29 years ago, I learned one of the most important things about commercial real estate I could have ever learned. What I learned was, if a buyer won’t show you the money, they don’t have the money. Ha. Such a simple yet fundamental truth. Let me explain.

In the world of selling hotels we run across a lot of big talkers. Many of these people talk a good game but don’t have the cabbage to back it up. When a real buyer makes an offer on a hotel and the seller asked for the buyer to show his proof of funds, there is no hesitation. Serious investors with money have no issue with showing the money to a seller to be approved to buy their hotel. This can be done via a letter from the buyer’s banker that states the cash/equity on hand or any number of similar ways to prove the available funds.

Over the years I have had many buyers balk at this and it tells me very clearly that they do not have the money. It could be as simple as they need to go raise the money but more often than not, they just simply don’t have the money. Why a buyer would go through this process if they didn’t have the money is beyond me.

I have this one buyer named Bob who always calls me and makes multiple offers on hotels, and the best I can tell, doing so just makes him feel big and he tells all his friends that he has multiple offers out on hotels. Just several weeks ago we had this group make an offer and when pressed where the money is coming from, they got all squishy about some eastern rim Asian investor that doesn’t want to disclose their resources, yada yada yada. Basically, it was all a hoax.

In our business we always ask upfront for the proof of funds before we present the offer to our client and it has been proved true 100% of the time, that if the buyer won’t show you the money, they don’t have the money. KT

I titled this blog, finding your own path, because at some point we all must find our own way forward. By way of example, I want to tell you about the best decision (choosing my own path) I ever made in the hotel business and that it happened three days after I started in May 1990.

When I started with an Atlanta based hotel brokerage company I would be exaggerating by saying I didn’t know anything. I was below not knowing anything. Ha. I had no formal education and no history in the hospitality industry and barely knew how to spell the word, hotel.

If you are new to something, there is a time for watching and listening how other more experienced people work and then there is a time to create your own path. This sounds strange but listening and watching others at some point can become harmful to you. If you spend all your time around more experience people you can subconsciously begin to develop an inferior view of yourself. If you allow this to penetrate your spirit, this causes many people give up and quit. They become so intimidated that they don’t believe they can do it. Many people give up because they can’t stop measuring themselves against other people. That last sentence is worth reading again. Sometimes you must get out from under the influence of others and start to create your own path.

When I started selling hotels I would hear the other experienced brokers and think to myself, man I can never do this. It was at that point after three days of watching and listening that I made the decision to hit the road and see if I could find my own path. I got in my car and went down the interstate and stopped at 132 hotels and ask if I could speak with the owner. By the end of that trip I had a stack of business cards and people I could work with. I started in May 1990 and by the end of 1990 I had closed seven hotel sales and won the rookie of the year award for the whole US. Five of those seven sales came from people I had met on that first trip down the interstate

So, that decision to go find my own path was the best decision I have ever made in this business. Had I stayed at the office under the influence of the other brokers, there is an almost certainly, I would have failed in the business.

Here is the point. Be very careful who you listen to and stop measuring and comparing yourself against other people. Many times, in life, maybe the best path is to find your own path. KT

Funny story. Years ago, one my partners was closing a hotel transaction in South Georgia. Back then, when you had a closing, you had to go to the closing if you wanted to be paid.

So, the week or so before this closing, my partner said the buyer just keep “nickeling and diming” the seller. This term basically means they keep asking for discounts, adjustments and reimbursements etc. Have you ever known anyone who always ask for something free? Well, that is the type mentality I am speaking of. Some people are never satisfied unless there is a winner and a loser, and they destroy the relationship to try and save a few bucks. They do not understand what the words integrity, honesty and respect mean.

Back to the story. So, there was a physical sit-down closing. My partner had already gotten there with the seller and they were waiting on the buyer to arrive. Once the buyer arrived and got seated, the seller looked at him and told him he was a SOB. Just imagine that as the opening conversation of the closing. My partner lowered his head and thought,,,,, well I better not say that. Ha

After the seller called the buyer the ugly name, the buyer sat down and didn’t say anything else and just signed all the papers and handed over his cashier check (yea, that was a long time ago) and left. Ha. My partner who was watching this was flabbergasted and later asked the buyer about the name the seller called him. The buyer’s response is the point of this blog. The buyer was so happy and told my partner the following quote, “before the closing I “thought” I had a good deal but when the seller called me a SOB, I “knew” I had a good deal.”

I would not recommend this approach in business or in life but there are plenty of people who feel this is how one should act. This person did not care if he destroyed the relationship or not. I have found that you should do your best to always be respectful, honest, generous, and kind. That does not mean to lay down and let people walk over you. Being respectful and kind shows intelligence. In our business I have many clients today that I have worked with for 29 years. We just closed a deal yesterday for a client that I have known since the early 1990’s. If you treat everyone with respect, people enjoy working with you and will tell others about you. The bible speaks about this when it says, “what you sow, you will also reap.” There is not a better example of this than the story of this buyer. It is about how “not” to act. KT

Buyers of real estate need competition. Almost all buyers say they don’t want competition, but they subconsciously need it. It doesn’t matter whether we are talking about commercial real estate or residential. They all want the feeling that that they beat the competition and won the race.

Take a simple sale of a home or a car for example. When the buyer shows up and hears you have other people that have called you already, it sends a message to the buyer’s subconscious mind that’s says, ok, if you want it, you better act now. In commercial real estate (hotels) I have said thousands of times, “the best way to close buyer number one is to have buyers’ number two and three already lined up.” It is the competition that validates the purchase for the buyer and every buyer says they don’t want it, but they all really do.

Most any commercial buyer will tell you they want to buy investments off market. This means that the investment was not marketed to other buyers, rather it was a quiet deal. That is what they tell you they want and many times they believe it, but it is not true. It is subconscious. They will never admit it, but they want to know there are other people that want the same deal.

Having other people that want the same deal validates the purchase. The worst transactions I have ever gotten into were ones where we were working only with one buyer. When that happens, the one buyer (will never admit it) begins to believe they have leverage over the seller and that one fact is the problem. That believe is the catalyst to the buyer wanting to renegotiate the price and terms because they feel they have the control over the seller. This is the quintessential reason a seller should never try and sell their property without a broker. It sounds self-serving, but it is like being your own lawyer at trial. Bad decision.  It doesn’t matter if you are buying a home, car, office building or hotel. All buyers subconsciously want and need the validation of other interested parties.

A perfect example of that was a conversation I had last week. We are selling a deal and the buyer ask me on the phone if I have other parties that wanted the deal. What he was really asking me was to help him validate the reason he wanted to purchase it. The one and only way to help someone validate a real estate transaction is to have multiple people wanting the same deal.

So, like many things in life, what you say you want could be very different from what you actually want. KT