It Only LOOKS Easy
In the past ten days, Warburg Realty has put over $125,000,000 worth of property under contract. Each of the seven or eight deals in this accumulated total results from months of hard work, preparation, and expertise. And each of them possesses different characteristics that together make up a cross-section of what our business looks like. Here are a few details about how this gets done:
• Several of the deals have involved working with both high net worth individuals and off-market properties. Dealing with the very rich, and with properties which are not for sale, creates a uniquely layered and complex dynamic. With high net worth individuals, one invariably deals a lot with handlers: lawyers, CFOs, accountants, assistants – people whose job, much of the time, is precisely to keep the individual at the center from having to deal with people like US. This means that if we don’t have a direct line to the decision maker we get bounced around from handler to handler and not too much happens. So having actual rapport with the principal is crucial. Generally that means we need something in common. A friend, an interest, a location – one of these deals got done because the principal and our agent were both at the same mountain resort at the same time, so when the opportunity for purchase arose they flew back to New York together on the buyer’s plane. That gave them plenty of time to chat about how to make the deal work. And when the principal decided that the units offered were not big enough, the Warburg agent was enterprising and determined enough to spend weeks, day after day, finding and persuading another neighbor to sell in order to expand the package to the right size. That’s brokerage!
• Wealthy people are often very well connected. And because they have a high profile, many of their friends and handlers tend to know they are looking for property. So as an agent you need not only access, but also something they do not already know about to show them. This involves the sort of research and legwork not done so often in the computer age. Letters needs to be sent to appropriate owners. Connections to them need to be found. Enticements need to be offered. The agent who signed up our biggest assemblage last week worked all summer, in the office before 8 AM every day, putting together the pieces for buyers who were being pursued by every agent in town. Often we do this work but it does not result in a deal; luckily this time it did.
• The more moving parts any transaction has, the harder it is to synchronize them. Multiple owners often demand additional money or concessions, even after a deal has been struck, when they realize their property is critical to the success of the entire enterprise. The rich, both foreign and domestic, rarely take title in their own names for reasons related to both taxes and security. Each new purchase requires the creation of a new LLC. This makes buying a co-op almost impossible, and even the purchase of townhouses or condominiums can become more complicated. The newly formed entity, whose only asset is the real estate being purchased, often requires a guarantor. Condominiums may want a guarantor with US assets, or funds in escrow. With big rentals it can be even more complicated. Buyers or renters at this level are understandably not used to being questioned. The phrase “Do you know who I am?” hovers in the air. So the agent must be expert at soothing egos as well as solving problems.
Miraculously, sometimes it all works out. From the outside, it can appear like easy money. But it never is. Hard work, an exquisite sense of timing, and multiple areas of expertise all contribute to bringing these deals to fruition.