Negotiation is one of the most underrated skills in property development. We do it our whole lives, with the two-year-old who will not eat their veggies, with the teenager who wants a new phone, even with ourselves when the alarm goes off in the morning. But when it comes to property, sharpening your negotiation skills can save you money, save you problems, and sometimes save you hundreds of thousands of dollars. On a recent episode of the Property Mastermind Podcast, Bob Andersen and Hilary Saxton unpacked how the best developers really negotiate. Here are the key lessons.
It is not just about price
One of the biggest myths is that negotiation is all about getting the cheapest price. Price matters, but conditions can be worth just as much, sometimes more. Bob gives a simple example. Imagine buying a site for $1.5 million on a 45-day contract, or $1.55 million on a 12-month contract. The second option costs $50,000 more on paper, but that longer settlement can be worth far more. With the right conditions, you can secure your development approval, line up your builder and be ready to start before you settle and begin paying interest. The condition, not the price, created the value.
Understand needs versus wants
Great negotiators get clear on two things: what the other party needs, and what they want. Needs are non-negotiable. Wants can be massaged. Bob tells the story of a seller who simply had to sell for a round $1 million. It was not about the conditions; the number was locked in his head, maybe for bragging rights. So Bob paid the full $1 million, but negotiated a long settlement. The seller got his million-dollar contract to wave around, and Bob saved a fortune in interest. Both walked away happy. That is the goal, not win-lose, but win-win, where both parties are 80 to 85 percent happy.
Know your walk-away point, and when to bend it
You should always know the point below which you will not go. But Bob adds some perspective. At one auction, the team set a firm walk-away price of $1.6 million. When bidding reached it with one rival still in, they went one more bid, $1.605 million, and the other party folded. On a project selling four and a half to five million dollars of duplexes, $5,000 was nothing. Know your line, but keep your eyes on the bigger picture.
Talk to the real decision-maker
The best deals happen when you can talk directly to the other party, not through a go-between. Agents and lawyers can help, but they can also distort or block a deal. And whoever you talk to, make sure they can actually make the decision. Bob once spent two and a half hours in a meeting that felt like a done deal, only to hear the other person say they would now go and discuss it with the landowner. Lesson learned: confirm you are dealing with the decision-maker before you invest your time.
Get creative with structure
Sometimes the best deal is not about price at all. Bob shares a stock-back deal, where instead of paying all cash for a site, he paid some cash plus two finished townhouses at the other end. The seller had always dreamed of doing that development and holding some product, and this gave him part of that dream, while getting Bob into the deal with less cash. When you understand what the other party really wants, creative structures open up.
Know when to walk away
Walking away is a powerful tool. It leaves the other party cold, and it gives them time to think. Sometimes they come back, occasionally at an even lower price than you were first willing to pay. There is always another good deal around the corner, so never be afraid to walk.
The bottom line
The best negotiators are not the most aggressive. They are calm, they understand the other side, and they look for a deal where everyone feels they have won. As Bob puts it, do not go in like a bull at a gate. And remember, if you do not ask, the answer is already no.
Want the full conversation, including more of Bob’s real deal stories? Listen to episode 267 of the Property Mastermind Podcast. And if you are ready to learn property development properly, join Bob, Hilary and Aaron at the Property Development and Joint Venture Workshop, with a live online session on 1 October and three days on the Gold Coast, 9 to 11 October.