Ask The Broker:
BLACK SWANS
“My specialty is primary homes,” I said, “and I do not normally practice in the ski area, so I would not know prices there like I know the back of my hands, although I do feel competent in my ability to get an accurate reading of the fair market value of a condo in that town, researching recent sales history.” (Of course condos are the closest thing possible to “a cookie-cutters-property,” which does make research easier.)
Then I made sure that they understood that I required an up-front retainer (non-refundable except at closing, or if they became dissatisfied with my service) and that a Realtor® who regularly works in the ski area, not only would be more familiar with the local market there, but — unlike me — would not ask them for a retainer.
I concluded by suggesting that they might be better off not retaining my services, but in finding someone they like in the ski town.
“No,” said one of them without hesitation, “I like your style!” His husband agreed. We looked in several condo developments, comparing the selections. In one of those developments, the prices seemed significantly lower than comparable condos in nearby developments. Researching sales history confirmed our impression that these prices were below market.
When a deal looks too good, you have to ask, “why.”
Through conversations with local agents, property managers, and town officials, I learned that this condo development had been in litigation for the past few years. A very large amount of money was involved; so the risk of an as-yet uncertain outcome, had driven prices down.
The litigation rumor was easy to confirm by looking in court records. It turned out that the lawsuit had just been resolved by an out-of-court settlement, but the resolution of the case was quite recent, and prices had not yet adjusted to the new reality.
My clients ended up owning a lovely condo at the foot of a ski trail, purchased at a price about 25% below comparable units.
Here is the lesson:
In his book, Never Split The Difference: Negotiating as if your life depended on it, Chris Voss advises: “FIND THE BLACK SWAN.” (There are a lot of youtube videos featuring Chris Voss.)
A Black Swan is something unusual, something which the average person may overlook, but which may signal opportunity. In this case, the Black Swan was the litigation, its effect on prices, and most especially the incredibly fortuitous timing. Once we understood and verified the meaning of this Black Swan, my clients could move forward decisively, feeling safe to snatch up the bargain.
Your Black Swan, no doubt, will be different. When the Black Swan does appear, will you notice it? Will you understand its nature and be ready to act?
Steven K-Brooks is the Principal Broker of Brattleboro Buyer Brokerage Real Estate. He is a former two-term president of the Southeaster Board of Realtors® (now merged with the Southwestern Board as the Southern Board) and 2006 Realtor® of the Year.