Last time you didn't source a deal via email


When was the last time you didn't source a deal (i.e., become aware of it for the first time) via email? Where did it come from instead?

Whether the deal came to you (e.g., teaser) or you went and got it (e.g., contacted an owner) doesn't matter so much to me.

Comments (16)

Oct 14, 2019 - 4:02pm

Call or in-person

I'm not doing my job properly if the first time I see a deal from the major brokerages is email first (via a blast). In the markets I'm in I'm always on the phone with the big guys asking what's in the pipeline. Also when you're touring in-person you always need to ask what they think they can break loose for you because people are way more willing to spill the beans face to face than through a phone call.

Also I'm more apt to find out about a deal thats already being markets through a call even if I've gotten an email 3 times about it. Brokers on here please note: today is Columbus day which means 75% of the italians in NYC took off the day for some reason, its very quiet and I still have 75 emails. I'm going to miss that teaser if its a day I'm getting 100+ emails.

Oct 14, 2019 - 11:35pm

Great context; thanks for sharing! Also appreciated the Columbus Day joke (note my last name).

I hear this view a lot: "I need to be in front of the big brokers a lot (phone and in-person) to stay tuned into what's on and what's coming." Could you say more about why this adds value for you?

For example, what do you do with the knowledge that a deal is coming to market soon?

> I'm more apt to find out about a deal thats already being markets through a call even if I've gotten an email 3 times about it. ...its very quiet and I still have 75 emails. I'm going to miss that teaser if its a day I'm getting 100+ emails.

...this suggests information overload is part of the problem. Maybe this is where the calls to brokers kind of help you stay current?

Is the goal to have full visibility into the set of available deals in your strike zone at any given point in time? How much of your time and effort does this require? How important is it?

Looking back over this it's a lot of questions. I'm super interested in this topic. I encourage others to pile in here and share your views.

Most Helpful
Oct 15, 2019 - 12:15am

Brokers only have so much bandwidth as well. If we get a good off-market lead (ie No control of the deal) we may only call up 5-10 of our closest and trust clients about it. We need to trust that they won't go blabbing our lead to the world, disclosing confidential material, won't take fee, and will work through us.

If we get the listing (control the deal), we are more secure in our position and typically market it off-market for a few weeks in the beginning. We only take it to the 30-50 prospects we know will work through us and won't take fee. We actively email and call on buyers to pitch and get feedback, and stay on enough to cut through the noise of their crazy busy day to day.

This persistence in getting the deal in front of these people and cutting through the noise to actively market your property is the majority of value that we bring to our clients. This works in the sellers favor as well because we will do the deal for a discount if we can keep the deal in house. It's also a quicker process for the seller, and time is money.

Most of my buyers appreciate it because many rarely have enough time to track the open market, and appreciate the follow up to get them looking at deals. Many times, great properties at won't ever even hit the open market and may be limited to a closed door bidding process.

Only after those few weeks of off-market activity does it hit the open market, and by then, a significant portion of the logical buying pool has taken a look at it and passed. For less than stellar properties here is benefit to the seller as its the best way to find a potential buyer at or near asking, but they will be paying a higher commission and the process may take longer. For buyers, it means it has been picked over, and is almost a deterant in some cases, especially if the listing gets stale.

If we don't have control, but the potential seller has great price expectations, it may only be shown to 1-3 people before someone pounces. As brokers we only get paid when deals are done, and the quicker and less hassle, the better. If I find someone with great price expectations willing to look at offers, but not willing to sign a listing, I may only tell that handful of people because I'm incentivized to get deals done and don't want to get a bidding war started. Especially if it let the seller get ideas about slowing up the process by taking it to market, or raising prices.

With no listing contract I'm not obligated to the seller and am incentivized to help my buyers get the best deals, and they're more incentivized to work with me. I do land, so I deal with a lot of unsophisticated sellers and highly sophisticated buyers. Keeping in touch with my buy-side regularly is critical as finding the right development sites requires a lot of misses, feedback, and constant acquisition criteria changes to get just the right site to get to yes. This back and forth of pitching and feedback is critical in getting through the brokers bandwidth as well.

Everybody wants to be in the know, and most everybody likes those secret off-market leads that only you and a handful of others know about. That ability to look and get in ahead of a bidding war or other bidders brings massive value to buyers. The ability to have a chance at a great site without anybody else looking at it or even knowing its for sale brings even more value. Staying on the top of minds of brokers by talking on the phone builds a rapport and puts you in that top 5-10 buyers that are first of mind when something good pops up off-market. That is why it is part of their job and compensation to maintain good relationships with brokers, its one of the few competitive edges you can get in this business and it only takes one great deal to earn yourself the right reputation.

Oct 16, 2019 - 2:44pm

I'd say we source about 50% of our acquisitions deals off market. Like, truly off market, as in we know the Seller and they're coming to us with a deal, no broker involved. Once a broker enters the equation, "off market" is just a buzzword and is no longer a meaningful proxy for a discount to the Purchaser, since it's absolutely being shopped to more than one person.

That being said, I'd say about half of the remainder are coming from broker blasts. Nothing wrong with buying off that, assuming you have a business plan that isn't easily replicable (is that a word?). The reason "off market" is so sexy in theory is because 90% of the firms buying a given asset are going to have the exact same execution, in theory. Sure, maybe some folks put granite countertops in, instead of Caesarstone, but at the end of the day that's the same underlying plan to monetize the asset.

If you have something that is genuinely a different execution than those 90% of the people bidding, then broker blast deals are just as viable as an "off market" deal, since there is almost certainly some technical aspect of the execution the broker isn't pricing appropriately

Oct 16, 2019 - 4:17pm

Good points. Thanks for sharing.

In your 50% of true "off-market" deals, is the seller another professional investor? I'm just curious why one would knowingly take a discount (beyond just netting out the broker's fee or needing compressed timing).

I agree with your view on brokered/competitive deals. Perhaps I'm oversimplifying, but pricing is just the result of reconciling a projected cash flow with a return requirement:

• Same cash flow, same return requirement: Same price
• Different cash flows, same return requirement: Different prices
• Same cash flow, different return requirements: Different prices

Your point about business plans is contained in that second bullet. The third bullet also shows an alternate path: more efficient/favorable capital stack, leading to lower return requirement.

Oct 16, 2019 - 4:46pm

Matt Marino:

In your 50% of true "off-market" deals, is the seller another professional investor? I'm just curious why one would knowingly take a discount (beyond just netting out the broker's fee or needing compressed timing).

Depends. If you have investors forcing you to sell (because they're wrapping up a fund, for example), then it may matter more to sell to someone you know, because you know they can transact quickly and it might be worth 5% to not pay a broker and avoid the hassle of a competitive process. Last thing you want is to have a building in Queens you want to sell to someone from the West Coast who comes in offering 10% over market, only to have them drop out after a month of negotiating the PSA. Waiting for those home run deals where you find the unicorn buyer is all well and good when you have time; less so when there is a clock ticking.

Plus, for all the CRE is a giant business, most markets, even big ones like NYC, are pretty close knit within industry/niche groups. What goes around comes around, and giving a bit of a break to a fellow developer may result in you getting that look in 5 years when they have an asset they need to dispose of.

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