Tips To Negotiate A Commercial Real Estate Or Business Loan

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(1) Negotiation For The Entrepreneur – Good Cop, Bad Cop

“I didn’t say you can or cannot get the business loan.  I just take down the information and send it off to an underwriter.  I want you to be able to get every penny you can.  I have no idea what he is going to decide.”

So said my business banker at our small New York bank when I told him to bid on a line of credit.  We didn’t need any capital, but I heard people my age talking about carrying around half a million just in case and that made me curious enough to see what my firm could get. 

“Can you give me a rough estimate?”  I asked back. 

“No, every underwriter is different.  It totally depends which one.  Some, I don’t even know.” 

At least, that’s the initial answer I got.  After he loosened up, I got closer to the heart of the banker-underwriter connection at work here:

“We didn’t go to college together, but I’ve known the guy for years.  I mean I work with him – he’s a decent person.  He drives in from Jersey.” 

Good Cop Bad Cop is one of the most widely used methods of negotiation taught to low-level employees.  It is very easy to execute, very hard for the other side to decipher, and nearly always eases any high tensions, as negotiations between amateurs have frequently been known to turn psychical. 

The tactic aims to make friends between both negotiating parties via a common enemy they have who nonetheless is sometimes the friend playing two roles right before your eyes.  There are some telltale signs that this negotiation tactic is being used against you. 

First, the negotiating party never gives out the name of this Bad Cop.  Nothing is personalised about it.  He is a noun, not even a proper noun.  He is just a pain in the arse.   The entire time you’re getting more and more pissed at Bad Cop, you start to feel for Good Cop. 

“Hey, maybe Good Cop isn’t that bad.  After all, he has to deal with Bad Cop.  I’ll just give him the extra $1,000 and be on with my day.” 

The moment that thought goes through your mind, you’ve lost the bet.  It works so well, it’s almost devious.  The problem is that sometimes the other party will go as far as to stop you when writing the check and pull the deal back. 

Good Cop Bad Cop is used so often in the movies and television not just because it increases the odds that the suspect will confess.  That’s not Hollywood’s main concern.  They use it for time, money and dramatic purposes. 

The produces don’t find themselves having to bargain shop between Brad Pitt and Ryan Phillipe.  Any ol’ idiot can play the part.   After all, whatever the cop dramas churn out is what is pretty status quo now for those scenes.    

The Tale of the Matching Falcons…Almost

When you go to negotiate large spaces of commercial real estate, you are usually dealing with somewhat civilized human beings.  It’s like blue-collar prison.  When you go south of the 7-figure mark, it’s like waking up in an episode of HBO’s Oz.  

More or less, the commercial real estate associates pit you up against a landlord.  An opponent that only he, the commercial real agent, can throw a jab at. 

When I was negotiating mine, I asked the guy why he couldn’t get in touch with his landlord who was supposedly going to approve or disapprove the request of a guy sitting in the nicest office I have ever been into.  Surely, the landlord worked for him.  They only had six buildings and we were the only one leasing that day (seemingly). 

Sitting there waiting, I just told this guy that the terms are fine, give us the lease, we’ll sign it and pick up the copy tomorrow. 

When I went home, I emptied out my pockets and tossed his business card on the table.

The next day, when I met him to sign the lease he gave me another card.  I did the same, put it in my pocket and threw it on the table when I get home.  About two days later, I looked at my table to see two very similar, yet very different business cards.  Same colour, same texture, same design, except, one didn’t have a title and the other had the title “President.”   

I was negotiating with a wolf when the entire time I thought I was speaking to a sheep.