16th September 2017
Deals, like people, have their own nature. You can push them but they have their own timing. They evolve and they fructify at their own pace.
One deal we closed recently was located in Park West, London W2. It consisted of three flats all merged into one lateral flat, giving a massive 2,200 square feet. This is too much space for one flat; you won’t achieve the rental income or the right sales price.
Having had a proven track record with the agents, we were given the first right of refusal.
It had some quirks to it; for one it needed a cash purchaser because a mortgage would have been difficult as the flat had been used as an office for the family.
Often with these deals, there is always a story in the background; the family behind the ownership of this property were having personal issues, which prompted them to sell the property. Generally, you have one of three categories into which good deals fall in to, they are either triggered by divorce, distress or death.
This one was a distress sale, caused by the break down in family relationships which had led to a breakdown in the business relationship.
We procrastinated over the deal. It was a good deal, but we just had a lot going on and didn’t close it in time. To be honest, having a lot going on is also a story. It is an excuse. It doesn’t take long to reach a decision. It’s a yes or a no.
The deal equated to £773 per sq. ft. in a block where the prices float around £1,250 per sq. ft. This represented a discount of a shade under 40% in W2.
What were we waiting for? We should have acted immediately.
We delayed. A competitor acted more quickly and locked us out of the deal with a decent deposit. And it is when you lose a good deal your desire for that deal increases exponentially. We really wanted it now!
So, I checked to see if the party buying it will perform. I was advised that they have performed previously, and were known to the agency. Furthermore, the lock-out clause meant there was no room to enter a contract race or give a higher offer.
As it happened, luck smiled on me. I was introduced to a lawyer who had a client who was in the process of setting up a fund for some Indian buyers in central London. He was on the ball and picking up deals. He mentioned the deal in Park West, and I realised he had been my competitor. He had the contract and was set to close the deal, but it no longer suited him so he suggested that I step in, take his position and pay him a healthy fee.
I told him, honestly, that we were getting the deal directly. If he wasn’t doing the deal, it would revert back to the agent for the next highest bidder to perform.
I suspected he wasn’t going to perform on the contract, so, I gave the agent a heads up about the contract coming back, and informed him that we were there to pick up the deal. He assured me this was not the case and he was confident that the buyer would perform.
In the end, the deal ended up back on the market as the buyer didn’t perform. The sellers were now anxious for a deal to be concluded so they allowed two parties to compete in a contract race. It was now all about who was first to the line.
This situation didn’t bother us as we were confident we had the right team of lawyers to execute this in time. We ended up concluding the deal much to the satisfaction of our investor.
It is interesting to reflect on how deals work and evolve. This experience provides a great opportunity to do this.
We initially lost the deal to procrastination.
Six months later, and with a little patience, we ended up with the contract again.
And the will of providence ensured it was closed in our favour.
There is a gulf of difference between patience and procrastination; one should not be mistaken for the other. The definition of procrastination is you delay making a decision. Patience is defined as the capacity to accept or tolerate delay.
Both involve taking time. However, the emotions that prompt these two states of mind are very different. Procrastination is bad for business, and patience is a virtue. Because these are subjective, you perhaps can present one state as another to an outsider. However, the astute observer will know the difference.
Procrastination is often felt in the head space of a body, your mind does mental gymnastics and goes through various what ifs, again, and again, and again.
In short, you will find reasons to avoid making a decision. The symptom of this tends to be experienced in the mind alone. This can be very fallible.
Patience on the other hand is a ‘knowingness’. It will be felt in a balanced way, through the whole body, a more grounded, integrated feeling, in contrast to only being experienced on the mental plane.
It’s important to differentiate between the two, and to be honest with yourself about which space you are in. We often see people in the procrastination mode, who delay making decisions for years. This costs them hard money. Money in the bank, though liquid, is a depreciating asset.
Whatever deal you present to these people, they will find a reason to talk themselves out of it. And there is always one if you look hard enough, including ‘it is too good to be true’.
Patience is important. Waiting for the right opportunity and evaluating the deal from every angle is not the same as procrastination.
Procrastination is driven by fear. Waiting for the right deal and thorough evaluation is driven by knowledge.
In our example, we started the deal off with procrastination, which led to it being taken by someone else. Then when it returned we had the patience and know-how to execute and close the deal.
Overriding and superior to both these states of subjective emotions is the will of providence which has the final and ultimate say in all matters.