Chapter 6
Managing Lease Negotiations

Qualifying the Tenant

l    Applications

–    Residential (6.1)

–    Commercial (6.3)

l    Identity

l    Fair Housing

l    Rental History--character

l    Financial Status (Residential)

l    Financial Status (Commercial)

Lease application

l   Residential lease (see Figure 6.2)

l   Commercial Lease

Evaluation of data

l   Identity--How will the tenant impact the tenant mix?

l   Rental History

–   Frequency of moving

–   History of making rental payments

l   Future space demands

–   Residential--Is woman expecting? Fair Housing Issue

l   Financial status

–   Residential--Employment stability, Credit report

–   Commercial--Net worth, Dun & Bradstreet rating (see Figure 6.4)

Negotiating the Terms

l   Controlling the Process

–   Cooperating Brokers

–   Role of Attorneys

l   Security Deposits


l    When to Grant Concessions

l    Rent Schedules and Rebates

l    Free Rent

l    Length of Lease Period

–    Renewal Options

–    Escape Clauses

l    Tenant Alterations

l    ADA Compliance

l    Expansion Options

l    Non-competing Tenant Restrictions

l    Defraying Moving Expenses

l    Lease Buy-out, Assumption and Subletting

Essentials of communication

l   It must be heard.

–   Speaking clearly and loud enough

l   It must be understood

–   Speaking slow enough

–   Using slang regional terms.  (pop, lift)

–   Using jargon

–   Using proper grammar

l   It must be accepted

–   The other party must want to hear what you are saying

–   Agreement is not necessary

l   It must be acted upon (dialogue)

Bad listening habits

l   Faking attention

l   Listening to only the facts and not the feelings.

l   Avoid difficult listening (too tired, bladder timeouts)

l   Failing to listen to uninteresting conversation

l   Failing to listen because of prejudices about the person's appearance, age, or delivery

l   Failing to listen because of distractions

–   Traffic

–   Animals

–   Children

–   TV, radio

Good listening

l   Talking to avoid listening

l   Place your prospect at ease

l   Act interested

l   Control environment--avoid distractions

l   Be patient with the speaker

l   Ask revealing questions

l   Avoid argument and criticism

l   Learn to be an active listener--listen to the feeling behind the communication

l   Try to discover the hidden agendas

Modes of interpersonal communication

l   Verbal

l   Nonverbal

Joharry Window

Evidence of Effective Communication

l   Nonverbal

–   Eye contact

–   Body position

l   Verbal--Defenses suggest problems

–   Defenses that protect personal standards and values

–   Defenses against control by others

–   Defenses against being manipulated or tricked

–   Buyer defenses against the clinical, coldly detached salesperson.

–   Defenses against superior "experts”

–   Defenses against dogmatic persons

Voice patterns

l   Voice pitch, resonance, volume, rate, and rhythm

l   Laughing, coughing, throat clearing, and sighing

l   Momentary variations in voice pitch and volume

l   Interrupters

l   Silent pauses

l           Extraneous speech habits--"ahs", "ers", "ums”

Questioning techniques

MACK principles

l Make questions brief

l Avoid yes and no answers

l Confine questions to single topic

l Keep to simple words

Types of questions
Open questions

l   Do you need to move from your present apartment?

l   What do you like about your present apartment?

l   What do you look for in a neighborhood?

Probing questions

l   What advantages to you appreciate in your present location?

l   What features did you like most in that home?

l   Do you have any hobbies which might influence your housing choice?

Mirror questions (reflective)

Leading questions

l   Isn't it true ...?

l   ..., haven't you?

l   ..., don't you?

Common objections

l   The rent payments are too high.

–   Look at using a step lease

–   Look doing some of the tenant improvements.

l   A newer property is better than an older one.

–   Lower out of pocket expenses.  (Basic tenant improvements already done)

–   Mature landscaping

–   Mature neighborhood

Common Objections (Continued)

l   The moving costs are too high.

–   Offer moving allowance

–   Cost to business of not moving

l   The apartment is too far from the job.

–   Examine the extra time per day.

–   Examine the benefits--recreation, less crime.

–   Show best route to work.

Closing the sale

Reasons for failure to close

l   Personal lack of confidence

l   Personal guilt feelings

l   Poor selling tactics

Clues indicating closing the sale may be appropriate

l   Non-verbal clues

–   Frequent eye contact between parties making the decision (husband and wife)

–   Facial expressions indicating approval

l   Physical clues

–   Prospects asking to return to a property

–   Prospects returning to key rooms

–   Prospects undergoing detailed inspection

Verbal Indications

l   "We always wanted ...”

l   "This is really a great ...”

l   "I really like the floor plan.”

l   "What would the payment be?”

l   "When could we move in?”

l   "Our ___________ would go well here.”

l   "What are the neighbors like?”

l   "Do the neighbors have any children?”

l   "How far is the school?”

Closing Techniques

l   Trial closings

l   The assumptive close

–   "Would you like to have possession by the 15th of next month?”

–   "Would you prefer a step lease?”

–   "If the owner would be willing to give you a tenant allowance of $_______, would you be willing to put down $_______?

Closing Techniques
Summarizing advantages

l   Summarizing in logical sequence order of presentation--schools, neighborhood, lot, construction, rooms, etc.

l   Summarizing the points of common agreement--work from the most certain to the least certain.

l   Finish with asking for the earnest money amount.

Closing Techniques (Continued)

l   The direct close--"This is the property for you.  Tell me what you want to include in the contract.”

l   The balance sheet approach (Ben Franklin approach)

–   List the advantages on one side, the disadvantages on the other.

–   "On balance, the advantages seem to outweigh the disadvantages.  This seems to be good, don't you think?”

Closing Techniques (Continued)

l   Closing on a single objection--"If we could solve this problem, would you be ready to sign the lease?”

l   Closing on minor details--keep the prospect answering "yes”

l   Scare technique

Postponing the close

l   Reading too much nervousness

l   Don't allow too much time to pass (avoid waiting more than one day.)