From Real Estate Game Changers
by Faun G. Hauptman
Trust, in the context of a real estate transaction, looks much like it does in any other context of importance. A few of the markers of trust I’ve observed over my years in the business include mutual respect, mutual honesty, mutual problem-solving, and loyalty. My most trusting, and trustworthy, clients have always come to the table with a sincere desire to learn from the experience, to let go of preconceived notions that later prove to be false, and to replace those with newly acquired notions based on facts and an honest evaluation of the present circumstances.
So what does that mean? Present circumstances can and do fluctuate wildly in the world of real estate. Real estate prices, and the process of buying or selling itself, will be largely determined by one very simple, but powerful, economic force: the supply/demand curve. Most successful real estate professionals know this down to their core, but how this plays out in their daily efforts to assist clients who are buying or selling, is less consistent. Probably, that’s because there is little long-term consistency to the supply/demand curve itself.
To illustrate, I’ll pull a rather extreme example from the 2008 market crash. Just prior to the crash of 2008, I was an up-and-coming luxury home broker. I had just joined one of the most prestigious luxury home companies in the U.S., and was in process of listing and selling several multi-million dollar homes. I remember the market crash well, because when it happened, I realized that all of my inventory (supply) was now drastically overpriced, because supply began flooding the market, and demand was drying up quickly.
When commodities are overpriced relative to demand, they don’t sell. It’s as simple as that. And when your clients are trying to extricate themselves from an asset, having it sit on the market month after month is not ideal. It was time to have the talk. The assets had quickly become devalued, and that reality was completely out of my hands.
Some clients handled the news well, realizing that there was little I could do to “fix” the market. No amount of glossy photo ads, open houses, catered events, or other efforts were going to sell an overpriced property. The only control we shared was to re-evaluate the changing circumstances, re-price accordingly, and sell the asset. In some cases, clients chose not to re-price, and not to sell. Many of those assets would ultimately be lost to foreclosure because the client wasn’t ready to face the facts, facts that they were repeatedly being confronted with, by a variety of sources. Those were costly decisions.
Other clients had the ability to hold the assets until 2013 when the market in my area finally began a decisive recovery. For them, the market crash became a five-year inconvenience, a break in life’s momentum, and a waiting game. They were the lucky ones.
So what does that illustration have to do with trust? Well, when market values rapidly declined, some clients knew they could trust their real estate professional to advise on the changing conditions, and respond accordingly. Others began not to trust their real estate professional, even going as far as to blame their real estate professional, and made decisions counter to the information, data, and advice they were receiving. In some cases, there were millions of dollars, businesses, credit ratings, future financial security, foreclosures, bankruptcies, divorces, and even suicides that ensued. Real estate ownership doesn’t happen in a vacuum; it impacts and is impacted by all the challenges and changes life throws at us. No doubt, those individuals felt they had no one to turn to, to determine what to do next, and for help making informed, rational decisions to mitigate the impending damage. In some cases, they were receiving conflicting information or advice, and they simply didn’t know who to trust.
Others did know who to trust and they listened. And those clients, by and large, made it through the worst of the financial crisis and resultant real estate market crash, relatively unscathed. Being willing to hear the truth, or at least the facts that are reasonably available at any given time, and act on it, leads to more successful, or the least damaging, outcomes.
Now I admit, it may be hard for readers to believe they can ever trust someone like a real estate professional, who works on commission. So let me ask you a few questions: do you trust the waiter or waitress who brings you your food, in exchange for a future tip? Do you trust the bellman, who stores and later delivers your luggage, for a tip to be given later? How often have you driven your $50,000 or $100,000 car to a valet stand, handed over the keys, received nothing more than a little paper ticket, and trusted that your car would be returned to you in the same condition it was when you last saw it? Do you drop your child(ren), your most precious “asset(s),” at daycare before driving to work, and trust they will be well-cared for? The truth is, in the world of personal services, we are required to give people a great deal of trust. And while it’s true that sometimes that trust is violated, either intentionally or unintentionally, in the vast majority of cases, when intentions are good, the results are good.
But when it doesn’t work out, we become cynical. We doubt our ability to trust others we meet in the future, because we misjudged someone in the past. We have all had that experience, and the worst part about it is, we sour future relationships, in an effort to resolve the pain and other negative consequences from the past ones. That’s human nature I suppose, but it’s ultimately self-destructive because humans were not meant to live, or function, alone. We must trust those with specialized knowledge or we become destined to make costly mistakes that could have easily been avoided.
In anthropological terms, humans have evolved as a herd species. There is safety in numbers, and over the millenia, we have survived only because we learned to cooperate and specialize. We are now hard-wired to trust each other, to support each other, and to benefit from each others’ contributions. And when it comes to buying and selling real estate, most people can and should benefit from the experience and expertise of a real estate professional. But in order to benefit, it requires understanding a little bit about license law in the state where you are going to buy or sell property, and hiring someone you can trust.
Photo by Gwen Weustink (@agoeka) on Unsplash