What I’m thinking about: The most insane 48-hour emotional roller coaster of my professional career.
Quick recap for context: We bought a 25-acre Tennessee lemon for $93K that had been listed twice in the past two years and couldn’t sell at $100K. Four people reviewed this deal. Everyone missed the (hidden) listing history. My system. My responsibility. Here’s the breakdown from a previous newsletter.
We threw it into an absolute auction – no reserve, no safety net. Whatever the highest bid was, we had to accept it.
Three weeks of sweating bullets started May 22nd…
I was extremely impressed with the auctioneer’s approach to marketing. He is associated with one of the most premiere brokerages in Tennessee that routinely list and sell 7 to 8-figure properties.
He turned over every rock possible:
- Finding out-of-state buyers from their brokerage’s significant online presence amidst various social media advertising.
- Routine boots-on-the-ground work posting signs within the city the property was located in as well as surrounding townships.
- Top-notch drone photos that displayed the best features of the property (of which there were few).
- Setting up meetings with local builders and timber engineers, some of whom owned properties that directly bordered ours.
It was a true marketing blitz, and trying to slap some lipstick on a pig. And I was convinced that there was no chance our previous MLS listing would have reached nearly the pool of qualified buyers.
The auctioneer cautioned me that most of the real action for auctions doesn’t start until two days before the auction ends, and we just had to sit tight in the meantime.
He routinely updated me and, based on the online activity we were getting, the number of registered bidders, the conversations with buyers/agents he was having, and the fact that the property had access to sewer (with no moratorium), that we would be in good shape. Potentially even to get us close to breaking even on the property.
I was certainly feeling more optimistic than I was when we first started the auction process.
The auctioneer told me he usually has a pretty good sense on how things are going to turn out 48 hours before the auction ends.
Well, he called me 48 hours before the deadline. (BTW, totals bids were sitting at $20K at this point…we had a LONG way to go.)
His assessment was brutal: “My gut feel? This is not looking good. We’re probably looking at a 50-60K exit. Getting to 70K would be an absolute home run. There are just so many issues with this property.”
True punch to the gut.
I mentally (and maybe physically) curled up into a ball.
It had already been a tough quarter…and I was about to eat the worst loss of my career.
Started questioning my own capabilities as an operator. Had to tell my business partner (the day after he returned from his honeymoon, no less) we were staring down a ~$50K loss on a deal that should never have happened.
Our current vintage of investments had been performing better than any in the history of our land business, and I was about to cripple the return metrics with a nasty loss like this.
I was stewing in anger at myself. Using it as fuel to NEVER make a mistake like this again…and realizing that I just flat out need to be MUCH better if I truly want to be elite. No flimsy excuses to hide behind.
24 hours before the deadline, another call. Auctioneer’s tone had shifted: “I’m feeling better than yesterday. I think we’ll hit 75-80K.”
Still a nasty loss, but not catastrophic. Maybe $20K down instead of $50K, about what I was hoping for when we started the process, and I would’ve set the reserve at $75K if we had the chance.
The auctioneer had found some local, well-financed construction guys the day before the auction ended. They were registering to bid. Email blitzes going out. Last chance urgency kicking in.
I forced myself not to check the auction site until 10 AM on closing day (2 hours before the auction ended)…
At 10 AM: $50K in bids. Two hours left. Still looking at a massive loss.
90 minutes left: $58K. Cutting losses slightly, but where were those construction guys? (The auctioneer texted me, “I called them, they’re going to bid.”)
30 minutes left: $60K. My stomach was in knots. Sweating bullets. About to absorb a ~$35K loss…
5 minutes left: Still at $60K. Time to eat the pain.
Then with less than 3 minutes remaining, everything changed…
A two-person bidding war erupted. The increments switched from $5K to $2K to $1K as the price climbed. Every bid under 5 minutes added another 5 minutes to the timer.
$62K… $64K… past the original noon deadline… $70K…
The auctioneer called me: “One of these bidders is the well-financed construction group I found yesterday. The other is a mystery bidder from Nashville.“
$75K… $80K… we hit the “home run” territory from 48 hours earlier…
$95K… Holy cow. We just broke even. Think I let out a primal roar at that point (my memory’s a bit blurry), as I thought there was absolutely no chance we’d get there…
But they…kept…going…
(Auctioneer called me again, saying his whole brokerage was watching this, no one could believe it. Who was going to tap out?)
About 45 minutes past the original deadline, the final hammer price: $117,000.
The mystery bidder from Nashville won.
With the 10% buyer’s premium, they’re paying almost $130K all-in for a property that couldn’t sell at $100K when listed.
We’re not just breaking even…we’re profitable.
With the preferred terms we had built into the deal, we’re actually hitting our target 1.2X net MOIC (Multiple on Invested Capital) despite this being one of the worst properties we’ve ever owned.
I’m STILL reeling from this emotional whiplash.
Key lessons from surviving by pure luck:
- We had no business buying this property in the first place. Four people missed a critical red flag that immediately would’ve disqualified this parcel from being funded. That’s a system failure, and ultimately the buck stops with me.
(Even without that previous listing history, we are no longer funding ANY properties with questionable/poor characteristics, no matter the price, FULL STOP.) - Absolute auctions are higher risk, higher reward than listings. Property didn’t move at $100K listed, sold for $117K at auction. But the stress of the last month is not something I ever want to repeat, to put it lightly…
- Last-minute bidder discovery can be miraculous. Auctioneer found this local builder group 24 hours before close. He mentioned that his strategy is to actually try to find builders with only a couple of days prior to the auction ending, so that they can’t talk themselves out of the deal, compared to if they have a couple of weeks of notice.
Even though the local builder didn’t end up winning the auction, they served their role as the rival bidder. If they hadn’t participated, the Nashville bidder would have won the auction with almost no contest at $50k.
The brilliant, high-stakes strategy from the auctioneer created a ~$70k swing. Writing this, it’s still making me nervous thinking just how lucky we got. - Luck is not a strategy. We escaped by the skin of our teeth. Attributing this outcome to skill would be a fool’s errand. My conclusion that there is still a massive skill gap I need to fill in our journey to become world-class still applies.
- Split attention creates errors. The more deal volume we push through our business, the higher the chance that we make mistakes, and lower cost properties inevitably get less analysis.
This reinforces our ongoing shift to prefer higher-value deals ($150K+ purchase price) with better characteristics, higher-quality (and more incentivized) realtors, and more capacity for focus within our team.
Second chances don’t come around often. Don’t waste them!
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Need reliable funding for your next land deal? Serious Land Capital is actively seeking development projects and higher-value acquisitions. Our painful and eye-opening lessons from deals like this Tennessee property mean better due diligence systems and fewer surprises for your projects.
P.S. Want the full play-by-play of this emotional roller coaster? Episode 158 of Get Serious breaks down every white-knuckle detail from the 48-hour nightmare to the miraculous final 5 minutes. Raw lessons from the WILDEST business situation I’ve ever experienced. No fluff.
