Dr. Gary Michelson does not understand basic theory of value. I will explain.

I have been a real estate appraiser, broker, expert witness for 30 years. Everyone knows that market value is what a willing seller will sell a property for and what a willing buyer will pay for the property. I will try to make this as simple as possible. I've had to explain exactly this to some of my clients.

A man bought a house for $10K years ago. He sells it to his son for $20K. Few years later his son sells it to someone else for $50K. What is the property worth? It was worth $10K, $20K and $50K respectively at those times. Did the son rip off his dad? No. Did the final buyer rip off the son? No. These are the prices they agreed to sell and buy at.

Dr. Gary Michelson tells Philip he wants land to plant teak farms. They must meet his certain strict requirements. Philip goes and procures the land then makes sure the land meets Gary's requirements. Philip offers the land at a certain price to Gary. Gary's appraisers, lawyers look at the land and estimate it's value. Gary then agrees to buy the land or not at that price or another that he offers. That was a fair land sales as buyer and seller agreed to the price after doing their due diligence.

This is where Gary doesn't understand and thinks everyone is trying to rip him off. Philip is a land dealer. He is not going to spend his time looking for land, hunting down owners, making offers, buying the property, clearing title...unless he will make a profit. When I was in sales this is how it works. I would flip buildings for profit. I wouldn't do it to make money for the ultimate buyer. That would be stupid.

Let's say Philip buys a piece of land for $100K. He invests money into the land, works and prepares the land and offers it to Gary for $150K. Gary's appraisers, lawyers look at it and say it's a good deal at $150K. It's probably worth more than that. Gary buys the land.

Years later Gary finds out that Philip bought the land for $100K. Gary thinks he's been ripped off. Gary thinks he deserves the profit that Philip made. Gary stupidly thinks at most Philip should only get 6% max commission which is US residential sales commission for residential property. When I sold income property in Cocaine Alley, Ingle-watts, I got minimum 10%. It's a lot more work. Buying a home in the US is very different than buying rural pasture land from villagers in Costa Rica. Philip used his expertise, time, money, language skills, connections, years of experience to buy the land at a price. Gary is not legally entitled to the profit of another or the supposed "bargain value." This is how Gary lost that appeal on the real estate deal on La Cienega. Judge ruled Gary is not entitled to "loss of a bargain." Gary was just an idiot for bidding the loan value and costs at a foreclosure sale. He was the first. He didn't even have to bid at all. He still would have been covered. Whoever told him to bid over his first is an idiot.

Back to Costa Rica. Gary thinks he was ripped off. He wants the profits that Philip made. If Gary wants to make all the profits he should learn Spanish and fly his ass to the dangerous grazing lands of Costa Rica. I doubt these people would even speak to gringo Gary. They'd probably shoot him on site. Gary doesn't take into consideration the risk Philip took buying the land, spending his time and money preparing it to offer to Gary. It's quite possible Philip got stuck with some land that Gary didn't want. Even if Gary could buy the land direct he wouldn't know how to clear title or plant trees. He also wouldn't know how to hire security so people don't steal the trees. When I was in Belize this was a big problem. They'd come at night and steal hardwood trees. They'd also poach the wildlife to eat or sell as pets.

Here's another scenario to show you how crazy this is. Let's say Philip paid $100K for the land. A week earlier someone heard Philip was coming to town to buy land. They bought the land from the villagers for $50K. They think it's just grazing land. They don't know it's suitable for teak farming. Philip then pays $100K for the land. Maybe Gary should sue those people for "loss of a bargain?"

Here's one last scenario to show how absolutely, totally crazy this is. Philip buys the land for 100K. He sells it to Gary for $150K. Few years go by. Gary finds out Philip made a profit. Duh, he's a land dealer. That's what he does. Philip then offers to buy the land back for what he sold it to Gary for, i.e. $150K. Gary then asks his appraisers, lawyers if this is a good deal. They tell Gary "the land is now worth $200K. You made money. You didn't lose a dime." Other people offer Gary even more money for the land. Gary chooses not to sell at an even higher price. Gary probably thinks Philip is trying to rip him off again by "only" offering $150K.

Gary with help from his advisors agreed to buy the land at $150K. It's now worth $200K. Gary decides not to sell the land at $200K. Nobody got ripped off. Philip made Gary money. He should be thanking him instead of suing him. Who the hell cares what Philip or the previous owner paid for the land. I would not care if Philip bought the land for a pack of cigarettes and sold it to me for $150K when it's worth $200K. I would beg Philip to set me up with these deals all day long. I might even instantly sell the land for $200K to someone else and just keep the profits. Should Philip sue me for "loss of profit?" No. It's about making money. It doesn't matter what someone else paid for the property. Remember the Dutch in 1626 bought Manhattan Island from the Indians for $12 in trinkets. Indians thought it was a good deal and agreed to sell. Fair sale.

I'd have clients see what the previous owner paid on title docs and they'd refuse to pay more than a couple of dollars more. They'd lose the deal and someone else would end up buying the property for a great price. Someone needs to sit Gary down and teach him the basics. Doctors really are the worst investors. They think because they are doctors they are smart and know everything. They may know medicine but they don't know real estate or investments as Gary has clearly demonstrated. I hope Philip sues the shit out of Gary when this is done. Gary did worse to Philip than he did to Dave and Dave got a nice settlement I hear.


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