ZOPA. It’s a world that transcends the far reaches of imagination and the structured pace of Corporate America. It’s the middle ground between emotional desire and complex negotiating strategy. And it lies amidst the pit of man’s fears and the summit of his knowledge. This is the dimension we call negotiation. Hold on…you are about to enter the Zone of Possible Agreement (ZOPA).
Ok, so Rod Serling we’re not. But finding the ZOPA in the commercial real estate negotiation process can be as fantastic as any Twilight Zone episode. Like the iconic television show, it may take some odd twists and turns along the way. But once you’ve reached ZOPA, you will have found a place where deals can be made and satisfaction can be achieved.
In the negotiation process, ZOPA works something like this:
First, a proposal is made by a person, commercial entity, or organization, known officially as a Proponent. At the other end of the proposal is the Prospect, the person or entity that considers the merits of the offer. If the Prospect doesn’t immediately accept the proposal, they have the option to either counter offer or outright reject the proposal. If both parties are still willing to negotiate, this is where the game gets good.
What ensues next is a back and forth of “I want this” and “I’ll accept that” between the two parties. Lines are drawn based on the minimum agreement that each is willing to accept. Then, lines can be re-drawn as the negotiating continues. At some point, there will either be overlap or someone will make the decision to walk away from the deal. If some overlap occurs, where there are some common agreements, then the two parties are entering the ZOPA.
While reaching the ZOPA may result in an ultimate agreement, there is still wiggle room for each party to walk away if terms cannot be mutually agreed. That is the gray area of ZOPA. Remember, the letter “P” stands for Possible. It means that it could still go either way.
In the commercial real estate market, getting to the ZOPA can lead to a mutual agreement that satisfies both Seller/Landlord and Buyer/Tenant. Our negotiating experience at the Menlo Group has led many on both sides to a place where the ZOPA brought about a mutually agreed upon deal. Let us help you get to the ZOPA and hopefully beyond in your next commercial real estate transaction.