When I Tell Clients Not to Buy

The client I talked out of a $390,000 purchase

About four years ago a client came to me ready to buy a condo. She had found one she liked and was prepared to pay $390,000 for it.

I knew what those units had sold for when the development launched: around $230,000. The market was in the middle of a run, and comparable units in that building had been pushed as high as $420,000.

What I told her was this. You are not buying a condo at $390,000 — you are buying $230,000 of condo and $160,000 of a moment. Appreciation may eventually catch up to that. It may also take another cycle to do it, and you would be waiting for the next bubble to get back what you paid in this one.

I also told her what I had watched happen before, because I was here for it. Los Cabos has run hot and then stopped before. I know someone who bought a penthouse near the top of an earlier run for $790,000 and sold it years later for $550,000. He did everything right except the timing, and the timing cost him more than any negotiation could have recovered.

My advice was to wait for the seller’s market to burn off, and that I would tell her when something was genuinely worth buying.

She waited.

Those same units are now listed between $300,000 and $310,000.

Had she bought at $390,000, she would be roughly $80,000 to $90,000 underwater on a property she still owns and still likes. Instead she is still a buyer, with her money, in a market that has come back toward her.

A couple of months ago I sent her what was currently available in that development. Her reply was one line: she was glad she had listened, and she would have been losing money if she had bought at $390,000.

I want to be precise about what that cost me. That commission was worth somewhere around twelve thousand dollars, four years ago. I did not earn it. She is still my client today, and she is going to buy — which is, I think, the entire point.

The seller I told to stop selling

The same thing happens on the other side of the transaction, and it is harder there, because a seller who wants to sell is a commission waiting to be collected.

Years ago I was referred to an owner in the Migriño area who held seven lots — four beachfront, three on the second line. His wife had been diagnosed with cancer. They had no medical insurance, the treatment was expensive, and he was putting his assets on the market to pay for it.

We sold three of them to one buyer and his family.

Then he told me to sell the rest. All four, immediately, get it done.

Before I did, I asked him one question: does what you have already received cover the treatment and everything around it? He said it covered it comfortably.

So I told him not to sell.

If the money is not needed today, I said, then selling four beachfront lots into a single week is not urgency, it is just haste, and it is the most expensive kind. Let us pause for a year. I will watch the market and I will tell you when it is time.

We waited. Several years later we sold two of those lots at $450,000 USD each.

He kept the last two, designating them for inheritance. When a comparable lot nearby later traded at $650,000, I told him about it — in case he wanted to move — but I also told him what the capital gains tax would do to that number in his particular situation. He looked at both halves and decided to keep them for his family. That was the right call, and I said so, even though the other call would have paid me.

That is the same judgment as telling a buyer to wait, pointed in the opposite direction. A seller in a hurry and a buyer in love are the same client with different symptoms.

The closing I stopped after the money was already released

Telling someone to wait is the easy version, because nobody has paid anything yet. The harder version is stopping a transaction that is already done.

A client of mine bought a house. We were at soft closing, with about eighty percent of the funds already released. For all practical purposes it was finished.

Then another agent called me. He was preparing to list the vacant lot next door, and in measuring it he had found that the house — built more than twenty years earlier — encroached onto that neighbouring lot.

Nobody involved in my transaction knew. The encroachment had been sitting there for two decades, it was not visible, and it was not something either side had created. I could have said nothing. My client would most likely have discovered it years later, when he went to sell or when the neighbour decided to build, at which point there would have been no seller left to hold responsible.

I stopped the closing instead, and I kept it stopped until the seller took on the cost and the process of a formal boundary survey and resolution. That took a year.

My client was not happy about it, and he told me so. What I wrote back to him was this:

I understand you’re anxious to finalize this transaction — believe me, we all want the same outcome. However, if we had proceeded without addressing this issue, you’d currently be dealing with these complications yourself. My priority is to deliver a property that’s free of any legal issues.

It closed clean. A year late, and clean. He owns a property with a boundary nobody can come back and argue about, which is not what he was buying at the time, but it is what he needed.

Why I found out at all

There is a part of that story that is easy to miss: I only learned about the encroachment because another agent picked up the phone and called me.

He was not obligated to. It was not his transaction, and telling me created work and delay for everybody. He called because we have worked together for years and because that is what you do when you expect to keep working with someone.

That network is not a soft benefit. In a market this size, the difference between finding a problem before closing and finding it five years later is usually one phone call from someone who did not have to make it. I take those calls, and I make them.

What I actually look at before telling a buyer to slow down

The boundary case was unusual — in all my time doing this, it is the only one of its kind I have run into. Most of the time the reasons to slow down are ordinary, and they repeat. These are the ones I check.

1. The rental projection does not survive contact with reality

Almost every pre-construction pitch in Los Cabos comes with a rental income projection. Ask three questions about it:

• Is it based on this building, or on a comparable that already operates?
• What occupancy rate does it assume, and across which months? Los Cabos has a real low season, and a projection built on high-season nightly rates is not a projection, it is a brochure.
• What is deducted? Management, HOA, utilities, furnishing replacement, income tax withholding, and the platform’s cut are all real and often missing.

If the number is gross and annualized from peak season, it is not a number.

2. The delivery date is not credible

Pre-construction here has a long history of delivering late. Before you wire a deposit, ask what the developer has actually finished in Baja California Sur, and go look at it. Ask what happens to your money if the delivery date slips by two years, and read that clause rather than being told what it says.

I have watched buyers accept a schedule that no one involved believed.

3. The HOA is going to move, and nobody quotes you that

The HOA fee you are quoted at purchase is a starting point. In amenity-heavy communities it climbs, and in beachfront buildings it climbs faster, because salt air, pools and shared infrastructure are expensive to maintain in this climate. Ask for the last three years of HOA history, not the current figure. If nobody can produce it, that is itself the answer.

4. You are counting on selling, in a market that is thin at the top

Los Cabos is a real market, but it is not a deep one, especially above a certain price. The higher the price, the fewer the buyers and the longer the exit. If your plan depends on selling within a defined window at a specific number, you are making an assumption the market has not agreed to.

Ask how long comparable properties actually took to sell — not how long they were listed at their final price, but total days from first listing.

5. You are buying the vacation, not the asset

This is the most common one and the hardest to say out loud. People fall in love here — that is the point of the place. But a property bought on a good week in February, with a margarita in hand, is a different decision than the same property evaluated in August.

If you cannot articulate what would make you sell, you have not finished deciding.

What I do instead

When these do not add up, I say so, and I tell buyers what would have to change for the answer to be different. Sometimes that is a price. Sometimes it is a different community. Sometimes it is waiting.

That is the difference between an agent and a consultant. An agent is paid when the transaction happens. A consultant is paid to be right — and if I am right when it costs me, you can trust me when it does not.