Dateline: At the Intersection of Mad Desire and Rational Calculation
After I left my viewing of the two houses, I came home excited. “I want those properties,” I screamed internally as images of Cruella de Vil danced through my head. In some ways it feels like the Universe wants me to buy these places too. There are some very interesting parallels to the purchase of my home in Boston. First, I found them entirely randomly, just as I had found my house in Boston. Though I had been looking fairly intently at real estate ads, this place wasn’t advertised. I just saw it while strolling around. And I just happened to meet the owner’s son as I was standing there, looking at the house. Third, because of this random meeting, we managed to do a “trato directo,” which is basically a deal between buyer and seller, unencumbered by an agent, which was something I had hoped for so I could negotiate my own deal.
It turns out that the family had had an agent, whom they had engaged informally. Her three month agreement had just ended. The agent was a friend of a sister-in-law. Or something like that. She lived and worked in the State of Mexico, at least an hour away. And it turned out that she hadn’t done much to sell the place at all. It wasn’t advertised on any of the major sites. She showed it to only one person, a Frenchwoman, who appeared very interested, to the point of coming back with an architect. But then was never seen again. And then a friend of the agent made a very informal offer, something to do with turning the places into condos. La Doña and her family shuddered at the thought.
So when I showed up, out of the blue, it was the perfect time to dump the agent. And that’s why the banner on the house had mysteriously disappeared between my first and second viewings. The family was going to go direct. But I only learned about the agent much later. When I saw the missing banner, I was suspicious, and several Mexican friends were almost sure it was some kind of swindle, and that I had to be VERY careful.
There were other coincidences with my Boston home too. When I bought my house there, I bought it from a woman in her 80’s, Mrs. Murray, and I dealt with her daughter. Mrs. Murray had also inherited her house from her father who built the place. So in some sense, I’m the second owner of my home in Boston. What are the odds that I’d be in the exact same situation in Mexico City? One-in-a-million seems like better odds than that. Another nudge from the Universe?
Finally, I’ve always wanted an Art Deco house. I’ve always loved the period, the simplified, geometric style, and the amazing American Optimism of the Roaring 20’s. While Mexico City is full of Art Deco places, the idea that I might be able to own one myself still seemed like a long shot. Typically they’re either amazingly posh, renovated, and super-expensive places in the likes of La Condesa, or they’re rotting hulks of their former beauty, slowly decaying in a so-so neighborhood like Santa María la Ribera. Finding one in decent shape at a reasonable price in Roma Sur was a godsend.
So the challenge was to negotiate a good deal. Frankly, I’m thankful that this is a trato directo, which means I’m in charge of the negotiation. No dim-witted agent between me and the seller, and no pre-printed forms forcing me into a style that wouldn’t work. Yes, I still had to deal via the son, but since he and his mother were on the same team, this didn’t seem like much of an obstacle. Also, I could put everything in writing, polishing my inexpert Spanish before delivery. This also had the advantage that either La Doña could read it herself, or the son might read it to her. But she’d hear my offer in my own words, not filtered through someone else. And my words were designed to persuade, and I intentionally crafted the offer with that in mind.
Persuasion as a psychological science is something that has always fascinated me, but my interest ticked up during the 2016 presidential election when I started following Scott Adams, who analyzed events through a persuasion filter. I started reading the books on his Persuasion Reading list, and learning a more scientific approach to the topic. Interestingly enough, I found that I’ve already got a knack for persuasion, and a lot of the techniques seemed pretty second-nature to me. I intended to put all this to use in getting this property.
I also had to make sure I wasn’t overpaying, and persuasion was going to be key here too. While the opening “ask” of the sellers was in the ballpark, based on what I had seen, there were also some unique problems. The two houses are what I call “Siamese twins,” e.g., they aren’t easily separated. The big house has windows that look into the smaller house’s yard. Those windows could get covered up by a hostile neighbor if the properties are sold separately. The dance studio above the smaller house is only reasonably accessible from the big house. The big house has cuartos de servicio that are built on the smaller house’s lot, etc. This means that selling the houses individually wouldn’t be easy. Both houses are also in need of thorough remodeling. Also, unlike everywhere in the first world, Mexico City’s real estate market is struggling. Sales peaked just before the earthquake of 2017, and have been in gentle decline ever since. Tinsa’s third quarter report on the market showed an alarming combination of sharply lower sales and sharply higher inventory. Prices haven’t moved down much, but that combination generally spells lower prices ahead. As much as I wanted the houses, I also wasn’t going to be the sucker buying at the absolute top either. In fact, if I couldn’t get the houses at a good price, I wasn’t going to buy them. After all, I have zero deadline and the luxury of plenty of time to look. At this point, there’s a lot to look at.
After some consultation with friends and my landlord, I decided to make an initial offer of about 75% of the asking price. Though I was a little hesitant to offer so little, Marco, the son, had made it pretty clear they had no other offers, and that the agent was useless. They had never received a written offer. Furthermore, it was pretty obvious they had no clue about how to sell a house and that they had something of a deadline to move La Doña to a better location. I figured they’d likely continue negotiating, even if they didn’t like the first offer.
So I wrote a long letter telling the family how much I liked the place, how intent I was on preserving their family legacy by renovating it back to its glory days, and how I’d be a great owner who would appreciate its special design. I would not develop it into condos or dramatically change its design. I also noted that the real estate market was very tough. In fact I called it a real estate mini-depression in my letter, and pointed out all of Tinsa’s grim findings. And I emphasized how covid could come back any time, making it very difficult to sell. (I’m sad to be quite right about that one.) And I noted that the Tinsa report suggested that things were getting worse, and that it’d be much better to sell now at a low price than to leave oneself at the mercy of all the potential problems that might get worse. Finally I noted that I had the funds in cash, that I could move quickly, and that by buying both houses together, I’d solve for them the “Siamese twin” problem which I played up in the letter.
After a couple of back-and-forths, the seller said she’d accept a 10% reduction from her initial ask. Though I might have been able to negotiate lower, over the couple of weeks this process took, it dawned on me that the property was something special. When else am I ever going to get the chance to buy two lots, side-by-side, at a price that seems reasonable? So I said I was inclined to accept their counter-offer, but before I formally accepted in writing, I’d have to think it over. Truthfully, what I really needed was to stall for time. Suddenly, I was in the position of the dog who caught the car. Since I first looked at the first house, I had gotten progressively more excited as I realized all the possibilities for these two properties. I fantasized about living out Armistead Maupin’s “Tales of the City,” with me playing the role of Mrs. Madrigal. (No, I’m not planning a sex-change operation.) I really wanted the houses, but in truth, wasn’t sure what the fair value was either. And I was determined that I was not going to overpay, and hopefully get a good deal instead. So I was finally going to need some professional advice from someone who really knew what was going on in the market. But who? I had talked to enough agents over the summer to realize that I knew more about what was going on in the market than did most of them. I needed someone truly knowledgeable.
And here is where the next, amazing piece of luck dropped out of the sky. Really, you have no idea how much the Universe wants me to buy this house. Two years earlier, in October 2019, the house next door was for sale and I went to see it with my friend, and upstairs neighbor, Carole, a gringa. She and I both had a very strong sense that the agent was trustworthy and intelligent. There was something honest and reassuring about him. It turns out he was also active in AMPI, the Mexico Real Estate Professionals association, which he mentioned. He also spoke excellent English, though both Carole and I are perfectly fluent in Spanish.
So I got in touch with him, but first did a web search, just to see what might be out there. Wow! Not only did it turn out that he was the head of AMPI, but he was incredibly well-recognized in his field, had won a ton of awards, and also happens to be the “Ambassador” of the Lebanese diaspora here in Mexico and possibly abroad too. Since I only found positive things about him on my web search, I sent him a message asking if he knew someone who could help me. I wanted someone who would work for an hourly or fixed rate, as I didn’t want to have to pay an agent commission, especially since I had already done much of the hard work of landing the deal. What I really wanted was advice on what the place was really worth, and how to effectuate a transaction. I was hoping he’d want to help me himself.
It turned out that he remembered me, and was happy to help. So I explained the situation, and said that my first concern was whether I was really getting a good deal or not. So, while we were on the phone, he ran some kind of computerized comparable evaluation on both houses, and promptly emailed them. His calculation, based on recent sales data, said that the two houses were worth approximately 37% more than the seller had just agreed to accept. “Are you sure?” I said, “This seems too good to be true.” He said that while it wasn’t exact, he had made the software settings for the houses as old and decrepit as possible. And based on that, his experience and my description of the condition, he thought that I would be getting a very good deal.
“So do know a good lawyer or notario who can handle my side of the transaction?” There was some “hair” on the deal, including the fact that La Doña had never had the property titled in her own name (only a formal will from her late father). There were other “hairs” too. I feared La Doña might not be 100% mentally fit due to her age and illness (she seemed very out of it when I saw her on the pass through her apartment). She couldn’t find the title to one of the properties. And it appeared that there might be some claim on the property from her only sibling. “Well,” replied Alejandro, “I’m also a lawyer and would be delighted to represent you.”
So based on that, I went back to the seller with a written acceptance of their counter-offer. Of course I added a few provisions, like the building needs to pass a civil engineer’s inspection. I need to see the water and electricity work, etc. But it looks like we have a deal in process. I’m very excited, but nervous as heck.
More to come as this process unfolds.
* Photo credit: Arturo Jacobo, via Google Maps