In July 2004 I received a voice mail from a local realtor who had a question: “Jay,
I have a great lot for sale on Red Mill Road that I just listed. Do you want to take a ride and see it?” It sounded interesting, so I suggested we take a look at it.
Not only did I go see the “great lot,” I bought it. It was significant for a few reasons: It was the last piece of property I bought in the past six years. It took me until December 2009 to sell it. It was the single worst investment of my career. Any realtor who has asked me to look at a great lot has received quite a different answer.
Is it true that the best, most valid answer to the same question is different depending on when the question is posed? Whether the question is personal, business related or globally philosophical, the answer you feel is correct changes depending on your personal circumstances, your business conditions and the economic conditions of the time.
Back to the story. In November 2009
I got a voice mail from another realtor. “I have a buyer interested in the 3,000-sq.-ft. home you built on Red Mill Road. Are you willing to contract to sell it subject to the sale of my client’s primary home?” I have been asked this question on other spec homes I have built and the answer has always been, “No thank you.” This time I answered with a question: “When can I meet with them and can we please meet at their home?”
My Red Mill home was listed for $559,000. I toured their two-bedroom ranch they had listed for $329,000. I sat with them at their kitchen table and explained the downside to me as a seller, tying up my property with a contingent contract. I offered an alternative to them. I would accept their offer of $500,000 to buy the Red Mill home if we agreed that 100 days after our contract was signed they would sell me their home for $275,000 if it was not yet sold to a third party. I provided time for them to sell for closer to their asking price. I accepted their initial offer on my home because in this buyer’s market I had seen many buyers make one offer and then move on if it was not accepted. They accepted my proposal.
The sale was contingent on their lender’s appraisal coming in no lower than $500,000. I knew that appraisers were producing ultra-conservative reports and that my price would be further eroded if their appraisal came in too low. I believed that they had bought below market value so I spent $350 and hired my own appraiser of my Red Mill house. It came in at $525,000. The day their appraiser visited Red Mill, I left a copy of my report conspicuously on the kitchen counter … with a big note on it so he could not miss seeing it! His appraisal came in at $530,000.
In early December 2009 I got a call that they had found a buyer for their home. They asked if I could close by year-end. It is a sobering statement that I was happy I might be able to transfer ownership in 2009 and realize my loss in the 2009 tax year. I knocked out their inspector’s punch list and my building inspector’s checklist by December 30. We closed at 5 p.m. that night.
You may have asked yourself any number of questions in the recent past about your business. I know I have. What I learned is you have to keep asking the right questions over and over again. However, you have to allow for the likelihood that the right answers today will be different from what the right answer was last year or even last month. Stay open-minded and remain flexible.
Times change. I am in Columbus, Ohio this weekend touring colleges with my daughter. I saw a billboard on I-71. I don’t know who sponsored it but it made me chuckle a little. It read:
RECESSION LESSON 101: One thing you can count on in a recession: They come to an end!
Make it your business to still be in business when the recession ends in your neighborhood.