10 ENDS OF LEASE STRATEGY

Generally, the stronger your position as a lessor, the stronger your stands in the negotiation process, Amembal&Halladay (1995) gives the following 10 key steps to developing a successful end-of-lease strategy, maintain positive environment during negotiation process and promote a favourable outcome:

  1. You should always look for win-win situations. If the lessee has the perception that you have made certain concessions, it will feel more satisfied with the final outcome.
  2. You should always start negotiations by asking for more than you actually want. A higher starting point creates flexibility and win-win situations.
  3. Neither party should allow the negotiations to be paralysed. If negotiations seem to be stumbling over a single point or problem, both parties should be flexible by considering alternative solutions or set the problem aside until later.  Sometimes, difficult issues seem less difficult with the passage of time.
  4. The supposed limits established by the lessee should not be an impediment to you. You should test the limits by suggesting alternatives. Always remember, the lessee also is likely to start the negotiation process asking for more than it hopes to achieve.
  5. You should not threaten or intimidate the lessee. Negotiations that turn into power struggles will become offensive and may be thrown off course, eventually requiring third-party mediators or even litigation to resolve issues.
  6. If you grant a concession, you should immediately ask for one from the lessee. From a timing standpoint, when one party obtains a concession, it’s more likely to grant one immediately afterwards, rather than at a later time when other issues are being addressed.
  7. Whenever possible, you should have the lessee make the first offer. Generally, the first party to state its position will be the first party to make a concession.  Negotiations start with an offer that is followed by a counter offer.  At that point, both parties have communicated their starting positions.
  8. You must be conscious of body language signals of the lessee. Look for signs of discomfort, lack of honesty or exaggeration.  Body language can take the form of actual body movements or changes in tone of voice.
  9. You should always attempt to be unemotional, to prevent the lessee from detecting weakness. A strong deliberate stance may in fact weaken the lessee.
  10. Most importantly, you must always be prepared for a negotiation by full understanding of the situation before the negotiations begin.

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