A lot of times what feels unseemly is exactly what’s called for.
I wrote yesterday about the supposed price gouging around the World Cup.
It made me think of another situation where this comes up. One where the do-gooders, in trying to signal virtue and make themselves feel better, actually make things worse.
Think about hurricanes.
In the past, when a big storm hit, some people would load up their trucks with plywood and other supplies, drive into the affected area, and resell them at a premium. Sometimes a big premium.
That upset people. It didn’t feel right. Feelings were hurt.
So laws were passed saying you can’t sell for more than X percent above the normal price. Everyone felt better. Justice was served. Or so it seemed.
But what’s the actual result?
Let’s say a hurricane hits and I know I can spend $1,000 loading my pickup with plywood, drive two or three hours, and sell it for $3,000 or $4,000.
That’s something I might do.
It makes the trip worth my time. It offsets missed work. And it gets plywood to people who need it now, not later.
It also beats waiting on the home improvement stores to restock and ship more in. Those higher prices only exist for a short window anyway. And they disappear even faster when people are incentivized to bring supply into the area.
More supply sooner means less demand later, which means prices normalize faster once the regular channels catch up.
That’s the part people ignore.
Trying to outlaw “price gouging” feels moral, but it’s not economic. And when you ignore incentives, you don’t get fairness. You get shortages, delays, and people worse off than they needed to be.
Feeling good about a rule doesn’t mean it works.
The same thing shows up in real estate, especially in short-term leverage situations.
They’re rare, but when they appear, how you handle them matters.
A lot of brokers rush to get something under contract just to relieve the pressure. These bidding situations aren’t like residential multiple offers.
The buyer groups involved know how to apply leverage, and they expect you to blink.
In one recent case, we didn’t. We let the leverage play out and allowed demand to show its hand.
The result was a price well above what we would have gladly taken just a few weeks earlier, and it closed all cash in 30 days.
The buyer who “lost” wasn’t happy at the time. That’s normal. But how you conduct yourself in those moments matters. People remember whether you were professional or reactive.
We’re friends now.
That’s the difference between using leverage and abusing it. One damages relationships. The other tends to compound over time.
PS- You’re probably not ready to buy or sell land today. And that’s fine. But the time to prepare for anything is long before it’s actually time.
I offer a free, no-obligation analysis on any non-residential property. It includes real comps with real prices near your tract, along with things like planned development, utilities, and current market conditions.
Even if you’re not ready to sell, or never plan to sell, having current market information can’t hurt.
And in the process you’ll get to know someone who won’t back down when things get touchy just because he’s uncomfortable.
Can anything bad happen by just talking?
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