Case Study: Buying an Island For 96% Off The Asking Price

Case Study: Buying an Island For 96% Off The Asking Price

3 min read
Jimmy Moncrief Read More

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Power concedes nothing without a demand. It never did and it never will. Find out just what any people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them; and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress.”

-Frederick Douglass

As a banker, it’s pretty amazing to watch negotiation strategies.  I think banking is the only profession where, for some reason, people can walk into a bank, act like a total, arrogant jerk and demand the bank do something.  Ugh?

It’s really weird.  Banking, in my opinion, is basically a service business.  Yes, we try to please our customers.

But when I wanted pest control services for my rental properties did I walk into the owners office, cuss-him out, and demand his services at 25% off his normal rate? Umm, no.

I digress.

I also see some very talented negotiators.  People that have nothing and yet negotiate miraculous terms.

The one common denominator with the top-negotiators is they approach everything from the other side.  Not what they want.  They focus on the other person’s true desires.

I personally have used this strategy for the following:

  • I bought my house $100K or 1/3 below the asking price.
  • I bought a triplex for half the market-rate.
  • I charged triple-the rate than my competitors for a financing consulting agreement.

The real title of this post should really be: You Have More Power Than You Think…

Related: 5 Crucial Steps for Successful Real Estate Negotiations

My  favorite real estate story is the one where Richard Branson bought Necker Island…

I really want you to read this story and concentrate on the fact that you can actually doing something this crazy.  Realtors have refused to write bids that I have made on properties. So, before I begin,  I want to ask: how much would you offer for an island that has an asking price of $5,000,000.

Be honest.

Necker Island had an asking price of $5,000,000.

Richard Branson was on holiday in the Bahamas and decided he thought it would be fun to ride in a helicopter to see the islands.  Not wanting to pay, he simply found an island for sale and told the listing realtor he wanted to purchase the property.

He got the helicopter ride and toured the property.  He thought it was nice.  On the helicopter ride back, the realtor asked what he thought and if he wanted to make an offer.  He said he loved the property.  The realtor was glowing. Richard Branson then said he would like to make an offer..

The realtor is shaking at this point.  Envisioning the nice commission check on a $5,000,000 sale, with a celebrity to boot.

Related: Are You Leaving Money on the Table? 7 Tips for Better Negotiations

Here’s the catch…

Richard Branson made an offer of only $100,000!

That’s a 98% discount off the asking price!

Eventually they settled on a price of $180,000 – a nice 96% off the asking price.

When is the last time you made an offer on a property that was 98% off the asking price?!

The realtor was so pissed she didn’t talk to them the entire ride back.

What the realtor didn’t know was the very important back-story of the seller…

Lord Cobham was in need of short-term liquidity.  Additionally, the country of Bahamas required all islands that were owned by foreigners be turned into resort, or the country of the Bahamas would claim ownership.

It took Richard Branson $10 million to develop the resort that is now on Necker Island.  However, he estimated in 2006 it was worth approximately $60 million, a 33233% increase over what he paid for it.

American generally assume that the powerful party in a negotiation will exert the greatest influence. Don’t assume this common-sense notion is true. Do you love Richard Branson as much as I do and have a crazy Richard Branson story? Let’s discuss..

 Do you have a crazy negotiation story?  Tell me in the comments!