Property development is all about persistence. You will never make it to the finish line (at least on time and on budget) without unwavering persistence in almost everything you do. Persistence is about challenging the status quo and not accepting mediocrity. Persistence is about persevering to find a better, faster, cheaper or more valuable alternative to the solution that is first presented. It’s persistence with people that is most important. Persistence to a point of course! It’s a fine line between being just persistent enough to achieve what you need and being a pain in the butt that paradoxically slows things down.
This series ‘Persistence Pays’ is my who’s who list to be persistent with and when you might need to restrain yourself.
Funders (Banks, Investors, Boards and Partners)
When dealing with funders (whoever holds the purse strings) my golden rule is to persistently communicate. Your new word is ‘Persistamunication’. You never know if you will need to extend your funding. A hiccup with construction or a slowing sales market could trigger it. Before you get in that situation, ensure you have a great working relationship with your funders, and that means talking. Communicate the good news in between typical reporting periods. Don’t hold back the bad news. Even if you are confident that you will fix some bad news before they need to know, consider telling the bank. When you do fix something that might have caused a scare (so long as your incompetence didn’t cause it), funders will gain more confidence in you. This is one group that will appreciate you being persistent on the project. So instil trust with your funders and show them just how hard you persist with everyone and everything to see the project through to the bitter end.
The moral of this section: Persistence has a pay-off. Without persistence, development projects can flounder and every day equals extra dollars.
Andrew Crosby +64 21 982 444 andrew@xpectproperty.com
Property development is all about persistence. You will never make it to the finish line (at least on time and on budget) without unwavering persistence in almost everything you do. Persistence is about challenging the status quo and not accepting mediocrity. Persistence is about persevering to find a better, faster, cheaper or more valuable alternative to the solution that is first presented. It’s persistence with people that is most important. Persistence to a point of course! It’s a fine line between being just persistent enough to achieve what you need and being a pain in the butt that paradoxically slows things down.
This series ‘Persistence Pays’ is my who’s who list to be persistent with and when you might need to restrain yourself.
Real Estate Agents, Sales and Marketing
If sales are going according to plan, then your real estate agents will be doing their job. Yes, they probably can always do better. And by better, I mean sell and lease faster and/or for more money. I am running out of letters to add to the word persist, but let’s call this one ‘persistasales’. Consider three circumstances:
In-house sales and leasing
External agents
Sales strategy change
In-house Sales and Leasing
With an in-house sales team persistence requires all the usual sales manager motivation, slash inspiration, slash training, slash lending-an-ear type responsibilities. It also means persistently encouraging (empowering) the team to find local marketing mechanisms rather than solely relying on head office. Gather regular feedback from those in the sales trenches and action the sensible ideas. It’s all too easy for sales consultants to default to wanting a price reduction. So being persistent is to continuously separate pricing incentives (freebies and price discounts) from marketing initiatives. When things aren’t working you try something else — don’t let the team stand still. When things work well, put more resource into that effort and persistently promote it to the in-house team.
External Agents
Often the external agent you use will not be solely dedicated to your project. The agency that engages you certainly won’t. An individual or three might be if they are part of a project marketing team. However, unless your project is substantially large, only juniors or showroom staff will be one hundred percent dedicated to your project. The main agents you engage to sell or lease your project will more than likely have other selling priorities. If your project does not create the highest number or value of transactions in a certain period, compared to the agent’s other activities, then their interest will wane. This is even if you offer a higher commission — because agents get intoxicated from making the sale. To many agents, a dollar now is more addictive than two dollars later. Moreover, external agents are in the listing business. They need to develop more listings to grow their commission base. And that means more clients competing with the attention your project deserves.
The short of it being you need to be the number one client to ‘your’ external sales and leasing agents. Invest your time in them, so they invest their time in you. Turn up the persistasales volume if it gets tougher to get transactions over the line. Emails, texts and phone calls won’t suffice, although you should be communicating this way at least every single day. Add to that a combination of coffees, lunches, dinners, events and parties. Don’t mistake this for stalking. These are the people responsible for your project’s income. It’s about making sure selling or leasing your project is always at the top of their mind.
Change in Sales Strategy
What happens when the market changes and your sales strategy no longer works? Well, you could go re-read Chapter Five ‘Fresh Image’. However, on the assumption you are almost at the sales finish line, but sales or leases are drying up and you just need to persist, then ask these questions:
Are your agents too well fed and now lazy? Ok, that might be a bit harsh and, let’s face it, realtors already get a lot of grief. A good agent is always on an aggressive look out for their next commission. After all, if they have been on this project a long time and already made a lot of money, then the last few commissions may not matter so much to them. Near the end they will already be looking for their next project, and yours is slipping down the priority list. Persistently keep them on their A-game or hire in new — and more motivated — blood.
What is the effectiveness of incentives? Whatever buyer incentives(or motivational buy-now tactics) you used when sales first started slowing will quickly lose effectiveness. You could try upping incentives such as a cash bonus. But if you withdraw it later, after you have achieved a target, then you face a kind of perverse-reverse sales motivator with the agent thinking if they wait long enough you may increase sales incentives again. Persistasales means convincing agents that every incentive is just a one-time deal.
Are they experienced in this new market? Rather than the cause being a blasé attitude, sales or leasing agents may just not be as effective (or experienced) in the new market environment. For example, let’s say you are developing a housing subdivisionand your sales were all based on preselling. That involves selling buyers on the vision using plans and renderings and maybe a showroom. Preselling is all about selling buyers on the premise to ‘get in now’ to secure a pre-construction opportunity. It is a different skill than selling a home under construction or a completed home. When selling a completed home, the buyer sees warts and all, but also can appreciate the final product. An agent sells the buyer on the benefits of the finished product. Conjuring up a vision is not required. Some agents are better at preselling homes than selling existing and vice-versa. If your project has an agency who originally pre-sold, but because the market has slowed is now faced with completed homes to sell, then the differing expertise needed could handicap further sales. Persistence in this case might be futile. You may need to look at changing to agents who specialize in finished home sales. Similarly, you may have inherited a project that had completed homes and your sales team were employed to sell those down. They did a fantastic job, so you moved them into preselling the next stage. But for whatever reason (they blame the market) they are not closing deals. It may be time to get the ‘pre-sale’ specialists in!
The moral of this section: Persistence has a pay-off. Without persistence, development projects can flounder and every day equals extra dollars.
Andrew Crosby +64 21 982 444 andrew@xpectproperty.com
Property development is all about persistence. You will never make it to the finish line (at least on time and on budget) without unwavering persistence in almost everything you do. Persistence is about challenging the status quo and not accepting mediocrity. Persistence is about persevering to find a better, faster, cheaper or more valuable alternative to the solution that is first presented. It’s persistence with people that is most important. Persistence to a point of course! It’s a fine line between being just persistent enough to achieve what you need and being a pain in the butt that paradoxically slows things down.
This series ‘Persistence Pays’ is my who’s who list to be persistent with and when you might need to restrain yourself.
Build Contractors and Subcontractors
There are two times you need to persist with build contractors. One, before you have a signed construction contract and two, after you have signed the contract!
When you are scoping projects be gently persistent to extract build rates and pricing that you can use to revise your feasibility and budgets. It’s important to maintain good relationships with contractors for this purpose — once again it’s a two-way street. If you are asking a contractor to give you some pricing for say, the next stage of the failed project you have just taken over, then he’s only doing that where there is a potential job for him down the line. As a developer it’s easy to forget that it may take the contractor some time and effort even to provide indicative pricing, especially if there is substantial construction cost inflation in your market. Any contractor will give you at least one quote, but after that they will increasingly become weary if no job (for them) results. If they are already doing multiple jobs for you then they should oblige providing estimates or quotes. Otherwise though, don’t overstay your welcome. Sometimes when I get conscious of overusing my contacts, I say it’s for feasibility purposes and offer to pay them like a professional cost consulting service.
Once you are in a legal contract, then the contractor should perform as per the letter of the contract and no need for you to have to encourage or persist, correct? Well, oftentimes, no. Let’s call this ‘persistagality’ (persistence with legalities). This means generally persisting with the contractor to get variation price and information requests back to you as soon as possible (irrespective of what the contract says). Reciprocate by helping the contractor out by getting them information in a timely manner as well and they will probably be more forthcoming. When managing the construction contract you need to persist with laying down your expectations of how you will treat additional cost and time claims. The contract, when negotiated correctly, should stipulate the process and what is valid or not, but often there is still a level of interpretation required.
If your project — already resurrected — starts to have its own construction delays and budget overruns (argh, not again!), then persistagalities takes on a whole new meaning. Especially so where additional costs are not clearly covered by liquidated damages or are your responsibility. Now you are compelled to persist, outside the scope of your contract, to limit the damage. Take this example:
As the client you are responsible for supplying an electrical transformer for a new industrial building that you have pre-leased. The transformer delivery is late by a month. That impacts on the contractor’s ability to finish their works as they can’t do their final hook up and test the electrical circuits. The contractor could be entitled to make an extension of time claim for $1,500 per working day or $30,000. Worse, on the other side of the equation you have promised a commencement date to the incoming tenant that will now be delayed — a double whammy! That penalty is another $20,000 hit to your bottom line, not to mention an angry tenant. Persistence to minimize your loss is required. You need to find a creative solution and you may not be able to legally rely on the contractor to help. I found myself in such a situation. We rigged a temporary power supply up to another source. We agreed with the tenant that we would pay their power until the transformer was in place, including a day’s loss of trade to switch the power from temporary to permanent. After convincing the contractor, we modified the existing construction contract to enable works to be completed later when the transformer arrived. That allowed us to get the tenant in on time and removed the potential of costly extensions of time with the contractor. There was the tenant loss of trade cost, some double up of works and a reasonable variation from the contractor to come back on site once the transformer was in place. In the end, because of polite but persistent hustling to obtain agreement from both the tenant and contractor, the damage was much less than it could have been.
Many construction contracts include a defects liability or warranty period. This is when the builder is legally obliged to return to fix any issues or latent defects. This period can be a testing time for your persistagalatic attitude, especially if the builder has left the jobsite and is now immersed in other projects. As time goes on they can get progressively more difficult to contact and coordinate to fix issues. It might be next to impossible if there are no retentions or final payments withheld. Add to that, you can have buyers or tenants who will be on your back to get issues fixed. But now there may be others in the middle, like agents and property managers, making it all the harder to complete tasks. This final effort to complete everything requires developer persistence — don’t underestimate it.
The moral of this section: Persistence has a pay-off. Without persistence, development projects can flounder and every day equals extra dollars.
Andrew Crosby +64 21 982 444 andrew@xpectproperty.com
Property development is all about persistence. You will never make it to the finish line (at least on time and on budget) without unwavering persistence in almost everything you do. Persistence is about challenging the status quo and not accepting mediocrity. Persistence is about persevering to find a better, faster, cheaper or more valuable alternative to the solution that is first presented. It’s persistence with people that is most important. Persistence to a point of course! It’s a fine line between being just persistent enough to achieve what you need and being a pain in the butt that paradoxically slows things down.
This series ‘Persistence Pays’ is my who’s who list to be persistent with and when you might need to restrain yourself.
Consultants
These are the professionals you have signed fee agreements with to deliver advice and documentation for a
healthy (often hefty) fee. If you have negotiated appropriately then they will all
have fixed deadlines in which to perform. Most likely though included in the
fine print will be enough disclaimers to provide the excuse that they need more time
to do this or that. Being facetious for a moment: architects are notorious for
being late, engineers are terrible at getting back to you in a timely manner and
project managers may be so busy with other clients you are not their number one
priority.
As much as they like to tell you
otherwise before you have signed the fee agreement, my experience is that you
need to drive consultants persistently to perform. Let’s name this ‘persistaformance’.
Not all require considerable follow-up,
but certainly plenty of them, and it gets worse when the industry is busy. I
can usually tell from the initial email exchange where a consultant lies on the
tardiness scale. If they start off with a poor, confusing or even arrogant
communication trail, it probably isn’t going to get better. A few manage to be
all communicative at the start and then after they have been engaged,
deteriorate over time. One pet peeve is when consultants are all keen and
willing to take on multiple projects for you. Later,
months down the track, they ask you to tell them which of your projects takes
priority because they have too much work on! They should have planned their
resource to deal with all your projects concurrently, when they first took on
your engagements. Much of the time it’s not that the consultant is being
unprofessional it’s just that your number one priority is not theirs.
Now you don’t need to tread as
lightly compared to dealing with the bureaucracy. You are paying these
professionals after all. You should be firm and set high expectations (remember
you should have done this when you restarted the project). And be relentless in
your follow-up when you are not receiving deliverables in adequate time. Don’t
take the excuse bait that quality will be compromised.
A final note: for persistaformance to be achieved you must live up to your end of the bargain and pay consultants on time when they do deliver.
The moral of this section: Persistence has a pay-off. Without persistence, development projects can flounder and every day equals extra dollars.
Andrew Crosby +64 21 982 444 andrew@xpectproperty.com
Property development is all about persistence. You will never make it to
the finish line (at least on time and on budget) without unwavering persistence
in almost everything you do. Persistence is about challenging the status quo
and not accepting mediocrity. Persistence is about persevering to find a
better, faster, cheaper or more valuable alternative to the solution that is first
presented. It’s persistence with people that is most important. Persistence to
a point of course! It’s a fine line between being just persistent enough to
achieve what you need and being a pain in the butt that paradoxically slows
things down.
This series is my who’s who list to be persistent with and when you might need to restrain yourself.
The Bureaucracy
Here are some of the things you might typically hear from
council, local authorities, government departments, utility operators and the
like:
“It’s in the queue.”
“We have 20 working days to process this application.”
“There has been a request for further information and therefore your
approval is on hold.”
“We have limited resource and cannot attend to your request at this
time.”
“We have no record of that information. Can you resend.”
“The person looking after your consent is on vacation and the file has
been reassigned. When that person has reviewed the file they will be in contact.”
“We have not assigned a person to this file yet.”
“You (referring to your consultant) have not provided us with the correct
information in the format that is required.”
“You (referring to your consultant) have not provided all the
information that is required.”
What you want to hear:
“Hi, my name is Bob and I will be looking after your request. If you
have any questions, please do not hesitate to contact me directly on my cell
phone at any time. In relation to your request, I will be working on it on
Wednesday, expect to finish it by Friday, have my manager sign off on Monday
and formally inform you on Tuesday. If I have any questions I will email or
call you directly by Thursday.”[1]
And if they need to, they do it, by
Thursday.
To get from ‘what you typically
hear’ to ‘what you want to hear’ requires a special kind of persistence. Let’s
create a new name to be added into the Oxford dictionary and call it ‘persistochology’.
We’ll define that as ‘the behavioral psychology of being politely persistent to extract
certainty from a bureaucratic organization without having them take offence and
red tape up any door that you are trying to open’.
It’s a delicate balancing act. In
countries where bribery proliferates, at least the ground rules seem
so much more transparent — pay up and get results! For the rest of us, you need
to be persistent to get the answers you need. But this comes with the warning
that officials can swamp you with jargon and excuses if you stray and become
too officious. Many public organizations have statutory time limits in which to respond. However, there are so
many ways they can stop the clock. Good relationships help. However, half the
battle is finding out who is dealing with your request. Steadfastly find out
who that person is, then determine how far is too far when trying to attain an
answer. Note, we are not even talking about trying to influence someone to your
way of thinking or to approve something that they have discretion over (i.e.
outside the rules). This is just to get some certainty and the all-important
ETA.
I have found it’s people not policy that greases the wheels of action. When you find that someone who can make the proactive action leap to what you want to hear, then take that person to lunch, put their name in your phone speed dial contacts, send their office morning tea cupcakes and always send a Christmas card.
The moral of this section: Persistence has a pay-off. Without persistence, development projects can flounder and every day equals extra dollars.
[1] I wish I was being cynical. If you do encounter a Bob (they occasionally exist) then treat ’em like gold.
Andrew Crosby +64 21 982 444 andrew@xpectproperty.com
