Gazundering is back, so why don’t you do something easy to stop it…

If you’ve read my book, you’ll know that I don’t like gazumping or gazundering. This is because I believe that, once I’ve agreed a deal, I should stick by it.

In case you’re reading from outside the UK, these are two techniques that rely on the fact that it typically takes 6-8 weeks between verbally agreeing a property deal, and the lawyers coming up with contracts that can be signed, or, in the parlance “exchanged.”

• Gazumping is where a seller agrees a price, waits 6-8 weeks while the buyer is incurring cost in the various legal / financial paperwork that has to happen, and then refuses to sign the contract unless the buyer pays, say, 5% more than originally agreed.
• Gazundering is the opposite – where the buyer waits until the last moment, and then reduces his/her offer.

Now, many have said that the law should be changed to mean that deals are binding once agreed… but in practice, this just transfers the risk to the buyer, who then has to deal with all the legals/financials (which take time and money) before even making an offer.

 

However, if you are selling, there’s an easy thing you can do, up front. This assumes that you are selling through an estate agent.

Ask the agent a very simple question.

As far as you know, has this buyer attempted to gazunder anyone in the past?

Now, the agent may not tell the truth, or know … and it is, in practice, impossible to prove any liability against them even if they do lie… but the very act of asking will, sometimes, flush out something. Gazunderers only get good deals if people fall for their dirty tricks.

It’s a limited upside strategy, in that it seldom works… but it’s a zero downside strategy, in that I’ve never known it to backfire. Or, viewed another way, it’s a free bet that, if you win, makes you a few thousand quid.

Gazundering is back

Alas, Gazundering is back.

This is (whatever the OED may say about chamber pots), the practice by which a buyer goes through the process of buying, and then, on the day of exchange, drops their offer.

Personally, I consider this (and the converse – gazumping, where a seller increases the price on that day) to be “dirty tricks” and neither use them, nor put up with them.

However, reports are that their use is on the up in some parts of the UK. I’ve just come off the phone from my solicitor, who tells me that neither is happening around here – initial offers are way below asking price, but it would appear that the people of West Sussex stand by the handshake and things go to exchange at the prices agreed.

The danger to the buyer, of course, is that they have made their outlay – paid their searches, and may even be in chains themselves – and may upset the vendor sufficiently that the deal doesn’t go ahead, even at the originally agreed price.

However, there is one weapon in the “victims” armoury that can be used – what I am now recommending, if you are gazundered, is to explain that you will be circulating the “buyers’” details to all local estate agents, with a covering note letting them know that they are a known gazunderer, and asking them to make this fact known (as part of their duty of care to their clients – the vendors) to any vendor considering selling to them.

In these Internet days, reputations are far more important, and easy to make clear

Five Negotiation Techniques in One Letter

I realised that it had been a while since I’ve blogged about any specific property negotiation techniques, but a letter I’ve just written combines FIVE of the techniques from my negotiation ebook in one single offer.

Obviously, I’m not prepared to give EXACT details, since the negotiation is still ongoing, but here’s what I’ve just done.

Three days after receiving a counter-offer, I’ve written back, with two alternative figures, showing how I arrived at the breakdown to the nearest pound.

Right, time to take these one at a time:

“Three days after receiving a counter-offer…”

• I’m not in any kind of hurry. The last thing I want to do is give the impression that I’m under any time pressure, so I forced myself to wait a couple of days rather than pinging a reply straight back.

“…I’ve written back…”

• If possible, I put my offers in writing. There’s lots of research to show that offers received on paper get taken more seriously than figures just read down a phone line.

“…with two alternative figures,…”

• The danger of putting a single offer is that the mental choice is “take it or leave it.” Giving what’s known in sales as an “alternate close” makes the choice “option A” or “option B”.

“showing how I arrived at the breakdown”

• In the UK, haggling is not well regarded. Hence, I’ve given a detailed breakdown of how I arrived at a price, with subtotals… rather than just saying “I’ll knock off five grand.”

“to the nearest pound.”

• Don’t offer round numbers! They look made up, and make people think “he could offer me” (or ask less.) This is why shops sell at £4.99 rather than £5. It’s nothing to do with the “four quid not five”, and everything to do with the “stop customers assuming you’re price-fixing”

The SubPrime crisis – as explained by Bird and Fortune

Update: 18th September 2008 – this video appears to be no longer available on YouTube. I can only assume that it was pulled for copyright reasons

Marvellous sketch from Bird and Fortune about the SubPrime crisis attached here. (If you aren’t viewing this on my site, you may not see the video – you may have to click through to my site to watch it.)

Some people have found the sketch racist in that it refers to “unemployed black men”, however it is worth noting that:

• The unemployment rate in the States is DOUBLE for blacks than it is for whites
• The sketch does NOT say that unemployed people are the problem – but that industry professionals preying on them is.

If we can put the racial epithets to one side, and concentrate on the sarcasm used against the financial community, there’s some very telling stuff there.

Property Negotiation – Slides now available on-line

Following the feedback about putting my Negotiation for small businesses slides online, I’ve updated my “Property Negotiation” slides.

These are from the 45 minute version of the talk I’ve given for organisations like the National Federation of Residential Landlords, and others.

If you run a networking event, and would like me to come and give this presentation (or any of my other presentations, please get in touch.)

You should be able to read the slides online here, or download them to your own PC.

And finally, thanks to Chris Brogan for his brilliant idea of using Flickr to find photos licenced under Creative Commons for use in this slideshow. Thanks also to the photographers (credited in the slides) for sharing their photos in this way.

Property Negotiation, The Book – now available from WHSmith!

Ooh, well done, my publisher…

Available on-line from WHSmith here, or in-store (probably by order only at most branches.)

It’s quite an odd feeling – I’d not been expecting it to be available anywhere other than Amazon, so pretty chuffed today

Now, if a few hundred thousand of you would go and buy it, and make it a breakaway Christmas Number 1, and I get invited onto Jonathan Ross, I promise I’ll make the tickets to the show available on my website

New dates for Property Negotiation 1-day training course

Two new dates for the course have been announced:

• 6th October 2007
• 24th November 2007

Both courses are at Gatwick. Click here to book.

Here’s what some past attendees have said about the course:

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One of the most useful one day seminars I have ever been to. Mark's sincere, simple, humorous and down to earth approach really helped me in thinking about every negotiation opportunity that we come across every day. It's actually embarassing for me to admit how much I have saved by applying these simple techniques where ever I can including in real estate negotiation... Probably thousands - Abhishek Mani, Property Investor, London

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I have been involved with property for about four years full time, and have known Mark Harrison for two years. I would say the Negotiation tactics like that heard today are better than the books I have read or American course tapes I have listened to simply because he's experienced the pitfalls and it's all based on real experience, is specific to the UK Property market, which is the most important thing which I haven't seen elsewhere, a great course and I definitely recommend it.
- Parmdeep Vadesha, Property Investor & Author, Vadesha Properties, Leicester - www.property-course.com

Property Negotiation, The Book – finally in stock at Amazon (UK)

Well, it’s taken over a year, but Property Negotiation, the book, is finally finished, published, and available at Amazon.co.uk.

• Would I have started on the project if I’d known how much time it was going to take? Maybe, maybe not.

• Am I glad I did it? Yes, very much so. I thought I knew a lot about negotiation as a result of 15 years experience as a negotiator, but the more “hardcore research” I did, the more I realised I had to learn (and the better some of my other business deals have been as a result.)

Anyway, the book pretty much does what it says – it’s about negotiating the best price for UK investment property… and I wrote it

Click here to see (and buy!) at Amazon.co.uk

There’s still a bit of work to do – sorting out cover art on the Amazon site, and so on – and my publisher tell me that the ACTUAL lead time will rather less than the 4-6 weeks that Amazon are currently quoting, but, heh, now would be a great time to buy anyway

Mini Book Review – Building Agreement (Fisher and Shapiro)

About 15 years ago, partway through by MBA course (which I never finished!) I read a really interesting book that changed the way I thought about negotiation. The book was Getting to Yes by Roger Fisher, William Ury, and Bruce Patton. One day, I’ll finally get around to reviewing that book.

However, on Friday I got my hair cut (think 50th anniversary of John meeting Paul tribute style!), which involves going into Crawley. Don’t get me wrong, I like Crawley, but the parking is awful, so what I tend to do is get dropped off, and then call for Mary (wife) or Dona (PA) to pick me up when I have the new look.

The great thing about this arrangement is that it allows me about 15 minutes to wander round Waterstones.  Now, I’m a big Amazon fan – I was importing books from them in the US several years before they set up in the UK, but I still like the feel of a bookshop, and in particular I like the way I can meet interesting books that I wouldn’t have obviously found on the web. There’s a rabid economic efficiency part of me that wants to then go and buy them online, but I tend to rationalise that I’m paying a voluntary tax to help support a local community service.

Anyway, to cut things short, I stumbled across “Building Agreement”, by Roger Fisher and Daniel Shapiro. Remembering “Getting to Yes”, pretty much clinched the sale for me, and last night I read the book. (It’s about 230 pages, and I speed-read quite well.)

Roger Fisher teaches negotiation at Harvard Law School – which pretty much establishes his academic credentials – helped design the process used by President Carter in the Camp David negotiations, helped the white Cabinet and the ANC in South Africa prior to the talks that led to the end of apartheid, and helped (then) President Mahuad of Ecuador in the successful negotiation of their treaty with Peru that closed of a land dispute that had been running on and off since 1532! One of the chapters of the book “On Using These Ideas in the Real World” is written by President Mahuad.

The book’s subtitle is “Using emotions as you negotiate”. This is something I cover, up to a point, in my own book / course, but Building Agreement takes it much further. The book uses the 7-point “Elements of Negotiation” framework from the Harvard Negotiation Project and goes beyond it, to develop, in depth, many of the problems that strong emotions can cause during a negotiation. The book then goes on to give a range of techniques for dealing with these problems.

It is hard to find anything to criticise with the book from where I’m standing. About the only thing to flag up is that it’s not particularly focussed around Property Negotiation, but that would be missing the point. If you are serious about improving your negotiation skills, this is a must-read for the bookshelf.

• Click here to buy from Amazon.co.uk 

The Four-Part mini-course on Below Market Value is now available on the main site

Between October and December last year, I ran a four-part mini-course about buying UK property Below Market Value.

For the last six months, this has only been available to my newsletter subscribers.

However, the course is now available on yourpropertyexpert.com – obviously, newsletter subscribers still have several months head start on the newer content.

The newsletter complements this blog and the negotiation course, despite the fact that both are free – this blog is a relatively “quick” collection of thoughts, as I have them. The newsletter is a more “considered” set of things – a lot more time goes into each issue. The free mini-course on property negotiation is both more detailed, and more limited in subject area – again, the newsletter and the mini-course complement each other!