NBN Online for the week of May 16, 2005

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In This Issue:

Front Page
Builders Seek Timely OSHA Citations and Other Reforms
Will You Be the Next Winner of a Digital Camera?
New Southern Nevada Homes Embrace Water Conservation
Coast to Coast
Developer Tactics to Avoid Housing Bust
Economics & Finance
Home Buyers Opt for Upscale Smaller Homes
Builder Confidence on Home Sales Holding Strong
Business Management
What Do You Need From Your Estimating Software?
Seniors Housing
A Holistic Approach to Wellness for CCRCs
Remodelers
Little Consolidation Seen in Remodeling Industry
Ohio Remodeler Named Remodelor™ of the Month
Education
Education Calendar
Environment
New Roadless Rule Lets States Choose Forest Protection
Career Staffer New EPA Administrator
Building Quality
Pulte, KB Home Divisions Earn Quality Certification
Deadline for Housing Quality Award Application Nears
Workforce housing
2006 Workforce Housing Awards Open
Workers Make Hard Choices to Pay for Housing
Housing Costs Get Tougher Still for Working Families
International
ICC to Guide Mexican Codes and Standards Update
Labor
Student Chapter Opens at Acosta Job Corps Center
Building Products
Custom Sell Sheets Present Door Glass Upgrades
Builder's Engineer
Good Lawyer — Bad Lawyer
TV
NAHB-Produced Shows on HGTV & DIY — This Week
Endowment
Research Center Seeks Land Development Expert
Association News
Customize Your Computer’s Cursor With the NBN ‘Hammer’
Tsunami Relief at Almost $350,000
GM Discount Available on More Than 80 Vehicles
Calendar of Events

Good Lawyer — Bad Lawyer

Everyone likes to joke about lawyers, that is, until you actually need one.

Lawyers, like all professionals, come in all shapes, colors and sizes; and in varying degrees of worthiness. The trick, when you need one, is to know who to select. After all, turn over any rock and you’ll find a lawyer lurking underneath. (For that brief lapse in good taste, I apologize in advance to my attorney friend, Kevin, who knows I have very little taste at all.) Here is a story about a large firm that chose wrong.

An old farmer had owned 50 acres beyond the outskirts of town for many years. He paid $20,000 for it originally, and as the town grew toward him, the value skyrocketed to several million. One day he decided to sell. Two large developers stepped up with offers. Negotiations ensued. The old farmer made amply clear his desire for a clean and simple sale; he just wanted out.

Fastlane Developers, Inc. responded with lots of cajoling words and high-spun stories of instant wealth and happiness for the farmer should he choose their offer.

DTE (Down to Earth) Developers, Inc. responded with a bit more sobriety, explaining that the true value of his land would only be maximized after it was rezoned and annexed into the city; a three- or four-year process. However, a purchase and sale contract could be devised whereby the farmer would get significant cash every year DTE held the option to purchase, pending rezoning and annexation.

The farmer was not overly pleased to learn it would take several years to get top dollar for his land, particularly with the knowledge that many things could go wrong during the rezoning and annexation. But he did appreciate DTE’s straightforwardness and had them draw up a contract.

To ensure competition, he also had Fastlane put together a contract. He figured he’d just select the best of the two; simple.

But land deals are rarely simple. 

Fastlane was the first to submit. Its contract was a “three-one” (three pounds of paper, one inch thick). The farmer, being a simple man, though no dummy, knew he needed his own attorney to help him understand this pile of jargon. Upon review, the farmer’s attorney commented that this contract was overly complicated, with many obviously cut and pasted sections, some of which contradicted each other, and many of which did not even pertain to this specific deal. The farmer confronted Fastlane’s attorney, who became belligerent, claiming that their contract had been used in hundreds of land deals, many of which were much bigger and more complicated than this one. The farmer listened patiently, then politely asked if there was any way to make it simpler.  The attorney said not likely, but if he had to, he’d try.

In the meantime, DTE’s contract came in. It was a “one-three” (one pound of paper, one-third of an inch thick). The farmer’s attorney reviewed it and proclaimed they’d have to negotiate some, but it was reasonable — a solid offer.

By the time Fastlane came back with a “one-three” (what they should have submitted in the first place), the deal was already done with DTE.

Here’s why Fastlane’s legal team lost them the deal:

  • They failed to understand the nature of the farmer. Old farmers are not suit and tie types; in fact, they’re usually just the opposite. They distrust slick talkers. To earn the farmer’s trust, straightforward, open-book negotiations were needed, not pie-in-the-sky tales of fabulous wealth and riches. Strike one.
  • They failed to remember the most important credo in business: “Half of everything you do in business is marketing.” When the farmer called to discuss the “overly-complicated” contract, instead of making the farmer feel good, Fastlane’s attorney became defensive and made him feel stupid. In short, he did not market his contract or his company well. Strike two.
  • They failed to act on the farmer’s first and most important request: a clean and simple deal. Granted, an option contract by its very nature is not clean and simple; however, there is always excess baggage and dense wording that can be cut from any contract. Fastlane not only didn’t cut, they did a sloppy job of assembling.  Strike three, yer out.


To summarize, Fastlane Development lost a multi-million dollar deal simply because its legal team failed to work appropriately with the customer. It had nothing to do with their legal expertise or the dollar amount of their offer; it was a marketing blunder, pure and simple. 

Anyone with customers ought to be able to glean a lesson from this tale.

Tim Garrison of ConstructionCalc.com, is a professional engineer, author and software producer for the building industry. Send e-mail to buildersengineer@constructioncalc.com. Tim reads every one.

This column cannot be reprinted without permission from the author.

The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article.


 

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