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The Real Estate Philosopher


You Will Never “Find” a “Good” Deal Again

Jun 28, 2019

The title to this article sounds needlessly provocative, but – alas – I think I am right here in what I am saying.
 
The (good?) old days are gone.  Those were the days where people looked for deals and sometimes “found” “good” ones.  They would get setups from brokers and hear about them and then they would try to do them. 
 
Then the internet came along and information became more ubiquitous.  It wasn’t yet true that everyone knew everything simultaneously, but it was getting closer. 
 
And then came the various disruptions to the real estate world that we have been experiencing in the past five-ish years.  Every day someone has a new way to disintermediate (a word I dislike) real estate in all different ways. 
 
Knowledge and ideas are blasting through the real estate world with great rapidity.  And, if you are sitting at my perch, you see parties that are not changing versus parties that are embracing new ideas.  Ironically, it is not necessarily the little guys open to change and the big guys stuck in the mud; instead, I am seeing mega-real estate companies embrace and try out creative new ideas, just as I am seeing the smaller parties take chances as well. 
 
In any case, the stodgy old real estate industry of the past is moving away and pretty fast too.  Change – accompanied by greater information flow – is afoot.
 
In this environment, the thought that you will “find” a deal that will be a “good” deal is just getting harder and harder to rationalize mathematically.
 
Consider – does your job consist of sifting through emails and setups from brokers trying to figure out if it is a “good” deal, while another 999 people do the same thing? 
 
Do you really think you will be better at evaluating a “good” deal than the other 999 people, and you will therefore outperform?
 
I think the best you can do with this strategy is achieve average performance.  It may appear to be above – or below – average performance over a short-ish time, but eventually reversion to the mean will set in.
 
This is because you are putting yourself into a situation in which you have no competitive advantage.  You and the other 999 persons are all seeing the same information and evaluating it.  As Sun Tzu has said (paraphrasing):
 
            The worst strategy is a direct battle across an open plain
 
This is because there is no strategy that can be employed – just two armies clashing.  Sun Tzu says you should try to win the war before it is fought through the use of creativity and cleverness and things like that.
 
Of course, I don’t advocate anything improper; however, sifting broker setups for good deals is similar to what Sun Tzu would try to avoid.
 
Okay, enough about what not to do.  What would I do instead?
 
The answer is easy to say, but hard to do.  Instead of “looking” for good deals, I would advocate “creating” deals and ideas instead.  This means that instead of looking at what comes to you, instead, you survey the real estate world – and the human world – figure out what we humans need, and then apply that to the real estate world and see what “creations” can come out of that. 
 
At first this is really hard, but once you start doing it you will find you can’t stop.  Every article you read – everything you see – will spark new ideas and new trains of thought.  And it will put excitement into every step you take.  Instead of being reactive in a game where only a tie is the best you can do, you will be proactive and a master of your own destiny – a real player in the game. 
 
Peter Drucker points this out in his statement that the “purpose” of a business is to “create a customer”.  He saw this many years ago that we aren’t out to just get or find customers.  Instead, our purpose is to ‘create” them with creative thinking.  Also, you probably heard Steve Jobs’ famous quote: “Our job is to figure out what [the customer is] going to want before they do…People don't know what they want until you show it to them.”  This is all saying the same thing – the name of the game is to create deals rather than try to find them.
 
As a side note, this thinking doesn’t just apply to people looking for deals, it applies to parties providing services or marketing or interacting in any manner with the real estate world.  We too need to do this as lawyers, or we find ourselves trending towards the average and eventual irrelevance.
 
As I advocate this I am mindful of the admonition that there is severe risk to what I advocate.  For by taking the chance to outperform, you also take the chance you will underperform, which may have dangerous consequences.  And, that might discourage my thinking here.  But – well – you have to stand for something – and if you have heard that famous quote from Teddy Roosevelt known as “The Man in The Arena,” then I know I don’t want to be:
 
            “One of those cold and timid souls who know neither victory nor defeat”
 
So – to conclude – I advocate changing the theme of what you do every day from looking at things others send to you and instead taking the reins of your destiny by “creating” your real estate future.

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As the Chairman of Duval & Stachenfeld – a law firm in mid-town NYC known as The Pure Play in Real Estate Law – I am inviting you to join The Real Estate Philosopher™. This will consist of my thoughts and also thoughts of friends and colleagues.

It will not be published in any traditional media – it will go only to friends of our firm. The purpose here is very simple – to put forth thoughts in the real estate world that are different, provocative, and challenging of accepted wisdom. Hopefully, nothing said here will be mainstream thinking.

You may be wondering how I am qualified to write on these topics since I am “just” a lawyer. However, I have an unusual place in the real estate world. As the Chairman of The Pure Play in Real Estate Law (one of the largest real estate law practices in NYC), I interact with an incredible number of real estate players. This ranges from small real estate shops with nothing but a gleam in their eyes, to some of the largest real estate institutions in the world, and everything in between. This gives me a unique and global perspective and allows me to act as an amateur philosopher in the real estate world. This has always been my hobby and it is what I love doing.

Regards,

Bruce Stachenfeld
a.k.a The Real Estate Philosopher™

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