• About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe
No Result
View All Result
Live and Invest Overseas
FREE REPORT
BEST PLACES TO RETIRE
*No spam: We will NEVER give your email address to anyone else.
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
Live and Invest Overseas
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
No Result
View All Result
Live and Invest Overseas
No Result
View All Result

Property Purchase Negotiations In A Developing Market

Sellers Be Crazy—And Other Secrets Of Negotiating A Property Purchase In A Developing Market

Lief Simon by Lief Simon
Jan 08, 2016
in How to, Real Estate
0
Negotiating Property Purchase
209
SHARES
3k
VIEWS
Share on FacebookShare on Twitter

A friend told me over dinner last week about a property purchase he tried to make in Mendoza, Argentina. He likes the city, but he travels a lot and has property investments in many other countries. He didn’t really need an apartment in Mendoza and owning one would further complicate an already complicated life. On the other hand, my friend thought that having an apartment in Mendoza would give him more reason to return more often to Argentina.

The negotiation for the apartment, my friend told me, went something like this:

He offered 85% of the asking price. The seller countered with the full asking price.

My friend then offered about 92% of the asking price. The seller countered with the full asking price.

After some deep soul searching and because he really liked the apartment and really wanted an excuse to spend more time in Argentina, my friend finally went back to the seller a third time and offered his full asking price. The seller countered with 110% of the asking price.

That may seem crazy, but it’s not uncommon. It’s happened to me several times in different countries.

Once when looking at some land in Panama, I sat down with the owners and made an offer based on the asking price quoted to me by their real estate agent. They immediately declined the offer and said the new asking price was 40% more than the original asking price. We left that meeting further apart than when we started.

After running some numbers, I made another offer that was less than the original asking price but more than my original offer. They declined. No counteroffer, just a simple “no,” and the meeting ended. A couple of weeks after that meeting, the sellers called my real estate agent asking when they could expect a new offer from me. I took that as a sign that they were finally interested in negotiating, so I returned to the table with yet another offer, higher but still below the original asking price.

At that meeting, they gave yet another no without countering and suggested that they were going to raise the asking price to an amount that was double their original asking price. I explained that we were never going to pay their original asking price let alone more and that that day’s offer was my final offer. We walked away again without making a deal.

For weeks, maybe months to follow, the sellers called my real estate agent asking when we were going to make our next offer. The real estate agent tried to explain that we were done. There would be no more offers. Eventually, the sellers stopped calling.

That property remained listed at double the asking price I’d initially responded to for more than a year without selling. The sellers eventually increased the price again, this time to triple the original asking price.

Huh?

The logic these owners applied is one I’ve encountered often. It goes like this: “My property hasn’t sold since I listed it more than a year ago, but meanwhile property values in my area continue to increase. My property must be worth more, so I’ll increase the price.”

Generally, that logic doesn’t fly. A property that is overpriced to begin with isn’t going to gain more traction if you increase the price. Still, many people whose only asset is a piece of land can’t bear the thought of selling too cheaply so they end up not selling at all because they don’t really understand their own market.

I knew better after the first conversation with this seller than to continue negotiations. When a seller increases his price when you show interest, the best thing to do is walk away.

Of course, real estate prices do go up… just not, normally, during negotiations. Developers increase prices over time as infrastructure is installed and progress is made. You can’t expect to inquire about a project today and pay today’s prices when you come back to the developer in a year or two.

One prospective buyer at a project in Nicaragua that I managed years ago had received the original email detailing launch pricing, which included beachfront lots for US$25,000. He didn’t act, but he followed the project over the next several years, eventually writing in again to ask about current prices. When he saw that all the beachfront lots were gone and ocean-view lots were selling for US$75,000, his response was, “Well, it’s too late for me with this project.” He couldn’t bear the thought of paying more when he knew what the original pricing had been.

That perspective kept that investor from making money a second time.

As with any investment, you can’t judge the upside potential of a piece of real estate based on what that property sold for a couple of years ago. You have to analyze current prices in the current market and project appreciation from the current point, not from some past point. If the investment makes sense at current prices, then make it. The investment’s history isn’t relevant.

In the case of the Nicaragua beachfront lot, the investor didn’t buy when he first heard about the project because he determined there was too much risk. The project had just gotten under way, and no infrastructure had yet been installed. By the time the guy made his second inquiry, infrastructure was in place, and the project risk had been reduced significantly. At this point, though, all the investor could think about were the profits he’d missed out on. He seemed to have forgotten all about the early risk he had avoided.

Had he invested the second time he inquired about prices, he still would have made money, as prices continued to go up for the next couple of years as the developer made further progress. The potential rate of annualized appreciation was lower, but so was the level of risk. Bottom line, though, the project still had upside potential that this investor missed out on a second time.

Lief Simon

Comments

Share84Tweet52
Previous Post

Proving Guaranteed Income Payments When Applying For Pensionado Residency Visa Status

Next Post

Are American Retirees Welcomed In Ecuador?

Lief Simon

Lief Simon

Lief Simon has lived and worked on five continents and traveled to more than 60 countries. In his long career as a global property investor, Lief has also managed multimillion-dollar portfolios of rental properties, for others and for himself. He offers advice on international diversification in his twice-weekly Offshore Living Letter and monthly Simon Letter dispatches.

Related Posts

Scenic sunset in Lisbon, Portugal.
Real Estate

How To Invest In Property 101: The Pitfalls You Should Avoid

by Lynn Mulvihill
January 18, 2021
0

Among the new trends we faced last summer in Ireland, a country home being snapped up by a foreign buyer...

Read more
Tropical waterside house with moored boat on lagoon side of Placencia in Belize.

Buying Real Estate In Belize: What You Need To Know

January 12, 2021
Perfect tropical paradise beach with palm trees and hammock 350x250

Most Frequently Asked (And Not So Crazy) Questions About Retiring Overseas

January 10, 2021
Couple Enjoying Beautiful Sunset Walk on the Beach.

9 Critical Issues To Consider Before Deciding To Live Overseas

January 1, 2021
Elderly couple sitting next to other looking at the sea at sunset.

The Real Reason To Retire Overseas Is Purpose

December 30, 2020
Chairs Under Umbrella In Palm Beach At Sunset.

How To Move Overseas And Launch Your New Life, Step 1

December 29, 2020
Red For Rent Real Estate Sign in Front of Beautiful House.

How To Make Sure You Profit From Your Overseas Rental Property

December 20, 2020
Next Post
American Retired Couple In Ecuador

Are American Retirees Welcomed In Ecuador?

A world full of fun, adventure, and profit awaits! Sign up for our free daily e-letter, Overseas Opportunity Letter, and we'll send you a FREE report on the 10 Best Places To Retire In Style Overseas Today.

Start Your New Life Today, Overseas

how to retire overseas

LIOS Resources


  • New To LIOS
  • Ask An Expert
  • Media Center
  • Contact Us
  • FAQs

Quick Links


  • Best Places To Live
  • Best Places To Retire
  • Finding A Job Overseas
  • Real Estate

Sign up for our free daily e-letter, Overseas Opportunity Letter, and get your FREE report: The 10 Best Places To Retire Overseas In 2021

  • About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

No Result
View All Result
  • Home
  • Countries
  • Budgets
  • Archives
  • News
  • Events
  • Bookstore
  • Newsletters
  • About Us
  • Members Area
  • Contact Us

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

WANT TO RETIRE OVERSEAS?

Sign up for our free daily e-letter, Overseas Opportunity Letter, and we’ll immediately send you a free report on the 10 BEST PLACES TO RETIRE in style overseas. Each day you’ll learn about the best opportunities for international living, retiring overseas, offshore diversification and asset protection, and investing in real estate around the world.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.