How To Negotiate a Real Estate Job Offer [Mistakes To Avoid]
Negotiating a job offer is not easy, and many people avoid this altogether out of fear of having an offer rescinded (or even just to avoid confrontation).
But by not even making an ask, you could be leaving a lot of money on the table.
And because people tend to switch jobs only once every few years, most people aren’t skilled negotiators, and just don’t know how to go about this in a way that’s respectful, well-received by the employer, and gets them a package that they’re excited to accept.
So to make sure you’re prepared to be successful during the offer negotiation process, this article walks through four of the biggest mistakes to avoid when negotiating a job offer in the real estate industry, and what you should be doing instead to maximize your chances of getting what you want.
If video is more your thing, you can watch the video version of this article here:
Don’t Provide a Minimum Acceptable Salary
The first mistake that people tend to make during this process is providing a recruiter or hiring manager with a minimum salary figure they’d be willing to accept, before even receiving a formal job offer.
It’s not uncommon for recruiters and hiring managers to ask about your salary expectations in the first or second round of interviews, which can put you in a really difficult spot, regardless of how you answer.
If your expectations are too high, you might be disqualified from the process altogether (even if you’d end up being the best fit for the role), but if you throw out a number that’s too low at this point, this can also make it a lot more difficult to negotiate in the future.
Because most people want to play it safe, the default response from a candidate here is often the minimum salary they’d be willing to accept, but this is one of the worst things you could do when asked this question.
By providing a minimum acceptable amount, this effectively anchors the employer to this lower number, and if you ask to go above this amount later on in the negotiation, this will inevitably come back to bite you.
So instead of providing a minimum value here, the best strategy you can use when asked about your salary expectations is to actually turn this question around onto the employer.
And to avoid sounding like you’re just skirting this question, you can respond by saying something along the lines of:
“At this stage, I haven’t had a chance to think about a target salary and I want to make sure this is the right fit before getting to that point. But just so I have an idea of where an offer might shake out, do you have an approximate pay range that you’re able to share for the position?”
This makes it clear to an employer that you’re prioritizing fit, first and foremost, while also giving you a better understanding of what that upper end of the salary range might look like. And from there, you can then use this to either negotiate an offer in the future, or decide if it’s even worth continuing with the interview process overall.
Provide a Clear Reason For Your Negotiation
Mistake number two here often happens after an initial offer has been made, and this is failing to provide a clear reason for negotiating and a justification behind why you should be paid more.
In order for a company to agree to improving an offer, they’ll generally need either market data or a clear reason why you’d need an increase in pay to make the offer work.
In commercial real estate, one of the best sources for salary data is the annual CEL & Associates Compensation Survey, which provides a range of base salary and bonus figures for many different real estate roles. This report even breaks this down between retail, residential, and office and industrial-focused positions, which can give you a helpful benchmark to reference when trying to make your case.
And if you can’t find comparable data to back up your request, personal reasoning here can also work well in cases where you’re relocating from a different city with a much lower cost of living, relocating from a place where you didn’t need a car to a place where you will, or if you’re just making a similar amount of money in your current job that you’re happy in (and you’d need to see an increase to make the switch worthwhile).
The key here is to justify your requests as much as possible, and if you can make it clear that the company’s initial offer either doesn’t reflect your current market value or just doesn’t make sense for you given the changes that you’d be making, these are all things that can work in your favor during the negotiation process.
Don’t Focus Only on Salary
The third mistake that a lot of people make during this process is giving up on the negotiation altogether as soon as an employer indicates that they won’t budge on salary.
Especially in commercial real estate, there are so many different levers that you can pull to get to an all-in compensation number that works for you. And while your base salary is important and can make your pay levels more predictable, there are other ways to get to a compensation figure that both you and your future employer can ultimately agree on.
Especially as you progress to higher levels within the industry, more and more of your pay is going to be based on performance. And if an employer can’t get to a salary figure that works for your budget, exploring options for more performance-based compensation can be a great workaround to get where you want to go.
This portion of your pay would be directly tied to your production levels, and you would only make money if the company makes money as a whole. And as a result, this is a very low-risk option for an employer, and also shows confidence in your abilities and your willingness to contribute to the success of the team.
This type of pay could come in the form of a higher bonus percentage, a percentage of fees or commissions earned related to deals you work on, or this could even just be the ability to invest alongside the company with a lower investment minimum than their usual requirements. Oftentimes, having your compensation more heavily weighted towards performance-based pay can actually make your upside even higher than it would have been if you were to have a higher base salary, which is also an added benefit of going this route.
Don’t Negotiate an Offer You Don’t Plan To Accept
The last mistake that people often make during the negotiation process is negotiating an offer that they don’t plan to accept, only to take this to a competitor (or even their current employer).
Real estate is an extremely small industry, and negotiating in bad faith almost never leads to a good outcome over the long term.
If you’re negotiating an offer and the company you’re negotiating with gives you everything you want, but you still say no, this is very likely going to permanently burn bridges with the firm. And even if you don’t have a desire to work for this specific company in the future, people talk a lot in this industry, and this can even end up affecting your reputation within other firms.
Also, if you end up bringing back a higher offer to your current company, this immediately breaks trust with your manager, since they now know that you’ve been spending time and effort looking for other jobs. And even if they do end up matching this, this could make you an easy target for layoffs in the future, or prevent you from being promoted (since you’re now seen as a flight risk).
While it almost always makes sense to negotiate an offer that you intend to accept, if you’re just negotiating for the sake of negotiating, you’re wasting everyone’s time (including your own) and very likely damaging your reputation in the process.
How To Succeed in the Real Estate Job Search
If you receive an offer and it’s not exactly where you hoped it would be, these are 4 things to avoid during the negotiation process, and what you can do instead to maximize your chances of negotiating more favorable terms that ultimately make it worthwhile to take on a new challenge.
And if you want to learn more about how to go about the job search process, how to build your network, and how to craft your resume and cover letters to land more interviews, make sure to check out our all-in-one membership training platform, Break Into CRE Academy.
A membership to the Academy will give you instant access to over 120 hours of video training on real estate financial modeling and analysis. You’ll also get access to hundreds of practice Excel interview exam questions, sample acquisition case studies, and you’ll also get access to the Break Into CRE Analyst Certification Exam, which covers topics like real estate pro forma and development modeling, commercial real estate lease modeling, equity waterfall modeling, and many other real estate financial analysis concepts that will help you prove to employers that you have what it takes to tackle the responsibilities of an analyst or associate at a top real estate firm.
As always, thanks so much for reading, and make sure to check out the Break Into CRE YouTube channel for more content that can help you take the next step in your real estate career.