Negotiations with a seller

[Daniel Brown]

Good afternoon BP,

I’m kinda in a pinch here. I’m starting negotiations with a mom and pop seller of their 89k sq foot Self storage facility. The seller is at a hard price of 7 million for their facility.

The facility is in a third tier area or tertiary market. Population is around 140k. Demand is at 7.8 per sq capita.

His rates are way under where they should be compared to the market. 2 major competitors in the area are 50% higher for one and 100% higher for the other in terms of rates and they are full. I ran the numbers I believe his price should be set at 2.6-3.5 depending on what the cap rate usually goes for in this 3rd tier market.

My question is, how can I help him understand that his price is extremely high without offending him or insulting him? He’s absolutely interested in selling and I’ve built good rapport with him. I don’t wanna destroy that rapport by offending him about his price. Any helpful tricks or tips would be great! Thanks in advance!!