*Solving Deal Problems

One of KJF Partners’ Core Values is:

“We are driven by our personal commitment to create value for our investors, tenants, teammates and brokers.”

To serve our broker partners, we send occasional emails that focus on things I have learned through my brokerage history or that I notice from my current role on the principal side of the business.

Brokerage is a challenging business and effective negotiation to solve problems will help every broker save and close more deals.

The ability to develop and implement solutions to deal problems is an important skill for top brokers to possess. Deal problems are part of the terrain that brokers must navigate on the path to beneficial client closings. There are many circumstances that may arise during a transaction and, the “gap” between the parties must be bridged in order to move a transaction forward. Most deal problems can be solved by getting both sides of the transaction to work cooperatively to reach a mutually satisfactory solution. Below are a few steps to a successful conclusion when issues arise.

Step One. The Investigation: Get both sides to acknowledge and define the “problem.”
Acknowledging and defining the problem and, its cause, sounds simple but, it frequently requires a lot of digging. Problems disguise themselves as re-negotiations of the existing deal. A buyer commonly requests a price reduction in order to move forward but, a price reduction can be a proposed solution to a perceived problem that a party is experiencing. Continue to ask “why” questions until the problem is fully understood. It is your task to investigate the issue thoroughly to ensure that you and your buyer agree on the true nature of the problem. In the case of a requested price concession, until you discover what has made your buyer “feel” that a lower price is needed, it will be difficult to solve the problem and move forward. Unless you dig deeper, you may not realize, for example, that the buyer discovered a tenant was in the process of selling the business and your buyer is worried the tenant is no longer viable. Your buyer is worried that they won’t be able to service the debt if the tenant fails. Keep your buyer talking about the problem and dissuade your buyer from proposing their own solutions at this point.

After you have defined the problem and, its root cause, fully explain the problem to the other side of the transaction. Define the cause and what your party is concerned about. Request that they fully examine the situation to discover its validity. In this case, the seller may call his tenant to verify their intention to sell the business and to understand the reasons why. Focus the seller on acknowledging and understanding the “problem,” and again, dissuade them from proposing solutions, emphasizing that at this point you want to ensure that you fully understand all of the circumstances related to the concern.

Step Two. The Resolution: Be the creator of ideas to solve the “problem.”
After the “problem” and its cause(s) are clearly defined, request that you be allowed to propose potential ideas to solve the problem. Avoid, when possible, having either side suggest solutions at this point. The most difficult part of the process is preventing each side from being entrenched in a position that they have authored. The biggest pitfall to an acceptable solution is allowing either side to become vested in “their solution.” People get fiercely attached to their own ideas and, I have seen many deals die unnecessarily because one party was overly committed to their solution being accepted. It is your task to control the process, to define and present reasonable solutions that both parties find mutually agreeable. You must remain diligent throughout the discussions about keeping the parties focused on their original and ultimate goals and reasons for pursuing the transaction. Your ability to find common ground will lead to a positive outcome.

If you are successful in controlling the process, asking the right questions, and communicating solutions efficiently, you will increase your close rate and continue your successful path to a great career in brokerage.

Happy Hunting!

Joe Faris
KJF Partners, Inc.
Cell Phone: 949-275-5038

Email: jfaris@kjfpartners.com
Website: www.kjfpartners.com