The Pretense of Competence and Authority
It is extremely difficult to get good reliable information about brokers and the sales process. Oh there is plenty of information out there. But most of it is bad.
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I have never met a broker who did not proclaim themselves to be a good negotiator. I close this book with a whole section on real estate negotiating, as it is or should be a core competency of a broker. But here, let me just address why brokers claim to be good at this skill set and why they are, in fact, not.
It’s a marketing thing. Of course it is. Brokers cannot say to potential clients: Look, once I have acquired you as a client, my heavy lifting is done. Of course not. So when selling themselves to any potential client, brokers must present themselves as competent. Yes, ironically, competent at conveying real property.
What’s the alternative? An honest broker would be required to say: Look, I’m really great at acquiring clients, and I spend almost all my time on this. So I’ve never taken the time to study negotiation in detail; to really give it the thoughtful attention it deserves and demands. But don’t worry, everything will be fine.
So what they say instead is: Look, I’ve been doing this for twenty years, and I have represented hundreds, or thousands, of clients. Believe me, my negotiation experience is second to none.
Except it is not. Not only have they never properly considered or practiced negotiation, since this skill falls squarely in the conveying real property category, really, it is just something to get through as quickly as possible. So they can get back to making money…prospecting. It is just not important to them.
There is a broker in our market who is a top producer in terms of number of transactions and transaction volume. She is a genius at Job Number One: Client Acquisition. And I mean it, a genius.
In 2016, five years after the Due Diligence Contract was introduced in our state, this broker posted a video on her YouTube page explaining the concept of due diligence to the audience, and one supposes, to her clients. In this video, the broker claims that during the Due Diligence Period of the contract, the seller has no control whatsoever and the total jeopardy is on the seller.
This admonition is quite simply false. And it is no small false thing. An understanding of the Due Diligence provisions of the contract is an important negotiating advantage. I personally believe it is the most important, and I have a whole chapter on this in the Negotiation section of this book. Here, let me just point out: Through the amount negotiated as the Due Diligence Fee, the seller controls the Due Diligence Period at least as much, and arguably more, than the buyer.
Now it is not my intention to get into the weeds of the real estate contract. The question is, why would this top producer make such a statement?
Well she clearly spends all her time, effort, and money, on Client Acquisition, to the detriment of transactional competence. One might think that, with so many transactions, a broker would necessarily pick up some competence. But the real estate business does not work that way. I assure you, this broker is more than competent at what she believes is the only part of her job that really matters: Client Acquisition.
So if you hire a top producer thinking that if the broker does so much business, they must know what they are doing, you are correct. They do know what they are doing and they are experts at it: Acquiring clients. The rhinestone cowboy has no ambition whatsoever to become a real cowboy. He only hopes that you don’t know the difference.
Transactional competence is something altogether different. Competence must be purposefully acquired. Competence is a choice. It is a choice of focus.
That video is still online in 2020.* If you visit this broker’s YouTube page, you will find many videos on any number of real estate subjects. And she speaks with such authority. On the face of it, clearly she knows what she is talking about. Right?
But this is no more helpful than picking a broker based on production. The fact that she sounds like she knows what she is talking about, does not mean that she actually does. I mean her video on Due Diligence appears perfectly authoritative. But this too is a marketing ploy.
When selling themselves to any potential client, brokers must present themselves as competent. Yes, ironically, competent at conveying real property.
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* Update: 2024