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Friends and real estate

gold home As children we were taught to "make new friends and keep the old." This old adage has a good lesson within it, but does it apply to business?

When it comes time to sell your home, do you list the home with your friend, or do you consider the sale of you most expensive possession a business transaction?

Homeowners faced with this decision often find themselves in quite a dilemma. They want to please their friends but also need to sell their home.

They want to make everyone happy, but they also don't want to share personal facts about their lives with someone they are close too, but not that close. Giving full roam of a home over to a friend brings a feeling of uneasiness with it.

What is a homeowner to do?

Answering that question without all the facts would be irresponsible. First, you should ask yourself;

is your friend a full-time Realtor with a track record of success?
is your friend employed at a company that is open 7 days a week and takes calls daily?
does your friend have references?
has your friend ever actually SOLD a house?

If you can answer affirmatively to these questions, you may not need to look any further. However if you can answer these questions, but feel working together in a business transaction may harm your friendship, you best face that head on. friends

My homeowners have been pressured into listing their home with a friend, only to find out they end up keeping their home and loosing their friend.

Obviously the best answer for you may be to ask your friend for a referral to a good agent, because in the long run, the friendship is more important. A true friend will understand and work to help you find the right person to sell your home.

In the end as the poem goes, make new friends and keep the old, one is silver the other is gold.

Kristal Kraft

Broker Associate, ABR, CIPS, CRS, GRI, ePRO, PMN, PNG
TheBerkshire Group, REALTORS
3801 E. Florida Ave., Suite 400
Denver, Colorado 80210
303-589-2022 ~ direct 303-953-5362 ~ fax

Selling Colorado Since 1984, Serving the Following Areas:

Denver Home Search	Highlands Ranch Home Search	Parker Home Search	Englewood Home Search
Littleton Home Search	Search Denver Foreclosures	Greenwood Village Home Search	Relocation to Metro Denver

Posted by Kristal Kraft ~Denver Real Estate~303-589-2022 on 04/10/2007 02:17 AM

Comments (48)

real estate, friends

Originally posted at: Denver Real Estate & Relocation: Friends and real estate

48 Comments on Friends and real estate

APR

2007

Oh Kristal! Asking tough questions like that! As is so often the way these things go, there is no single right answer... Nor can there ever be just ONE answer. It certainly requires that the Realtor take control of the relationship as regards the listing... Go over EVERY LITTLE THING that could happen, so there are NO SURPRISES! This is the medicine we should take with every listing, but when the friendship is in the balance, take an extra dose of caution. And know that some folks will be better off with a different agent - but even this requires a diplomatic conversation...

Kristal I love everything about this post, the graphic, the content and the intent I see - you are my hero

Spot on!! Loyalties complicate matters. It's easy for friends to desire to use us (the Realtor) when they've seen us succeed, we shared with them as our confidantes how we've handled tough situations, and they've experienced our expertise through that friendship. I have friends that call or email me when ever they have questions about the market, about strategies regarding when they should sell, community questions, etc. It's not a hard sell on whether they should use me later. They already know personally of my expertise, and are often my best advocates.

I am concerned when a "friend" is a Realtor but the friend has not established a reputation of expertise among their friends. Maybe my statement is harsh... This is my thinking:

Lawyers, doctors, and financial analysts have friends and family with whom they share about their life and their work. With time, if a practitioner is highly skilled in their field, the friend or family member will gather that opinion, via normal interaction. It comes out in how a person speaks about their field, how on top they appear to be with their familiarity of new developments/details, in whether they take pride in doing their job well, or if it's just a paycheck and another client.

For the homebuyer/seller that doesn't "know" whether their friend/family member is excellent as a Realtor seems to answer the question by omission. The decision transfers from hiring a practitioner of excellence to (hopefully) saving a buck by getting a "family"/"friend" discount. Even without the hope for a kickback, the assumption is that "All Realtors are equal". But this is not a rational presumption.

For my family and friends, I have my own policy for how I "solicit" for business: I don't solicit. I share my life with them, and seek excellence in my work. I allow them to know that part of me by living transparently as appropriate. I don't put on a show. If via what they see in me, they desire my representation, I am more than honored to work with them. If they don't, that's alright too. I feel better that they won't choose to work with me merely because they believe they can get a "discount". One of the most meaningful things shared with me when I was a young hostess at a steakhouse: "Some people wouldn't appreciate something even if they got it for free". My goal is to work with clients who appreciate my level of expertise, which also motivates my further pursuit of excellence. I believe that those who genuinely care about their money and see even a home purchase/sale as a method of investment will opt to hire the very best they can find.

I just had this conversation with a client this afternoon. I am selling their home and they are moving to another state. They said they have a friend who is a Realtor there. I gave them a similar list of questions to ask.

The low barrier of entry to real estate is one reason why the questions you mention are so important. And because the public only sells a home on average every 5-7 years, they really don't know how complex a transaction can be. An agent who is a true friend should treat them like any other client -- focus on their motivation and needs, and if the situation calls for it, refer them out.

I think i have more friends on the buyer/seller end than the peer end. Other realtors can be jealous.

Friends and family are the worst for not wanting to pay for your services. I have had many many "friends" walk away from a 4% listing even when I explain that 3% goes to the selling agent and the other 1% has to go to my broker---they think that is absolutely too much for a friend to charge. I work hard to be generous to friends when I can but when I explain that it takes away marketing money, thick shiny flyers, and all of the extras, they can't understand.

I really enjoyed the message that you put together and the message that you portrayed.

Friendships are more important.

Kristal - cristal clear as usual. I am always looking for people with no friends ;-)

KK,

Yes, sometimes a friendship can cause conflict of interest in business, do not mix a friendship with business unless you completatly separate each one..

:) good blog

I received a call from an old business associate who listed his house with his wife's best childhood friend. He was a month short of the listing expiration and was looking for my opinion. A quick review showed the house was listed about 10% high but finally down to reality. He said I'd be getting the listing but in the end the WIFE won out and extended with her friend.

Wonderfully said. I think it is hard for some seller's to go against the expected in certain communities. Love the post.

Krystal, Monika and I are headed this evening to list a house of a very very close friend of Monika's . She has been friends with him from back when she was just out of High School. What has helped is we listed another close friends house in that same circle of friends in '05 and they have been praising us to everyone they know.

Over the 23 yrs we have been selling we have seen many a seller frustrated by listing their house with a "part time" agent friend or family member.

I wonder if there has ever been a study on REALTOR/friend crash and burn rates. Sounds like a great way to end a friendship.

Chris only if the agent is a "looney tune". I think it's harder with family. We haven't lost any friends in 23 yrs. they just move away. LOL. The nice part is we have more places to visit.

I've had clients who were very reluctant to conduct business with a friend. For whatever reason, they didn't want the friend to know their business and thought they would remain friends if they used a different Realtor. I don't know if that friendship would remain intact or not. But I realize it's always a dilemna.

Great post! This is such a tricky issue for BOTH parties. The seller must consider the questions you cited and view it as a business transaction for what is best for them. Likewise, as Sarah mentioned, the agent must consider the pressure on the commission and whether it's a good business transaction for them as well.

KK.... great post because I am sure so many people go through this. I even hear it on the financial side. And some of these consumers think they are going to get a great deal and it's not always the case.

But as you stated, they do need to ask these questions. And still consider the fact, could they lose a good friend. Great job....

jeff belonger

Excellent post KK. Like Jay said we are going to list a longtime friends house tonight. I'm sure it will go well and that they feel 100% comfortable trusting us with their most valuable possession.

Kristal, The guy across the street from me has listed his home twice before with a lady from his church..never sold. Now he has it listed with her a third time. Still over priced..won't sell I'm sure. Seems his loyalty to his church and this lady is stepping in the way of his success to sell the home. But at the same time were not real close friend but I'm not sure I want the trouble of listing the home across the street from either!

Kristal - I am of the opinion all things being equal, we should try to support our friends that are in business. The key phrase is all things being equal. If you have a friend that you care about and you want that friend to have a good life, pay their mortgage, take their family on vacation and be successful; why would'nt you help them by allowing them to help you and earn a commission in the process. If there is some false idea that it is better to provide this for a stranger just to "keep business, friends and family separate" - I do not understand.

I once had a friend sheepishly apologize for not thinking of me on a transaction. I said, as long as am able to make my mortgage payment during the month that you close, I will not be mad at you. Seriously, a friend shoudl'nt engage you just because you are a friend, but "all things being equal," they should discount the idea just because you are.

Great topic and post!

James

You are a realtor in another state. and my friend too! I am lucky that I met you.

I have had friends of mine avoid me and list or buy with someone else. They didn't come to me before and ask for advice, but instead they came to me with all the problems after the fact. Why are people so spineless?

Of course, I was brought into the middle of it all when "it hit the fan." I guess at that point they could mix business with our friendship. Like that makes any sense?

Selling your friends or family members home is often times a recipe for disaster. Because of the friendship the temptation to please the friend by taking an over priced listing or to refrain from giving them the tough love advice that is often times necessary can be to hard to give. If your friend has listed your home the strain on that relationship can be unbearable. Especially if your normal friendly greeting is now dampened with the knowledge that you both must discuss the failure of your friend agent to sell your home.

Very few people I know that have the fortitude to separate completely the Business side and the Friendship side.

Great subject KK. I loved the friends tag line :

Good post. I'm relatively new and have not done business with any close friends. I think after reading this that I'm not inclined to do so in the future.

Most if not all doctors will not treat family members -- this is for a good reason -- there are too many emotional overtones that get in the way not matter how professional you are. Many real estate companies stress selling to friends and relatives - however, I wonder if that is such good advice.

I have gotten burned by friends too many times...

I feel that friends coming to me is flattering but usually going to cost me something - maybe even the friend.

Sometimes I see friends that aren't part of a transaction get involved anyway and then mess things up!

Kristal, great post and so very true. Though I do enjoy doing business with my friends, it can be sticky at times.

Great post. Working with family and friends can be more difficult sometimes than working with strangers. Either you're not tough enough to tell them the truth or you're tougher than they want you to be. We're more inclined to take it quite personally if our family and friends don't work with us, but I'd much rather keep that lifelong relationship than lose it over business.

Very thought provoking post, Kristal. I DO list and SELL most of my friends homes. However, there are 2 exceptions:

1. If I feel that my friend is being too unreasonable, I will not list the home, but refer them to someone else, after fully explaing why. Not worth losing a friendship over.

2. If I know myself and my friend well enough to know that I should not mix business with pleasure ... not gonna do it. I will refer them out. Again, not worth losing a friendship over.

Now, I have not had a problem ever representing my friends who are Buyers. It is a bit of a different experience - and very fun!

What is that old adage - never discuss religion or politics? I think listing a friend or family home should be added there. There is too much emotion tied up in owning and selling your home. How tough skinned is your friend going to be when you tell them the stairway carpeting is filthy? The cat hair on the kitchen counter is a problem? Or - best of all - we need to lower the price?

I don't think I would ever use a friend. Although I don't need to, because I can do it myself....LOL. I wouldn't even offer to sell a friend's home.

Kristal, if I plagiarized posts, which I DON'T, I would steal this one. It's just so darn true. Why dontcha enter it in the carnival of consumer real estate that Toby Boyce started?

Kristal, I have done several loans on very close friends, and to date they have all gone very smooth, but that is because I explain everything and do not take their friendship for granted.

I just a loan on for my nephew, and have family members ask me mortgage questions all the time. It can be uncomfortable for them if they are concerned about me knowing all of their financial matters, but up to now none of them have hesitated to do so. It really comes down to a matter of trust and confidence, I have been luck that those that I know have had both in me

George do you suppose that is it? Maybe people that work with friends forget to treat them as customers/client and prep them properly?

For example: I sat down with customer/friends the other day as I listed their home and matter-of-factly guaranteed a low ball offer. I told them not to be shocked, at all....be greatful for the offer, you never know they may pump it up and bring a better one. Maybe because everyone is so familiar a few details get skipped and that's how everyone gets their nose bent out of shape.

Chris I don't know if that is all to it, but it sure helps in avoiding a lot of future problems.

APR

2007

KK- Interesting post...It's a tough choice for everyone.. I have worked with friends and it can be very difficult.. I have had friends work with another agent and not even contact me.. There are some friends that I never want to get involved with in any business transaction.. let alone real estate... I have clients who became very close friends and I would work with them anytime. I think it all comes down to the personalities involved.

Patrick ~ Agreed there are no single answers. Diplomacy is of utmost importance, so is paying attention to your gut feelings.

Thesa ~ Hero? You are sweet, but this is just common sense, nothing more. ;)

Sara ~ I like your response and in particular the summary in the last sentence, "I believe that those who genuinely care about their money and see even a home purchase/sale as a method of investment will opt to hire the very best they can find." A home is an investment worthy of hiring the best, be that a friend or someone else.

Randy ~ it is always risky to "go there" with a client when it is a friend/family involved. You just have to go with the flow.

John ~ It is unfortunate in our industry to have such a low barrier. Worse yet no standards. Anyone can call themselves a professional, with no qualifying. The consumer never knows the difference...until it is too late.

Luke ~ Other Realtors are our competition. When they are local that is. Your comment is true for most I would believe.

Sandra ~ It is sad when friends expect us to work for free. What they don't understand is every minute we are doing something for them, we are unable to work with a paying customer. In effect working for free costs us. How is that fair?

Ricardo ~ Friendships are important, thanks for the confirmation.

Gerhard ~ LOL, how are you doing on that project? Farming for friendless folks...what a plan!

Ray ~ Thanks! I do believe separation is important, or rather communication of what to expect. A meeting of the minds so to speak.

Dan ~ Oh well, wive's tend to have a lot of influence. Maybe you will get it in the long run. Or maybe they will remember your helpful consultation and send other business your way. Other business is good too!

Miriam ~ Thanks, glad you agree.

Jay ~ you and Monika certainly will get the listing. When friends sing your praises, it's all over for the competition! Good luck in getting it sold nice and neat!

Chris ~ Maybe you have come up with a new demographic study for NAR. :)

Diane ~ It relly depends on the people. So many of us start out with a professional relationship and end up as friends. That's the nice part of the business!

Elaine ~ it really needs to be a "good transaction" all around. If it's not fair, one or the other will not be happy.

Jeff ~ Oh I bet you lender guys get this a lot. Everyone wants the loan for free!

Moni ~ Maybe your friends know you guys are full time pros? The word is out...

Danny ~ you bring up yet another question. Do you really want to list a home so close to you and risk bad publicity in your neighborhood? Guess if the seller is motivated and reasonable it's ok. Otherwise, I'd pass! It's a lose/lose situation.

James ~ interesting point..."Seriously, a friend shoudl'nt engage you just because you are a friend, but "all things being equal," they should discount the idea just because you are." Well stated! Thanks!

Teresa ~ That is a nice thing to say...thanks! We are AR Friends, etc.

Richard ~ Coming to you after the problems start is sad. Maybe after they learn you know what you are doing they will come to you first! Hang in there!

Herb ~ Good comment. IF you can't deal with the strain, and many can't then the best thing to do is pass on it.

George ~ We don't mean to discourage you. I think as it's been stated, friends shouldn't do business together for that reason and that reason alone. Welcome to the world of real estate!

Joan ~ Good example, you are right about Doctors not treating friends and family.

David ~ oh another topic indeed! Friends of friends goofing up the transaction...

Jeff ~ Sticky it can be, totally transparency is the goal, but sometimes impossible to achieve.

Jody ~ Lifelong relationships are more important than a fleeting deal.

Mariana ~ you rules are right inline with common sense. Friends as buyers are a tad easier.

Joan ~ good points there. Guess we have to delegate the bad news delivery to the stagers! :)

Christy ~ good point, we don't have to hire friends to sell our homes...lucky us! We can just get mad at ourselves and work for free. :(

MF ~ thanks for the suggestion. I will have to check out Toby's Carnival. Leave it up to you to know the carnivals! :)

George ~ I can see how your exposure would be high. You obviously are a man of trust, otherwise they wouldn't share their personal info so readily.

Kaye ~ Individuals are just that...individual. It makes life more exciting!

APR

2007

Kristal, just had to jump back in here. Last night I had a listing appointment. The seller had previously told me she was going to "talk to some friends" as well. At the end, she pretty much plans to sign my listing papers next week - after she consults with a friend. Turns out the friend doesn't work as a Realtor® but does have his license so he can buy his own investment property down around the campus area - typically known as slumlords for OSU students. When I found this out, I mentioned to her that (1) her friend will probably never have heard of me and (2) we work in two totally different markets.

So her friend, who only invests in his own properties, in another part of town and a different county, is going to give her advice on whether my marketing program - and me - is something she should use. DUH!!! Oh - should I also mention that I've sold 37 homes in her neighborhood! I think I'm OK, as I seemed to "wow" her, but I found this humorous.

APR

2007

Elaine ~ It's so sad but true. How often friends give a bum steer to friends. For what purpose, ego? Why would someone who doesn't even deal in this market try to offer up advice. Oh well, I will hope for the best for you. I hope your homeowner has some good old fashioned common sense!

APR

2007

Kristal, This is such a fragile subject. Truth is, much of my business is with friends or referrals from friends. Even though I have a track record of success, I am always a little nervous about working with friends because a real estate transaction can turn bad without much warning. So far I've been very fortunate but I never relax when it comes to selling to friends (or anyone else for that matter).

Carol ~ You are so right about real estate transactions turning bad with little warning. For the most part that is what keeps us in business, solving problems. I'm always concerned with the transaction until it is done. Most people never know how many bumps we absorb without them every knowing...

Kristal, It is true what you say about absorbing bumps without anyone knowing. That must be why so many of my clients think they want to get their license. I guess it looks easy. My assistants are finding out how many unending details there really are in a transaction... and how long it can take from start to finish! I'm sure your clients feel the same.

Carol ~ Oh so true. I've trained more assistants who ended up getting their licenses. A few clients too. It's a great business, but not all that easy.

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