Never Split the Difference: Negotiating as if Your Life Depended on It

“What” questions in order to gather information and judge
the broker’s skills.
“Great,” my student said. “First and foremost, how has
Charleston been affected by the economic downturn?”
The broker replied with a detailed answer, citing specific
ex amp les of market improvement. In the process, he
showed my student that he was very knowledgeable.
“It sounds like I’m in good hands!” he said, using a
label to build empathy. “Next question: What sort of cap
rate can be expected in this type of building?”
Through the ensuing back-and-forth, my student learned
that owners could expect rates of 6 to 7 percent because
buildings like this were popular with students at the local
university, a growing school where 60 percent of the student
body lived off campus.
He also learned that it would be prohibitively expensive
—if not physically impossible—to buy land nearby and
build a similar building. In the last five years no one had
built on the street because of historic preservation rules.
Even if they could buy land, the broker said a similar
building would cost $2.5 million just in construction.
“The building is in great shape, especially compared to
the other options available to students,” the broker said.
“It seems like this building functions more as a glorified
dormitory than a classic multifamily building,” my student

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said, using a label to extract more information.
And he got it.
“Fortunately and unfortunately, yes,” the broker said.
“The occupancy has historically been one hundred percent
and it is a cash cow, but the students act like college
students . . .”
A lightbulb went on in my student’s head: there was
something strange afoot. If it were such a cash cow, why
would someone sell a 100 percent occupied building