Brokers Lack Business Savvy
Residential real estate brokers are often not very business savvy. Many could benefit from some basic classes in accounting, interpersonal communications, negotiation, and yes, even marketing. And perhaps most importantly, on what it means to be a fiduciary.
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A broker calls me:
Broker: Will you take $210,000?
Me: Absolutely. In two weeks.The broker was just baffled by this. It took her a moment, but then the conversation continued:
Broker: I don’t understand. If you will take $210,000 in two weeks, why would you not take it today? (And I could tell, she was genuinely curious.)
Me: Because someone might just come along and buy it for more before then.
Broker: Well I’ve never heard of such. But okay, I’ll call you back in two weeks.But she did not call me back because, six days later, I sold it for $218,000.
Now, I am not saying that this sales strategy is for everyone. Although I have always liked some version of this when a quick sale is needed without leaving a lot of money on the table. And the process can be halted at any point in favor of a negotiated price. But what is notable here is the complete lack of understanding of the broker.
Many brokers just don’t have good business sense. And so they are not equipped to speak the language of business and negotiation. Instead, they speak the language of scripts and objection handling. In my example above, the broker was thrown because she simply did not have a script for that scenario. She really had never heard of such. We will come to scripts in Chapter Eight.
Look, brokers represent clients in a six-figure business transaction. Sometimes more. We simply must add value. This is a serious business. And brokers should approach this business with the thoughtful sobriety it deserves and attention it demands.
Now I mentioned above, what it means to be a fiduciary. But the truth is, I think most brokers know exactly what it means to be a fiduciary, acting on behalf of another and putting that person’s interests first and certainly ahead of your own. I mean, the concept is not difficult. They just choose not to do so. Underpricing and quick sales are two examples we’ve used so far. There will be more as we continue. But notice how subtle these can be. This is intentional. Even if the principal noticed, it would be difficult to prove malfeasance on the part of the broker.
Oh, and that broker above: One of the most successful in my market.