We hear this all the time - heck, I say it all the time! "Real Estate is a Relationship Business" - meaning that the more people who know you and like you, the more real estate you'll sell. As opposed to the good old Numbers Game philosophy that the more people who throw away your monthly marketing postcards or ignore your newspaper advertising, the more real estate you will sell.
And of course, I believe that - at least the part about how the more people who know you and like you, the more real estate you'll sell.
But is real estate really a relationship business?
I say no.
This blog was partially inspired by an episode of Million Dollar Listing (don't get me started). Okay, too late.
The three twenty-something boys young men drama queens who are the stars of the real estate reality show seem to have an unending supply of "Dear Friends" with gazillions of dollars to spend on real estate (or gazillion-dollar homes to sell). Dear, dear friends. "After all," sez Chad, "Real estate is a relationship business."
If you've ever watched the show with a critical/cynical eye, you might have noticed that these boys young men drama queens give abysmally bad counsel. Often laughably self-serving, almost always bordering on incompetent. They advise their Dear Friends to make full price offers in a declining market before the house even hits the market. They allow their sellers to dictate the price and terms of their listings, whining all the while that the seller is being unreasonable (but not knowing what else to do). They talk their buyers out of even asking for repairs at inspection because the seller has already come down on his price (again, in a recessionary market).
I don't know anything about agency law in California, but if it's anything like Colorado, these boys young men drama queens are failing in their agency obligations to their clients. Or, if not technically violating agency law, definitely doing nothing to earn their $100k+++ commissions.
Speaking of commissions, a recent episode showed Madison being dismayed when his seller client accepted a lowball offer on her $3.75M listing which resulted in - get this - a $42,000 decrease in commissions for him! Poor Madison.
So, what does this have to do with real estate and relationships?
Selling real estate is about knowing how to sell real estate. Let's say that differently. It's about knowing how to manage and facilitate the exchange of real property so that the buyer or seller who hired you is satisfied with the outcome.
Sure, building your real estate business may have everything to do with your relationships, but THAT'S NOT WHAT WE DO! Is tax preparation a relationship business? Is dentistry a relationship business? Is dog-training a relationship business?
No, we expect our tax preparers to know how to prepare taxes. We hope our dentists know how to fix cavities. We expect a dog-trainer to be a master in dog behavior. That's their business.
Our buyers and sellers have the right to expect that we know our business. Which is... how to manage and facilitate the exchange of real property. Not how to persuade our Dear Friends to provide us with easy paychecks.
As promised, I'll return to my little series on pricing historic homes in urban neighborhoods... I just got distracted today.