Baseball & Real Estate Investment

Posted @ 10:41 pm - Filed under Real Estate Investing, Real Estate Brokerage

What do experienced, winning pitchers have in common with their counterparts in real estate investment brokerage?

They’re always thinking.

I recall a game in which Fernando Valenzuela was pitching back in the ’80’s. Now this guy had superb control of many pitches. He was without a doubt one of the brilliant tacticians on the mound. In this particular game he was ahead by a run in the eighth inning with two outs and a man on third. So what’s the big deal? Just get the third out and back to the dugout, right? Not so fast.

Here’s how he played it. In eight straight pitches he walked (not intentional walks) the next two hitters. The pitches were ‘just’ off the plate, not real hittable pitches. The announcers in the booth were wondering why Tommy Lasorda didn’t come out for a visit after the second walk — which loaded the bases. Remember, this was a one run game in the eighth inning. It appeared Fernando had lost all control. If he walked the next batter the game would be tied.

He popped the next guy up to the infield on his second pitch. His control had miraculously returned. The Dodgers won the game by one run.

The only guy not on the field who had guessed what was going on in that tense eighth inning was the all time great play-by-play guy, Vin Scully. Fernando was Vin’s choice for the post game interview. His first question, after congratulating him for the win was, “So, Fernando, what was your thinking when you were in that tight spot in the eighth inning?”

His answer showed how it was he who had ‘controlled’ that inning the whole time.

The two guys he walked had been hitting the ball hard against him all year. So he purposely threw pitches that would either become outs if hit, or called balls. The hitter immediately following those two, had a lifetime batting average against Fernando of under .150. Fernando knew he could get that guy out easily, and almost predictably. He also thought throwing strikes to the guys he walked made no sense — he only needed one more out.

He was thinking three batters ahead of everyone else in the ballpark — Brilliant.

A real estate investment broker finds a fourplex he thinks is a very good deal. As a matter of fact he thinks the property is under priced by $15-30K. When he makes the full price offer for his client, the seller counters at a price much higher than what was listed. The buyer is not only mystified, but more than a tad miffed. “What’s the deal here? We’re the only guys offering, right?” The broker counsels patience.

The market data is analyzed once more just to remind the broker of his initial opinion. He discovers he was not only right the first time, but now has another property very near by, and exactly like the subject property, that has entered escrow for $14K more than even the new counteroffer price. He’s now convinced this property is worth at least $20K more than even the higher counteroffer. He tells his client to stay cool and get this property into escrow — even at the counteroffer price.

Oh, forgot to mention one last thing. The buyer listened to his broker’s advice and indeed signed the counter as written, putting the units under contract and into escrow. This is when the buyer began rubbing his hands together in anticipation of the repair request he’d be signing. He’d show this guy. Meanwhile, back at the ranch, his broker found out there were three very solid counteroffers received in the late afternoon of the day they went under contract. All of them were for more than the contracted price.

The broker advised his client to look at the inspection report he’d ordered — and eat it. Let the time run out without even submitting one tiny request. Why? Because the broker knew the seller’s agent was by this time, trying to explain to his client why they’d received four offers and were in escrow on the lowest price. (Wouldn’t you have loved to have been a fly on the wall for that conversation?) The buyer’s broker, putting himself in the other guy’s shoes, decided he wouldn’t give the sellers any possible way to create an exit from their deal. By not asking for any repairs he was signaling to the sellers this deal was going to close.

The deal closes two weeks later. The broker learns the backup offer in first position was for exactly $20K more than the price his client paid. His client was amazed. He’s made $20K just by closing as agreed. Cool. Repairs? Less than $1k.

Just like Fernando, the broker was thinking three batters ahead of everyone else. He knew what he was doing — a distinct advantage over the listing broker — and of course, his sellers. And like Fernando, his actions appeared to be counter productive to the casual observer. Yet, he was in control the whole time - just like Fernando.

The only real difference between the broker and Fernando? Vin Scully wasn’t doing his Hall of Fame play-by-play of the broker’s every move.

What a pity.

This entry was posted on Monday, April 30th, 2007 at 10:41 pm and is filed under Real Estate Investing, Real Estate Brokerage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.