[00:00:00] Intro: This is the Texas Land Guys Podcast hosted by brothers Tim Dosch and Tom Dosch. With their partners David Marshall and Tripp Rich, they have built DMRE, the leading land brokerage in Texas. With decades of experience brokering deals between landowners and real estate developers, they take you inside the deals that move the market.

[00:00:27] Tom Dosch: Welcome to the Texas Land Guys Podcast. Tim, how are you doing this morning?

[00:00:31] Tim Dosch: I’m doing good. It’s good to be back.

[00:00:33] Tom Dosch: Yeah, it’s good to have you back. It’s crazy, you know, we’re coming to, now we’re at the end of the summer, school’s back, and so all the summer travel plans and trying to coordinate the schedule of the podcast, it’s going to be a little bit easier going forward.

[00:00:45] Tim Dosch: Yeah, it’s crazy how fast it went. It’s always, uh, summer’s fun every year, just a little bit different routine and getting to spend more time as a family. And it’s just crazy how it flies by, you know. Then you’re back, back into kind of real life and school and sports and you know, the routine that is most of our year.

[00:01:03] Tom Dosch: Yeah, the pace of summer is a lot of fun. The kids want to swim every day, and it just seems like because people are out of town and traveling pretty much every week, you have clients out of town or other team members out of town. It’s just not the same grind as the rest of the year, but it’s been a pretty busy summer. So when we have been, you know, in the office, and also I think it’s compounded by when you’re in the office, you know, then we’ll have other team members out, so you’re just busier because we’re supporting one another. So It’s been a pretty busy summer.

[00:01:31] Tim Dosch: Yeah, that’s the great thing about being a team is the ball never gets dropped. You know, if one of us is out, there’s people in the office who are handling things and our clients can always have someone to call. So that’s really good. But yeah, we’ve had some challenges this summer. Just, you know, there’s big deals we’re working on and things where you need, you need to get ahold of people, you need to meet in person. And it’s just tough when on every single deal there’s someone out that’s important to the deal. So you’re, you’re just always waiting in the summer months.

[00:01:58] Tom Dosch: So yeah, it’s a good point. You know, you get in a contract and then they say, you know, the attorney’s in France, and so it’s going to be 2 weeks and I’m leaving town. And I was talking to, talking to a guy in early August and he’s like, I’m going to be gone all of August. You know, just like, it’s so hot in August. And so especially a lot of, a lot of like landowners, you know, that have the ability to leave town, you know, if they maybe own several properties and stuff, they’re just not going to be here. So It is nice to be back now to where you can kind of count on people being able to get together, be available, get to a meeting, and we can get work done quicker. And I think the fall is always a really busy time because now it’s a great time to go to market. So bringing out new listings and trying to get deals closed before the end of the year. I don’t know if you’re seeing that, but we definitely have clients that are really focused on, especially on the seller side, like making the transaction get close by the end of the year. And so you pretty much have to be under contract by now for that, or you’re working on a really fast timeline with the buyer.

[00:03:00] Tim Dosch: Fortunately, a lot of our deals, there’s all these big infrastructure issues. And so we’re working through those, and either it’s the joint referral process or a utility issue. And so it’s more about just getting under contract and then getting everything lined up to be able to get it done. But for some of these deals, next year’s going to be the year it has to close just because of all the problems on the site.

[00:03:23] Tom Dosch: Yeah. I mean, there are some of these deals that take so long. We just put a deal under contract after really negotiating the contract for 18 months. Just a complicated situation. Now it starts, it has to be rezoned. There also has to be an alleyway abandonment. So, you know, it’s going to be probably 18 months from now. And so it is amazing how a lot of these deals that will close, there’s definitely the deals that we close and they close really quickly. But then there’s the deals that we close and they’ve been under contract for several years because there’s so many just complicating factors.

[00:03:56] Tim Dosch: Yeah. It’s like you always fight so much over timing and trying to make the timing as short as possible. And then you spend 3 months negotiating the contract. It’s just like, man, or you spend 2 months thinking about the deal and looking at different offers and then 3 months negotiating the contract. It’s like, we just would’ve picked someone 5 months ago. We’d already be through due diligence.

[00:04:15] Tom Dosch: Yeah. You pop up and you’re like, wow, it’s been a year. This is pretty crazy. But I think that kind of relates to what we were going to talk about today, which is just challenging or honest conversations that a lot of times have to be had in these deals because these deals are not, they’re not very straightforward or simple. I mean, for sure there’s been deals that go really smoothly and it’s really clear who should be selected, what the outcome’s going to be, but that’s not the case. Like I would say the majority of the deals we do, they have to die a couple times. They actually get done. And there’s so many factors that many times are almost outside the control of the deal itself. It could be the market, it could be the municipality, it could be a new city ordinance. There’s constantly things that happen that sometimes we see them coming and a lot of times we don’t. And then there’s, they create conversations with the buyer, with the seller. So we were talking earlier about, we feel like we’ve been having a lot of those recently. We’re always having them, but a lot of those where just because the market I think is challenging, challenging to get equity. It’s not just on this like really fast growth trajectory. A lot of sellers are not, they’re not maybe selling at a profit or a very big profit or the profit they thought they were going to achieve. Maybe they’ve had higher offers in the past. So anyways, it just creates a lot of these, I would say like honest conversations, which can be difficult conversations.

[00:05:37] Tim Dosch: Yeah, I think that’s right. I think that there’s a perception sometimes about land that you’re just selling land, and so it must be really simple versus selling an apartment building or an office building or industrial development or something. And the reality is land is normally the most complicated transaction, especially when you’re trying to develop an institutional quality project on it that might be a $100 million project or even more expensive than that. And there’s so many different factors that go into it. There’s environmental issues. A lot of these sites have Phase 2 environmental that has to be done, and there’s historical environmental problems that have to be cleaned up on the site. There’s utility issues, especially in Houston. A lot of our sites maybe have access to utilities or maybe they don’t. You’re trying to get annexed into the mud. There’s costs associated with that. There’s access issues that need to be worked out on the site. In Dallas, you guys have zoning, so there’s zoning issues. So there’s all these different things and it’s complicated. And I was talking to a client this week and he was frustrated about this deal. And he was like, well, we’re just, you know, we’re not developers. We’re just simple guys and we just want a simple deal and we just want to sell it. You know, I was like, hey, I’m on the same page, but this is a complicated deal. We have no utilities. We have Phase 2 environmental problems. To actually get the price you want, it’s going to be a little bit of a complicated transaction. Now, if you want to take a really low price and sell it as is to an investor, we can do that and it’ll be a quick, painless deal, but you’re going to leave a lot of money on the table. But you want to maximize the price, and get maybe the highest price that’s been achieved in the submarket. It’s going to be a little bit more complicated to do that and sell to an institutional quality developer who has to check a lot of boxes to build a $100 million project on this property.

[00:07:24] Tom Dosch: I think about that a lot. What’s the mindset of the person that’s making the statement or the comment? And so you have a seller that will, a lot of times, they love their property. They think their property’s a great property and it should be easy to sell. And the way they look at it, these developers are going to come and they’re just going to make a ton of money. They’re going to buy it and they’re going to make a ton of money. Why do they have to figure out the utilities or the environmental? Because it’s probably clean. Maybe it’s not, but I’m sure they can figure that out because they have plenty of money. They’re a developer and the utilities are coming, whether they’re there today or not, that’s going to happen. But the way the developer looks at it is there’s a history of maybe a long time ago, they bought or they heard of another developer that bought a site, had an environmental issue, and they lost everything. They never were able to develop it or it cost millions of dollars. Then they missed the timing in the market. And they’re in turn, they have investors that are investing with them that they have to hit certain returns. A developer cannot take that risk. It’s just not a risk that they’re going to take. But I think there’s a,it’s just like human nature. I think the perspective that you have a lot of times there’s a little bit of reason that kind of goes out the window because it’s like, well, I just think it’s all going to work out. I think the developers should be willing to just figure that out. And we do this every day and we’ve been doing it a long time. And so we know the buyer that’s willing to just say, sure, I’ll buy your property. They may be at 30% of that price that the developer’s at. It’s not a 10% discount. It’s a—

[00:08:55] Tom Dosch: Because they also know that they would potentially get stuck in this property, or maybe they’re going to have to invest $5 million to get it to a stage where they can then sell it to that developer someday in the future.

[00:09:06] Tim Dosch: I remember one time we were representing a nonprofit in Houston on a really incredible asset, just like a legacy kind of site here in the infield part of Houston. And we were sitting around this boardroom with their board, which was like all these really powerful, wealthy people because it was a very respected nonprofit here in Houston. And we had a very strong developer, one of the strongest developers that we could have had offer on this site. And we actually had several groups, but this one group was ahead of everybody else. And they started throwing out these crazy terms like $2 million hard day one, and why don’t we just have them pay 20% more, and all this stuff. And Scott Galloway was on that board, who’s a longtime Houston real estate guy. And he just said, guys, I mean, they can just go to another site. I mean, if we make them accept non-market terms, they’re just going to leave and go to another deal. And I think sometimes that’s,sellers will miss that. And it seems so simple, but we have another deal in Houston where there’s a very high net worth buyer who just offered and they made a good market offer. And when the seller found out who they were, they’re like, well, I mean, those guys have so much money, they could pay more money. Like, this is a drop in the bucket. They could pay a lot more. And it’s like, people that have a lot of money or developers that are very successful got that way by making smart deals, not by making dumb deals.

[00:10:27] Tom Dosch: Yeah.

[00:10:27] Tim Dosch: So, I mean, it seems so obvious, but they’re not going to pay 120% of value just because they have the money. Just like someone who has a lot of money just doesn’t go around just giving everybody money just because they could. And it’s funny how people,there’s something about human nature where people, they just don’t see that, especially when it’s their property, because they’re like, maybe this is so valuable to me, they must be able to pay more for it if they’re interested in it. Yeah.

[00:10:51] Tom Dosch: I think you see the same thing even when people sell their houses, which there’s so much more data on that, that I think it is hard to say, well, you need to be able to pay XYZ more because there’s just more data. But a lot of times you may look at the comps if you’re trying to sell your house and you’re like, well, my house is better for these reasons. And you kind of diminish what’s maybe better about the other house and elevate what’s better about yours. But when you were telling that story, it made me think of a meeting I was just in. There was a local municipality here in DFW where they’re running a sealed bid process for a property that they have. And so went to the meeting, you know, kind of everybody was there that you’d expect to be there. They had a great attendance. This was the, this was like the pre-meeting where you could go and ask questions. So it wasn’t the actual bid yet. And the process that they ran, and I talked to you about this afterwards because I was like, I’m just, it’s so interesting to see how, you know, like someone like a city or an ISD runs a process versus how we run them and how like the brokerage community runs them. So they had a property, they’d owned it for 60 years. They had no Phase 1 environmental on the property. But when I drove the property that morning, there were big mounds of dirt and I’m talking like big mounds of dirt. So I don’t know the whole backstory on why the dirt was there. There was a pretty significant overhead power line that created an easement on the property. that there was no survey at the time of the meeting and offers are going to be due in a couple weeks. And so they said there would be a survey soon, but they couldn’t answer the question. The easement had been there since prior to when they purchased the property. So is it set? Does it extend beyond what you can just visually see? The current zoning of the property was low-density single-family. But they had a floor price on the bid and the floor price on the bid would only work If you were assuming you could go upzone the site, but any zoning was going to have to happen after you closed on the site because the terms were they wanted you to put up, you know, 6 figures with your bid as a cashier’s check. So $100,000 in a cashier’s check with your bid. And then if you were selected, another $150,000.

[00:12:55] Tim Dosch: Gotcha.

[00:12:55] Tom Dosch: So you’re $250,000 in nonrefundable. Yeah. And then you have 60 days max to do your due diligence. You can do it quicker, They said, if you think you can do it in 15 days, that’s great. But everyone, it’s just not understanding how this works.

[00:13:11] Tim Dosch: You don’t even know the basics about the property. And that’s unfortunately in that situation you mentioned, I think they had a broker involved that was not a land broker that knows what they’re doing. And I think part of this podcast episode is talking about having the hard conversations with our clients on the seller side, which really just means the honest conversations. And the reason it’s hard is that people, do get emotional about it and they get very tied to whatever their expectations are. And so you’re in kind of a hard position as a broker because you don’t want to go in there and be negative about their property, you know, because it’s something that’s very important to them. And no one really wants to hire the broker that’s talking about all the negatives. They want to hire the broker that believes in the property and is excited about the property and can go tell the market how great it is. And so I think it is important as a broker, you you have to see the glass half full and you have to be like, hey, this is why this is a good property. This is why someone should want to buy it and develop on it or want to own it as an investment. But I think if you don’t have the other side of it and you can’t be honest with the seller, and we actually had a conversation, David Marshall and I had a conversation about a particular person we’re working with. And he is like, this guy, if you had a yellow glass in front of him, he he would say that it was blue. And it’s like, he doesn’t want you to say it’s actually yellow.

[00:14:29] Tom Dosch: Yeah.

[00:14:30] Tim Dosch: I mean, it’s like when people will not look at reality, and I’ve had a conversation with this guy multiple times, so I want to help you look at reality. We have to be honest because you’re being hurt if you’re not looking at reality and what’s true. I want to get you every penny we can get you for this property. And part of that is getting a buyer who’ll actually close. And then the other part of that is getting the highest offer we can get that we think will close. And we have a lot of challenges with this property, so it’s not a simple transaction. But you have these conversations where people continually sort of veer off into what’s not real. Like, oh, I heard about this. Some architect told me I could build 3 high-rises on this property and it’s worth $300 a foot, or these crazy things. Or it’s like, that guy, that’s not even market. Here’s where the market is. And so I think, I mean, I know that you deal with that every single day in Dallas, and it’s hard when you have this market, like in Dallas, where it’s been so hot and people have, you know, been crazy and actually done well being crazy, because sometimes it works. You know, we have this saying that, you know, pigs get fat and hogs get slaughtered. There’s a lot of sellers who’ve been super difficult, and just because the market and because they had a great site, it actually worked out. And then you have people that we’ve seen just get destroyed by,they’re just so crazy, they will never make a deal. And they end up having to finally make a deal at a lower price, or they get dropped 3 times, or, you know, some negative thing happens to them?

[00:15:55] Tom Dosch: Yeah. I mean, I think that if you looked at what’s happened over the last 5 years in DFW, it was, it was so hot in ’21 and ’22 coming out of COVID And so pricing was just at these historical levels. And I think if you were difficult then and you didn’t sell, you just lost. I mean, because even if you were one of the few people that you didn’t really sell, you now chose to sell, but you didn’t lose money. You would’ve been so much better off to sell 5 years ago and park it as cash and get a 5% return on your money than waiting 5 years. And most people just have not. Most people, if your property was getting offers at $15 million 5 years ago, now it may not be getting offers at all. Or in some cases, it could be worth like $7 million today. today. And so I think that’s with land, what makes it so unique. I had this conversation the other day with another broker and we were just kind of both talking about how challenging it can be to help a seller understand, because you’ll have sellers that they’re not, they’ll tell you like, I’m not that motivated. It’s funny, like they want to be on the market. They’re opportunistic, but they’re not that motivated. Like, I don’t need to sell. We hear this a lot. Like they’re well off, they don’t need to sell. then when they decide they want to sell, it’s not like you can just cash it in tomorrow. And so that’s what we were talking about. With land, it would be so interesting to actually have the data on every land transaction. So maybe if every title company said, here’s how many transactions we had that went under contract this year for land, and then here’s how many closed. I mean, Tim, it’s got to be like, I wouldn’t be surprised if it’s single-digit percentage that actually go under contract and close. If you looked at the entire market. Because even on a lot of our deals, there’s so many things that happen that were unforeseen that are legitimate reasons why deals don’t close. And then there’s capital problems. Yeah. And then there’s, like you said, there’s very ambitious plans. And so those sites should have probably never been put under contract. But I don’t think that sellers understand that. I think they, because land, again, it’s so different. Houses are not like that. It’d be interesting to then compare that to single family. If you’re selling your house, not all those close, but the percentage would be, I mean, it would be so much higher. Or if you looked at cash-flowing assets, like if you’re selling a Chick-fil-A or if you’re selling an apartment complex or an industrial building, again, they don’t all close, but it’s a way higher percentage. And we had this conversation years ago with, I think it was the 10X guys, just about land and auctioning. And this may have changed, but early in their process, they talked about how they didn’t do as much land because there was a lot of effort that went into it. And then a lot of the deals just didn’t close because there’s so much more of this unknown. And so I think just that sellers, it really helps if they start to understand that, that there’s so much with land that’s beyond the offer on the piece of paper because there’s all these other factors at play. And so a lot of times when I’m trying to help a seller understand, because they’ll say like, well, why should we hire DMRE to list our property? A lot of times I go, I go more to our relationships with the actual developers and like knowing them and truly being able to get ahold of the right people that make the decisions. And that sounds like so simple, but so important. And then I’ll go straight to just our knowledge of like, does their business plan actually make sense? And we can sniff out when it doesn’t.

[00:19:16] Tim Dosch: Yeah.

[00:19:16] Tom Dosch: We had one recently where we had a lot of offers and there was an offer that on paper it’d be like, what are we even talking about? Like, you’re,that’s the offer.

[00:19:24] Tom Dosch: It was like so far and above. And we just sat down with the seller and dissected it. And we were like, first of all, we all make a lot more money if we pick that offer and it closes. So obviously we want to pick that offer and it closes, but let’s look at what they’re planning to do. And it was like, the plan for the property was overly ambitious. The odds of capitalizing, so getting an equity partner for that plan, were extremely low. And then this company’s experience in the market and track record was not there. You add all that up and then you go compare that to the next offer, and the next offer’s lower in price, but it’s so much stronger in all those other categories. And so it’s trying to help sellers understand this because again, land is just so different in the way that it transacts. And again, how often it actually goes all the way from offer to closing.

[00:20:12] Tim Dosch: One thing I think is kind of good to do really for anybody is to day trade the stock market a little bit. Not because I’m trying to tell you to make money doing that, but because you get into the psychology of selling, and so much of selling is just emotional, and people make bad decisions when they’re emotional. And if you ever day trade a stock, you know, just pick any stock and try and buy it and sell it, you kind of vacillate between greed and fear, you know? So it’s running up and you’re like, oh man, it’s going up. I’m up 20% or 30% or 50%. I should just wait a little bit longer and get a little bit more. And so that’s like the greed talking. If I just, if it just got a little higher, I’d make this much money. And then what happens, it’ll start, it’ll go the other way, it’ll start to fall. And then, you know, maybe it either goes below your basis or just at your basis. And so then the fear starts talking, and instead of thinking about how much you’re going to make, you’re like, I’m going to lose money. I got to sell this. I got to sell it now because it’s never going back up again. And it’s interesting just how as people we’re so similar and that we fall into that. And we deal with these sellers a lot. They get emotional and they start thinking either on the greed side or the fear side. You know, I have to sell this, I gotta get rid of it. Yeah, I talked to a guy recently, he’s like, no one’s gonna buy this deal in 20 years. And you know, that’s not true. I mean, it’s, it’s, there’s issues with the site, but it’s not gonna be held for 20 years and not sell, you know? And so he was, that was sort of the fear side of where, where it was. And then, but then a lot of times we deal with people that, They’re trying to get that last little tiny bit, and they can’t even really tell you what it is, but there’s a little 2% or 3%. There’s a little, maybe it’s the terms got to be a little bit better, or I just have to win a little bit more, and it’s already a good deal. And they kill the deal over that, or they delay. Like you were saying earlier, there’s this opportunity cost of money. They could have sold 5 years ago, and even if they can sell for the same price, a little bit more now, They could have invested that money in something else 5 years ago and been making money the whole time. And instead, they’ve been sitting there paying property taxes, just waiting, hoping to get a little bit more. And it’s just a very interesting thing about human nature. And one thing I see a lot of sellers, they assume that the way to get the highest price is to be super adversarial. So they want to fight about every little thing, and they think the developer is trying to get them and trying to you know, they’re trying to hold back money and they could pay 50 cents more, a dollar more. And what we see a lot of times, these developers, is they just want a deal that pencils. And so if it pencils at $10, they’ll pay $10. If it’s $15, they’ll pay $15. I mean, they don’t mind getting a little bit better deal, but they just need a deal they can go get capitalized. And so sometimes with these sellers, we’ll get in a situation where they’re wanting us to be adversarial and sort of speak the same language as them. But we know we’re actually killing this deal when this is the best deal we have. And so we’ll have times where we have offers and we get 10 or 15 offers. And so you would assume, maybe in the investment sales business or with a house, like you’re saying, those offers are all grouped pretty close together typically, because the value is, if I’m selling a house for $500,000, I might get an offer for $490,000 or $485,000 and maybe one for $510,000. Or $515, and that’s sort of the range. It’s a tighter range. In our business, sometimes we’ll get 15 offers, but the top offers are double what the bottom offers are. So if we’re getting offers at $15 a foot, we have some at $6 a foot or $7 a foot, and we have some that are $15 a foot. And so a lot of times there’s only a couple of those offers that we are like, man, this is a very strong group. They’re paying a good price. They can get it capitalized. We need to figure out how to make it work with this group. And still, I mean, negotiate, be tough on them. But what we can’t do is kill that deal because our backup offer is $2 million less, and we don’t want to go with that because that’s going to hurt us. And so talking about having that conversation with a client where they don’t really necessarily want to hear, hey, you need to do this deal. This deal is really a really good deal, and we fought hard, and there’s just,I mean, we’re going to have to give on some things, especially because the market today The market today is not really a seller’s market. I mean, in some cases it is for some of these sites and some certain submarkets, it’s still a seller’s market, but typically it’s more of a buyer’s market. And so how does that conversation go, Tom, when you’re talking to a client like that and they’re having a really hard time just finally making the decision to be like, all right, I fought this hard enough, I’m going to make a decision and I’m just going to try and get this deal done?

[00:24:51] Tom Dosch: I think it starts with why you hired us in the first place. So as you were talking, that’s what I was thinking about. Like, these relationships are,they’re built on trust. At the end of the day, it’s like, what did we say we were going to do? And maybe it was the first time we ever met you as a seller was the first proposal, or maybe we’ve known you for 20 years, right? But it’s like, what did we say we were going to do? What was the value we were going to add? And at the end of the day, this is an art. This business is not,there’s no like exact playbook that every broker reads and they all do it the exact same way. For sure, there’s companies that try to create that, but I think in our company, we have more of these guiding principles. It’s more about like character and integrity and trying to be honest and care about the client and do what’s best for the client. And then you have latitude in how you do that and your personality. And so some guys are going to do that by being like, probably like overly kind and just who they are. And some guys might be a little bit more just like naturally abrasive and that’s just their personality. And both of those can actually really work. But I think that it’s important to start from the very beginning when we’re getting hired and just sharing how we add value. Because when I have that conversation, I think that what I’m trying to help the seller understand is whether or not the request from this buyer is reasonable or not. And then being honest if we don’t really know and we need to do some homework, but we normally understand because it’s coming from maybe their lender, And that it’s a request from the equity partner. Or like I had a deal recently where we thought for sure that there was going to be sewer because this property was in an area surrounded by development, a lot of newer development, but it ended up when they studied the site, there was no sewer. So the developer had to come back. They didn’t know that until they were to the end of their inspection period. So they had to come back and ask for money off for that. And that’s a That’s one of those that falls into reasonable request. Because if you have to go remarket that site without that sewer, then now it’s going to be, okay, what do we think the cost of the sewer is going to be? And so that’s now what you’re working from. And so I think it helps so much that we have the experience we have and we have worked through so many different situations because I think you and I know if we’re kind of getting BS’d by a buyer or if we’re just getting retraded for the sake of being retraded.

[00:27:06] Tim Dosch: Yeah.

[00:27:07] Tom Dosch: And we’ve had this on even deals we own where, especially as the market just starts to get more challenging, groups will try to get a discount right at the end. It’s like, well, we can close, but we need a discount. And we’ve had times where we just said no and they still closed because we understood they’re so committed to the deal. Their equity partner, sometimes it’s literally the equity partner just coming and saying, can you try to get it? We’ll still close, but just try to get it because it’d be nice to have some money off. And so I think it’s just understanding the business to the level we do, and then trying to help articulate that to the seller. Now, again, like you said, some sellers are just, they’re not always reasonable, so they may not listen. And there’s some deals that don’t happen because of that, because the sellers push back and they won’t agree and they just hold firm. And I’ve had deals where a buyer’s told me, if that guy’s ever the seller again, don’t even worry to send me the site.

[00:27:59] Tim Dosch: Yeah.

[00:28:00] Tom Dosch: And then there’s other buyers that are like, I’ll always look at a site from any seller because I just need deals.

[00:28:05] Tim Dosch: They just want a deal.

[00:28:06] Tom Dosch: Yeah. So you’re going to run into both.

[00:28:09] Tim Dosch: I think that your point about trust is really good. And I think that there are certain sellers, and sometimes it’s hard, like in a situation I’m in right now where I’m dealing with a family. And so I have parts of the family that really trust me and are very reasonable. And then parts of the family that I don’t know that, I think they just don’t trust anybody. So I don’t think it’s me. I think it’s just their personality that they have a hard time trusting people. And they think that everybody’s got like an angle and they’re trying to like get them. But I think that going to this trust part first and basically being willing to say like, hey, I mean, we need to deal with this first because if you don’t trust me, why am I representing you? You know? And the whole seller group, whether it’s a family or, you know, whoever it is, needs to trust the broker. Because if there’s no trust there, how can you make decisions? And all we can really do is share market information, share our experience, and then I know that you’re the same way as me. We’re never calculating our fee, you know, we get the listing or we’re never basing it off a fee. I mean, we want to do a good job for our client and be successful for them and get them the best possible deal. So we feel good about it. But, you know, people have to choose to believe that, you know, they can take our word for it or not. But that’s, that’s who we are. And that’s the integrity that we have and the reputation that we build. But I think if there’s not that underlying trust there, then you’re always kind of in this weird sort of game where they’re always looking to figure out what’s really going on. What am I missing? I must be missing something. And there’s really no way to help someone when they’re in that position.

[00:29:40] Tom Dosch: The buyer and the seller do always have sometimes the same motivation, but they always have kind of an angle on the situation, right? And a way that they’re going to look at it and see it. And so I think it’s understanding that. I mean, I think we understand that there’s people out there that are not honest people and that are not truthful people. And you hope that you can discover that pretty early on in a relationship so that you don’t invest too much in that from a business standpoint. But most of the people we work with, I would say, are,they’re reasonable, but they have very different personalities.

[00:30:12] Tom Dosch: And so there’s people I can think of I’m working with right now that just on like a spectrum, they would have, they’d be all over the spectrum from a personality standpoint. The way you talk to them, it just has to be very different. It’s not that I’m being honest, but it’s how I have to deliver that honesty in a way that they’re going to be willing to receive it. Because I think for all of us, the other thing that gets involved is our ego.

[00:30:35] Tom Dosch: And so I’ve heard a lot from sellers that even things from like their ancestors will be like, you know, my grandfather said, never sell land. I’ve actually heard that a lot. Like some distant relative had told them like, never sell land. And so now they actually feel guilty that they’re selling it. It’s like they’ve made the decision to sell it, but then it’s like a painful process the whole way because it’s like they are selling it, but then they’re, they’re like torturing themselves. Then they keep trying to like, maybe I shouldn’t be selling it, you know? And just anyway, so I’ve run into that a lot. And then I think just the ego of I need to get a really good deal, like for my, especially if it’s a family, maybe it’s for my siblings, or maybe it’s because we’ve owned it so long, or because we have all these memories, or just for myself to like kind of validate myself. Like I need to get, be getting a really, really good deal. And sometimes that looks like, you know, my neighbor told me he sold for this price and I kind of feel like I’m a failure if I can’t get the same price. And so there’s like those type of dynamics that we have to work through that are really difficult because There’s nothing really about that that actually has much bearing on the situation because the neighbor’s property’s different, different timing, could be zoned different. There’s all these specifics to these situations, like why the grandfather said that. Would he still be saying that 80 years later? And so I think the ego part can be tough, especially when there’s a negotiation and then it’s, I really wanted to get $10 million and I’m at $9.6. And we’ve had those deals where they fall apart between $9.9 and $10 million. It’s like they just won’t agree to that last $100 grand. And the buyer’s kind of gotten to the point where maybe they’re already just beyond where they’re comfortable. And so they’re just like, I can’t come all the way. And so we’ve had deals fall apart that close too.

[00:32:20] Tim Dosch: Yeah. I think it’s interesting because there’s buyers or there’s sellers with a lot of experience. They’re probably the easiest for us to work with. So a lot of times that’s a developer or a seller who has a Sold a lot of deals to developers. And so we can speak the same language. We have the same goals. A lot of times they want a real deal. They want to maximize price. They want to actually close. Then there’s the inexperienced seller. A lot of times it’s a family that maybe has never sold a big asset before, and they have a big asset. It’s been in the family for decades. A lot of times they’re very challenging to work with because there’s different personalities within the family, and then they’re trying to maximize the price, but they don’t have experience. of selling these deals and seeing a lot of deals not work and deals work like we have, which we’ve seen, you know, thousands now. When you look at ones that haven’t worked and ones that have worked. And then you have people that are experienced but in a different part of real estate, and that can be tough too because they don’t really understand land. And they’ll sometimes think, well, I’ve done all these retail deals or apartment, you know, sales, so land is simple. I can sell land. But then they, they’re dealing with a site that has all these different easement issues or utility issues or restrictions that they have to deal with. And there’s actually a lot of complexity to it. And especially when you start dealing with these sites where there’s a larger site and you’re selling off a piece of the deal, but you have to think about what are we going to do with the rest of the land? How do we maximize that price? What uses go on that site and how do they relate to whatever use goes on the site we sell? So there’s a lot of complexity to that. And so we’ve had some people in Houston that are great people and they’re They have some sophistication in real estate, but not land. And so trying to help them, there’s some ego there ’cause it’s like, oh, I’m a real estate professional, I know what I’m doing, but they really don’t. You know? And so trying to be, you know, what, for me, I’ve just had to be very direct with them and be like, hey, you’re pushing really hard on this, but this is legitimate. Like the seller actually needs this time because you have an easement that has to be cleared by the city. It’s just gonna take some time. You know, I mean, there’s specific things like that where they may think like, well, that’s not a big deal, they should just take that risk. It’s like, well, no one’s going to take that risk. No developer’s going to come take a risk on easement that the city has to release. So going through those different kinds of questions and development issues with a client, depending on which bucket they fit in, and for some of them, it can be challenging to walk through that because they’ll think, I should be fighting on this point, when the reality is sometimes there’s a different point that we should be really fighting on. Like in a different situation, We were pushing really hard on an infrastructure issue with the mud. And I told the seller, I was like, what we really need to be focused on is the due diligence timeframe. Like, they’re asking for 60 more days than they should be. We should be fighting like crazy on that, but we need to give them the mud issue because they have to have utilities, you know? And so trying to figure out like, where do you fight? And I think that’s a benefit we have with Ascend, all of our experience on the broker side, seeing all these deals. Like you said, there’s times where we fight really hard, with developers because we know it’s a place like the place where we should be fighting. And then there’s times where we completely give in and let them have something because we know it’s crazy. It would be silly to fight it. It just hurts the deal to fight it.

[00:35:31] Tom Dosch: Yeah, that’s right. I think that it’s keeping the big picture. I think a lot of it goes back to the fear of making a mistake, the ego of this. Maybe I left something on the table because the big picture is we’re trying to get to a closing here. And so sometimes the sometimes what gets in the way of that, there’s deals that you negotiate it too much or you try to wait for a certain price and then the market actually turns the other way, it goes down.

[00:35:58] Tom Dosch: And then now suddenly you’re waiting years for it to come back. And so I think sellers, it’s funny, I don’t know that they think enough about, is the bigger mistake not making a decision, not moving forward because I’m so worried about signing this guy up and giving him an extra 60 days or signing it up and maybe at a price that it works, but it’s like, I always thought I could get a little bit more. But then when you don’t, when you don’t do that, when you don’t sign it up, the market goes the other way. And we see that happen all the time.

[00:36:27] Tim Dosch: Yeah, that’s another thing that’s kind of interesting with sellers. It’s very common for people to assume that land prices just, just steadily go up over time, you know? And so it’s like, man, if it was worth $10 a foot 5 years ago, it must be worth $15 a foot or $17 a foot now. And what we see in our career is it’s very cyclical, and not even just in the market, the different use types. So maybe the industrial use could be really hot, and then that might dip down while multifamily’s good, but then multifamily goes down and retail’s up. And so these different land uses will be up and down at different times. And so depending on your side and what kind of use goes on your side, and then where you are in the broader market, timing is really critical. And so like you’re saying, I mean, you may, like so many of our deals, we’ll spend way too much time negotiating with someone or we get all these offers, but we won’t accept one because we’re just looking for a little bit more. So we just, we kind of drag that process out. And then before you know it, you’re under contract and it’s a long contract because there’s, you know, maybe there’s a mud issue or there’s a zoning issue or there’s something like that that drags it out. And then by the time you’re finally ready to close, the market’s completely changed. And so the deal gets retraded or the deal gets dropped. And the seller could be sitting there waiting for years. I mean, we’ve seen this happen where people hold sites for 10 years or 15 years. I mean, it’s crazy how long some of the deals that we’ve,whether we’ve worked on or we just know the seller and we know the site because it’s just been out there for so long and just a series of bad decisions that didn’t seem like big decisions, but just little decisions at the wrong time. Unfortunately, you know, people are sitting on property and it’s, you know, it’s been sometimes over a decade.

[00:38:07] Tom Dosch: Yeah. And a lot of the harder conversations we’re having right now are when we’re getting called by capital partners or even banks to value properties. And I had one the other day where they shared like, this is our basis in the tract. And so we put our BOV together to send to them. And one of the guys on my team was like, hey, did you notice that you valued this below their basis? And I was like, yeah, I mean, that’s what it’s worth. I mean, today at least.

[00:38:32] Tom Dosch: And there’s a ton of backup for why, and we know a lot about that part of town. But I just think that those are tough conversations because as a broker, you want to tell people, you want to tell them what they want to hear, but then at the same time, we don’t want to waste their time or ours. And it’s interesting because people still don’t want to hear it. So we’ll have these conversations and a developer can’t raise capital for their site. So then when you tell them what the site’s worth and they’re kind of like, oh gosh, that’s it? It’s like, well, yeah, but you can’t raise capital for this right now. And I don’t mean like you developer, but the reality is, yeah, you developer are not able to raise capital. So it’s likely the next person can’t either.

[00:39:11] Tim Dosch: Yeah.

[00:39:11] Tom Dosch: Now, there are situations where we have found other developers that can come in and take a developer site and make it work. But in a lot of these cases, there has to be a discount. And also, if you bought the site in the last couple years, you just bought at such an elevated level, And what’s unfortunate with some of these is I’ve been doing BOVs every 6 months or every year for a lot of these developers over the last 5 years, and the price just keeps coming down. It’s like every 6 months the price is coming down. And actually, had you sold some of these sites maybe in ’23 or ’24 when the belief was survive to ’25 and there was this big momentum around things are going to turn back, and just because it hasn’t come back, as quickly as people expected. And now I think sites are trading below where they were in ’23 and ’24. In some cases, it just depends on the market and the use type. But I think that that’s where sellers can get in trouble because they’re just believing it’s going to come back. And it’s not free to hold, especially for our clients, because most of our clients are, when they hold sites, sometimes it’s all cash, but a lot of times there’s a land loan.

[00:40:16] Tim Dosch: Yeah.

[00:40:16] Tom Dosch: There’s pretty much always going to be taxes because most of them are not buying an ag-exempt site. they’re thinking they’re going to develop it. And then even if they use cash, they have cost of capital with whoever they borrowed that cash from because it’s an opportunity cost. And so you stack up 10 years of that, like you’re saying, and you’re never probably going to get out of some of these properties. So it would’ve been better to make the sale versus just continue to hold and hope it comes back.

[00:40:41] Tim Dosch: Yeah. I think looking at the whole picture is so critical because it is crazy how people will, they’ll be so focused on the actual sales price, They’re more worried about hitting that price. And a lot of times it’ll be like a round number. It’s like, well, I want $10 million. It’s like, well, where’d you get that number? It’s like, well, it sounds like a really good number. It’s a good round number. And that sounds crazy, but there’s a lot of sellers who are like that. They’ll pick out a number and be like, I just think it’s worth this. I think I need to hold out for this. And so they’ll be focused on that. And then like you’re saying, the whole time they’re paying all these holding costs. You know, so what that’s really doing is you have your holding costs and your opportunity costs, you’re eating away whatever profit you’re ever going to make. So even if you do someday hit that number of $10 million or whatever that number is, it’s actually a lower number, a lower net number, because you spent so much money trying to get there. And so that’s just an encouragement. I think if you’re a broker, you know, or if you’re a seller, to just be honest about that, you know, and it’s okay. I mean, there’s times where we’re holding too, because we don’t like the numbers that we’re getting and we think we can get more. And so there’s nothing wrong sometimes with holding a property and waiting for the market to recover. But just to be honest with yourself about, is this number achievable and when will it be achievable if it’s not today? And then what is the cost to get there? Because every single day that goes by, I am paying a cost to get to that point.

[00:42:00] Tom Dosch: I think that’s good, Tim. That’s a good conversation. The reality is, I think what we’re seeing here in Dallas is that a lot of sellers or a lot of landowners are now becoming sellers. just because of where we are in the market. And so more and more of these landowners are saying, I think it’s time to sell because I mentally thought if I held it to ’25 or ’26, I did not think I would own the property in ’27. I think that’s what a lot of people are now realizing, and they don’t have the vision to say, I’m going to be developing this. And so it just makes sense to sell it. And so I think we are starting to see that. And so I think we might finally start to see some repricing in the market, deals actually closing at a repriced level from where they were because sellers are actually willing to take these lower prices. And so I think that’s actually probably good for the market. Hopefully a lot of these sellers are able to go reinvest that capital. In a lot of cases, hopefully not really lose money. And we’ve actually helped several even in the last 24 months sell their tracks and still make either break even or make a profit even after they purchased it record highs. And so that’s always our goal is get the best outcome we can. But I think right now the best outcome for a lot of these sellers is to actually just trade out of some of these assets.

[00:43:12] Tim Dosch: Yeah, it’s crazy because we’re in a market right now where I have some clients who are still able to sell at maybe the height of the market, higher than they’ve ever sold before, just because of where the site is, the kind of site it is. In a lot of cases, these are industrial sites in Houston, they’re well located. And so they actually could top the market more than they’ve ever been able to in the past. And some of those folks are still struggling to make the decision because they’re still hoping for a little bit more. Then like you’re saying, there’s other sellers that we have that because of the type of site they have, the area it’s in, the type of use it is, it just is a tougher market. And so trying to look back at where prices were 3 or 4 years ago is just And they’re just not there. And maybe they do come back at some point, but it probably won’t be the next 12 to 24 months. So that’s a tougher place to be as a seller and to try and work through that. But I think the most important thing is just to be honest about it, because the most frustrating thing is when we have these conversations and people are,they want to be 30 or 40% higher than the market. And it’s just like, I know you and me are the same way. We’re not going to tell someone that they can do that when they can’t, when there’s just no chance of doing that.

[00:44:21] Tom Dosch: Well, Tim, good to have you back on the podcast.

[00:44:24] Tim Dosch: Yeah, good to be here. It was fun.

[00:44:26] Tom Dosch: Looking forward to this fall and just to what we see happen. Thank you to our audience for joining today. Definitely check us out on YouTube and LinkedIn. You can follow our page, subscribe to us wherever you listen on Apple or Spotify, and we look forward to being with you next week.

[00:44:43] Outro: Thank you for listening to our podcast today. If you have questions about land own in Texas, send us an email at texaslandguys@dmre.com and follow us on LinkedIn to stay updated.