A successful negotiation can only take place when both sellers and buyers are satisfied with the deal. Their satisfaction will solely depend on the sum they receive or give against a property or a house. Buying a piece of property such as that mentioned in the case study is a kind of give and take process. In this process, the seller quotes a price whereas the buyer tries to bargain to meet its budget. Negotiations continue until the moment both parties involved in the process are satisfied with the deal. In some cases, buyers have other options to switch to. Sellers can also have such benefits. In all these situations, the deal becomes difficult as negotiation and bargaining get weaker. However, in context to the Sonic Software, the situation is different and both parties would simply look for a positive deal. Wonder Widget, Inc. wants to relocate to a cheaper area whereas Sonic Software Inc. wants this property in Santa Clara. The situation also forms the purpose of this assignment, which is to negotiate the land acquisition deal from Wonder Widget, Inc.
There are a few strategies that could be extremely helpful for buyers intending to buy a property. First and foremost, it is important to review the property from every perspective. The asking price may not be the one the buyer is looking for. Hence, it is important to have a knowledge of the actual value the property carries. In context to the case study, the current market value for the desired property is between $30.00 and $38.00 calculated for per foot of the land. The lower value of per feet of the land for the seller might be $30.00. Hence, the buyer in context to the case study should set $30.00 as the final offered price per feet. However, the buyer must not hurry but rather bargain and try to negotiate till the least value of the property. It is very important to sense the motivating factor for the seller to avoid any negative outcome of the deal. A mutual agreement at any price between the given ranges of price per feet of land needs to be done. Sonic has ample of cash with it; hence, there would not be any financial challenge. However, they may not want to lose this property. It is better to close the deal positively than unsetting the mood of the seller.
Second, it is necessary to obtain a copy of restrictions and covenants. This would inform on rules and legislation that is generally practiced in the area. This would also communicate the zoning system in the concerned property. These are primary works as one cannot come up with a retail outlet in zones that are only allowed for making industrial warehouses. Since the case study company is aimed to build up a facility like the headquarter office, it is necessary to know whether such facilities are allowed in the concerned area.
Doing a cost-analysis of the property would be the third piece of work to develop the strategy. The cost calculation would include several things that impact the overall cost of the property. The cost of acquiring the land should be known to the buyer. The buyer from Sonic Software Inc. needs to have a calculation of the value of the entire property, which is close to 450,000 square feet of land. Since the preliminary report suggests the value of the property ranging between $30.00 and $38.00, the value of the property should be calculated for each and every number starting from $30.00 to $38.00. This would give a fair amount of idea about the deal and the buyer could, therefore, confidently negotiate it. The buyer must not forget to judge the desired price of the seller as Sonic in any situation won’t want to lose this property. The property fulfills their desire of constructing a headquarter office.
The approach needs to be realistic so as to make the seller feel like the buyer is well equipped with related resources. In the market, these days, sellers, property owners and developers are willing to negotiate. However, sellers do not go down a certain point that means negotiation after which will be challenging for the buyer. This is to some extent for a fact that they do not want to publicize that few buyers paid less than many others. If it happens then sellers would lose their bargaining capacity. Many sellers just hate to bargain. However, this is not very true in regards to the case study scenario as the seller is perhaps willing to relocate to a cheaper site. Hence, they would never want this deal to close on a negative note. They would rather want to close this deal as soon as possible. On the other hand, this property in Santa Clara is of highest priority for Sonic Software Inc.
The seller or the property owner sums up every negotiating points, which buyer would construct. They do it to create a proposition for buyers, which is to either take-it or leave-it. In some cases, sellers might not agree to the prices set by the buyer. In all such cases, the buyer should convey the property owners that the buyer will make an analysis of the property before reaching any decision. It is advisable for the buyer to analyze the deal appropriately and wait for a few weeks till the seller reverts. It can be the case that the seller wants to close the deal at the prices offered by the buyer.
Developers or sellers in most cases are interested in selling properties at the earliest. Considering that the deal is of top priority for the case study company, an upfront payment would also be a good approach. Since Sonic Software Inc. has an excessive fund and wants to make the entire payment as a cash-down payment, the buyer can further negotiate the deal. Generally, the buyer can further ask for as much as close 9-10% as discounts.
Few strategies can be proposed to the buyer to conduct an effective negotiation of the property. First, the buyer if it is able to know the lowest price the seller has in the mind, the chances of closing the deal will positively increase. The problem arises when the buyer quotes lesser than the figure the seller has intended to sell the property. In such case, the seller thinks that the buyer has no real idea of the market and just want to take the advantage. However, the fact does not hold up well in regards to the buyer from the Sonic as they already knew the price value of per feet land in the area. Second, the buyer should avoid asking about the add-ons as it irritates the seller or the developer. The sellers do not expect any further demands being made from the buyer once after the deal is close.
Third, the seller has a target price in his or her mind. In a similar way, the buyer is also clear about the extent it intends to go with the property. However, this is strongly prohibited to advertise the price in one go to the seller. This will eventually turn up into a one-way offer. The one-way offer is that, which sounds offending to the seller. It appears rude to the seller. In such offers, the seller would perhaps quit the discussion and would more willingly look for the other buyer. In all such situations, the seller just goes defensive. This, in most cases, would lead to a dead-end offer. Despite knowing so much of an adverse impact the approach can produce, there are buyers who willingly practice this. These buyers include but not limited to those who make a cash payment. Hence, the buyer representative for the case study company must rely on a fair bargaining rather than making a nonsense bargaining or declaring the desired price to be offered to the seller.
These suggestions can be achieved by adhering to a few solutions as mentioned in this segment. First, the buyer must know the lowest price for the property. Fortunately, Sonic Software has a fair idea of the price value for on feet of the land. Second, the buyer must not ask for any add-ons as already stated that such things irritate the seller. Since the intended property is of a high preference for the case study firm, the buyers from the case study company must not ask about the extra. Third, the buyer must not advertise what price he or she has in their minds. The buyer of Sonic Software must first sense the buyer’s intention and motivating factor to close this deal. Then, the buyer must establish a good discussion of negotiating the deal.
In summary, this can be concluded that the given land acquisition scenario of the case study company can either be a success or not depending on the strategies and approaches adopted by the buyer. The strategies and approaches as being discussed in this paper should necessarily be followed by the buyer while negotiating with the executives of Wonder Widgets’ at the Olympic Club. These must be followed to avoid any unexpected outcome of the deal. These must be applied to the practice to ensure that the deal is positively closed.
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