Livin' La Vida Luna y Luca
Happy Bday Luca! Young, Wild, and 3.
Quid Pro Quo
Tit for tat. You scratch my back, I'll scratch yours.
Real Estate Investing tends to be a transactional business. Some might say you're only as good as your last deal. Others might say your next deal is your best deal.
Hence, a Golden Rule of Real Estate: He who has the deal, makes the rules.
Allow me to share a few recent anecdotes where this played out.
Oliver + Troy
Last year, when we made our initial offer on Project Oliver the seller's agent mentioned she had another listing coming up in Short Hills on a street I knew very well.
When it came down to the wire, we begrudgingly agreed to overpay for Project Oliver if she promised to get us the Short Hills contract without going to market. She agreed to sell us both properties if we gave her both listings back.
We ended up immediately flipping the Short Hills project for $100K over our contract price and more recently received an offer on Project Oliver that was $70K over our list price (which was $100K over our best-case scenario during underwriting).
Silver Spring & Willow
When my partner and I were ready to select a listing agent for Project Silver Spring, we had one main criterion: select someone who could reliably bring us our next deal.
We ended up selecting the listing agent from Project Oliver as she happened to live behind Silver Spring and had just as many sold listings in our price range in the past 12 months as any other listing agent. She also proved herself as someone willing to play this game.
Before signing the listing agreement, we made it clear that we wanted to build a long-term relationship built on being each other's first call when a potential opportunity pops up.
This past week, said agent brought us an off-market opportunity in the same Township as Silver Spring. We're officially under contract and starting due diligence tomorrow. 🥳
More to come in a few weeks.
Townsend & Loraine
When word got out that I bought Project Townsend, the phone started to ring. One caller was an agent listing another house on the same street.
We exchanged some niceties before they made their ask: "Did you sign with a listing agent yet?"
"No. What did you have in mind?"
"I'm working on a seller a few minutes down the road. Maybe you take that project too and I'll take both listings".
"Done".
We're not under contract on Project L yet, but I'm hopeful it comes to fruition.
More to come in a few months. 🤞🏽
Stags Hunt vs. Rabbits Hunt
I listened to a podcast this week where the guest quickly glossed over Game Theory. The guest went on to say,
"In game theory, the most famous game is prisoner's dilemma. But that's all about everybody cheating. And the Nash equilibrium, the stable equilibrium assumes everybody cheats. And the only way you can play a win-win game is if you have long-term iterated moves. But that's not the most common game played in society. The most common game played is one called a Stags hunt. Where if we cooperate, we can bring down a big stag and both have big dinners. But if we don't cooperate, then we have to go on individual hunts and kill rabbits. And we each have small dinners. So the high trust society is a more virtuous society where I can trust you to come hunt the Stag with me and show up on time and do the work and divide it up properly. So you want to live in a system where everybody has their own set of virtues and follows them without defecting, and then we all win."
Transactional vs. Relational
To some, this quid pro quo approach seems transactional. And for a while, I agreed. How can you develop a productive relationship that's built on keeping score and constantly asking, "What's in it for me?"
Admittedly, it felt "icky" to trade listings for future projects. And it irks me beyond reprieve when a listing agent gatekeeps a potential project unless you agree to use them on the outsale.
But as more time goes by and I witness this approach expand the pie for everyone involved, it becomes harder and harder to ignore as a viable strategy to not only stay in the game but win it altogether.
Here's to huntin' stags, not rabbits.
What I'm Working On...
