Trust in your real estate broker is the foundation of home buying, selling By Ilyce R. Glink and and Samuel J. Tamkin November 29, 2013
I bought a house for a bit under $2 million in Los Altos, Calif., (about average for around here). The seller and I were both represented by (different) agents from the same local branch office.
I was encouraged by my agent to bid aggressively for the house as “several disclosure packets had gone out” and the situation was supposedly very competitive.
After my offer had been presented (and accepted), I learned that in fact my bid had been the only one presented to the sellers — there were no other competing bids presented at the offer deadline.
When I pointed this out to my agents, they said their realty office would provide me $10,000 “toward closing costs,” apparently out of the goodness of their hearts. No release of liability was required. Was I lucky to get such nice real estate brokers, or should I be considering legal action? For later tax assessment purposes, is there any precedent for claiming the house sale price was actually $10,000 less than recorded, due to this agency payment?
We hate to point this out to you, but you always need to work with a real estate broker you can trust. While we don’t know if you ever considered this real estate agent’s trust in the equation of buying a home, the issue of trust is of utmost importance. Were you lucky? We don’t know. The information you received is not unlike what we hear our readers tell us when their brokers pressure them into putting in an offer on a home or increasing the amount of an offer during negotiations.
Not all brokers will pressure their clients, but certainly some do. Your letter doesn’t say that your broker told you that other buyers were bidding on the home. You were told that other buyers were given information or packages about the home. The brokers could have given you correct information, and either you took it to mean that you were competing with others, or your broker might have intended on giving you a sense of urgency to buy the home. In either case, the real question is whether the brokers did something wrong. California law tends to pioneer issues like this, and you could seek legal advice about your situation. The real estate broker has offered to pay $10,000 toward your closing costs once you brought up this issue.
You might have found a really good broker who feels bad for you and would rather keep you happy than have you feel bad about the deal. Your broker may be entirely correct. Your broker might have thought other people would come in and bid against you and thought that this home was the best home for you at the time. Whether you’re buying a home for $2 million or $200,000, the psychology of buying is the same. If you’ve been working with a reputable and good real estate agent, that agent may believe, after working with you for some time, that the home you’re bidding on is the right home for you. If that agent has a sense of what home values are in the area, he or she may also encourage you to make an offer to avoid having you walk from the deal. For many home buyers, this process works well.
The buyers end up buying the home they like and they move on to close on it. It’s possible you wound up with the right home at the right price. You might have initially bid less if you had known no one else was bidding on it, but you might have come up in the counteroffer or even lost the home if your agent didn’t push you to buy it. It’s quite hard to say where things would have ended up and how low the seller would have gone. But if the broker did nothing wrong — and perhaps the agent didn’t do anything wrong — the agent is making a fair amount from your purchase of the home. Your agent would rather that you buy the home, be happy in the purchase and make future referrals to him or her than have you feel bad about the purchase. It’s quite hard to second-guess what happened with your deal.
You’d know better as to whether the broker had dealt fairly and well with you during your entire home-buying process. If you feel that he or she was fair with you, you might give the benefit of the doubt and move on. On the other issue of the purchase price, we don’t think that the agent’s contribution toward your closing costs will adjust the purchase price one way or the other. Your lender will still consider the contract price to be the price you are paying for the home, and all of the closing documents will show the purchase price as what is stated in the contract, without regard to your agent’s contribution of $10,000 to your closing costs.
You may be deceived if you trust too much, but you will live in torment if you don’t trust enough.– Frank Crane, American minister and author
Have you ever managed people who didn’t trust one another? If you have, then you’ll know how challenging and draining this can be.
A team without trust isn’t really a team: it’s just a group of individuals, working together, often making disappointing progress. They may not share information, they might battle over rights and responsibilities, and they may not cooperate with one another. It doesn’t matter how capable or talented your people are, they may never reach their full potential if trust isn’t present.
However, when trust is in place, each individual in the team becomes stronger, because he or she is part of an effective, cohesive group. When people trust one another, the group can achieve truly meaningful goals.
So how can you, as a leader, help your team build the trust that it needs to flourish? In this article we’ll look at the issue of trust within teams, why it’s important, and what you can do to build it.
The Importance of Trust
One definition describes trust as a “reliance on the character, ability, strength, or truth of someone or something.”
Think about that definition for a moment. Trust means that you rely on someone else to do the right thing. You believe in the person’s integrity and strength, to the extent that you’re able to put yourself on the line, at some risk to yourself.
Trust is essential to an effective team, because it provides a sense of safety. When your team members feel safe with each other, they feel comfortable to open up, take appropriate risks, and expose vulnerabilities.
Without trust there’s less innovation, collaboration, creative thinking, and productivity, and people spend their time protecting themselves and their interests – this is time that should be spent helping the group attain its goals.
Trust is also essential for knowledge sharing. A study published in the “Journal of Knowledge Management” found that trust was a key element in a team’s knowledge acquisition. Put simply, if your team members trust one another, they’re far more likely to share knowledge, and communicate openly.
Strategies for Building Trust
As a leader, what can you do to create a culture of trust within your team?
1. Lead by Example
If you want to build trust within your team, then lead by example, and show your people that you trust others. This means trusting your team, your colleagues, and your boss. Never forget that your team members are always watching and taking cues from you – take the opportunity to show them what trust in others really looks like.
Open communication is essential for building trust. You need to get everyone on your team talking to one another in an honest, meaningful way, and you can use several strategies to accomplish this.
First, create a team charter to define the purpose of the team, as well as each person’s role. Present this charter at the first team meeting, and encourage each team member to ask questions, and discuss his or her expectations.
Next, consider organizing team building exercises. When chosen carefully and planned well, these exercises can help “break the ice” and encourage people to open up and start communicating.
It’s useful to help your people understand that other people’s approaches and insights can be as valid as their own. This is where psychometric instruments such as Myers-Briggs Personality Testing and the Margerison-McCann Team Management Profile can help people understand and appreciate those that they work with, even when these people have quite different approaches.
Meet regularly, so that all team members have a chance to talk about their progress, and discuss any problems that they’re experiencing. This time spent face-to-face is an important part of getting to know each other. It also creates opportunities for team members to talk, and to help one another solve problems.
Make sure that you “walk the talk” here: whenever you have important or relevant information to share, do so immediately. Demonstrate that open communication is important to you by consistently sharing with the group. The more you share with your team members, and thereby prove that you have no hidden agenda, the more comfortable they’ll feel trusting you and each other.
3. Know Each Other Personally
One way to build trust is to encourage your team members to see their colleagues as people. Think about creating situations that help them share personal stories, and bond.
Do this by asking sensitively about their family, or about their hobbies. Start by sharing some personal information about yourself, and then ask someone else about a hobby, or a musical interest.
Another way to get the team acquainted, and to form stronger bonds, is to socialize after work or at lunch.
For example, you could set aside time each week for informal group discussions. Consider asking team members to put forward suggestions on topics you could all cover. To start with, you could start a discussion around values. Share some of your own values, and encourage others to share theirs. Values are important to most people, and starting a conversation that allows people to share them highlights your team’s humanity.
Use your own best judgment when asking team members or colleagues personal questions – don’t invade their privacy!
4. Don’t Place Blame
When people work together, honest mistakes and disappointments happen, and it’s easy to blame someone who causes these. However, when everyone starts pointing fingers, an unpleasant atmosphere can quickly develop. This lowers morale, undermines trust, and is ultimately unproductive.
Instead, encourage everyone in your group to think about the mistake in a constructive way. What can you all do to fix what happened, and move forward together? And how can you make sure that this mistake doesn’t happen again?
5. Discourage Cliques
Sometimes, cliques can form within a team, often between team members who share common interests or work tasks. However, these groups can – even inadvertently – make others feel isolated. They can also undermine trust between group members.
Start an open discussion about this with your team members, and see what they think about cliques and their effect on other group members. Only by addressing the issue openly can you discourage this damaging behavior.
6. Discuss Trust Issues
If you manage an established team that has trust issues, it’s essential to find out how these problems originate, so that you can come up with a strategy for overcoming them.
Consider giving team members a questionnaire to fill out anonymously. Ask them about the level of trust within the group, as well as why they think there’s a lack of trust. Once you’ve read the results, get everyone together to talk about these issues (but make sure that you respect the anonymity of the survey!)
Building Trust Virtually
If you manage a virtual team, then you might be working with a group of people who have never met face to face, or who have never spoken to one another personally. So, how can you build trust between people who are hundreds – if not thousands – of miles apart?
You can apply some of the advice above when you’re working with a virtual team. Schedule a virtual “meet and greet” if it’s a new team, to help everyone get to know one another as individuals. Or, create a web page for your team’s project, and ask everyone to write a paragraph or two about their personal history and interests.
A team charter is still important for defining the goals and expectations of the team. Make sure that the charter addresses roles, as well as processes for submitting work digitally. Make sure that the charter is as comprehensive as possible, so that people don’t feel uncertain or fearful about the work they’re doing.
Next, make sure that everyone on the team is aware of other team members’ expertise and skills, as well as the value that each individual contributes to the group.
Encourage your team members to treat each other just as they would if they were working face to face. This means that team members should make every effort to be on time for conference calls or web meetings, and that they should let the rest of the team know when they’ll be absent, or on vacation.
It’s particularly important to follow through on the promises you make, and to set an example for everyone else. Keeping your promises is incredibly important in a virtual team, because your word is often all you can give. Positive follow-through builds trust quickly, and can raise the entire group’s tone and expectations.
Trust is an essential element in team productivity. Without it, you’re unlikely to get anything meaningful done. But with it, teams can accomplish everything they set out to do… and more.
As a leader, it’s important that you set an example. Show your team members how critical trust is to you by demonstrating your trust in them, as well as in your colleagues.
Next, make an effort to help everyone get to know each other on a personal level. Encourage conversations on values, family, or hobbies. Last, discourage cliques, if you feel that they’re damaging to the group’s trust and morale.
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Why You Can’t Trust Real Estate Agents When Selling A House
by MIKE HOLMAN
Yesterday, we discussed how your agent and you will have similar goals when starting a house search but your interests will diverge the closer you get to a deal. When selling a house, the same phenomenon happens but usually a lot quicker.
In the beginning: buddies
Usually when you agree to list your house with an agent they will make you sign a contract with them which ensures that you don’t turn around and sell the house with another agent after they have done some work. In my experience, the agent will pull various comparable houses in the area and together you will figure out an asking price. Another step that normally takes place is for the agent to do a walk through and advise the client of possible improvements they can do to the house to make it sell easier.
The asking price is usually the first potential source of conflict – the seller wants a high price and is often unrealistic about what their house is worth. The agent knows that if the house is listed too high that it will sit for a while and any effort the agent makes to sell the house will be a waste of time. Agents make more money by selling more houses rather than getting a high price for each house so they want to make sure that the house is listed at a reasonable market value or lower. This is why pricing a house low for auction is so popular because it’s the best situation for the agent. Another situation is if a client wants to price the house high – then the agent has to bide their time and work on the client to lower their price so it will move.
Thinking about accepting an offer – Trust no one!
Things that your agent might say (and you should ignore) when you are selling a house:
“Since I get paid on commission – the more you get for your house, the more I get paid so we both want the same thing”. This is one of the biggest lies in real estate. Yes, mathematically an agent will get more commission if your house is sold for a higher price but the problem is the amount of time it might take to get that higher price is not worth the extra commission. For example if your house has a market value of $400,000 then your agent’s cut might be 2.5% or $10,000. If you are patient and wait for someone to come along who will pay $410,000 then the agent will make $10,250 for an extra $250. To get this $250 they might have to do several open houses and wait quite a while. Clearly they are better off just selling the house for $400k (or even less) and taking their $10,000. The problem is that the difference in selling price to the agent is pocket change but the difference to the homeowner is huge since we are talking about a $10k difference.
Negotiation – don’t listen to a word your agent has to say.
At this point you are potentially pretty close to selling your house. You want to sell the house at the highest price, the buyer wants to buy the house at the lowest price and your agent just wants you to sell the house and doesn’t care at all what price you sell it for because they just want the deal done right now. Since selling at a lower price will get the deal done quicker a lot of agents will encourage you to counter lower which basically means that you are negotiating against them as well as the seller.
Things that your agent might say (and you should ignore) when you are negotiating are:
“Don’t counter offer too high or the buyer might walk”. If the buyer has put in an offer then it’s up to the seller to accept the offer or reject it with a counter offer. It’s true that a high counter offer might scare off the buyer but isn’t that part of the negotiation?
“Your first offer is often the best offer”. Another way an agent might phrase this one is “We have an offer which means if I can get you to accept it by any means possible then I get paid very soon”.
“Dual-agency means there is no conflict of interest even though I represent both parties”. The “dual-agency” scam is where a selling party has a real estate agent and a buyer comes along who doesn’t have their own agent. The selling agent will offer to “act” as both the selling agent and buying agent and of course collect double the commission. Even though this is such an obvious scam, I actually don’t think this one is a big deal since real estate agents are basically working against you anyways at negotiation time so adding more conflicts probably doesn’t really matter.
“Are you willing to lose this deal for $2,000?” (or $5k, $8k) This is a tough one – on the one hand it seems silly to not close the deal and be only a half of a percent away from a deal but on the other hand shouldn’t your agent be asking this question to the buyer? Ie – “we are going to walk, do you really want to lose this deal for $2k?”
“Are you willing to lose this deal for $12 a month?” This is part two of the previous point which is applied if you don’t bite on the first attempt. It’s also a more useful gambit if the “separation” is a bit greater. If you and the buyer are $12,000 apart then that sounds pretty significant but what if you are only $75 a month apart (for 25 years) or even better what if you are only $63/month apart (over 40 years).
Conclusion (pretty much the same as yesterday)
The more you educate yourself about the real estate market you are looking in and how real estate agents operate then the better off you will be when selling a house. Real estate agents are quite useful when selling a house because most people won’t buy from a private seller and because they have access to MLS.
Whatever you do, never forget that they get paid when the deal gets done and only then. They don’t get paid for having extra open houses or walking away from close deals.
Do you have any good “lines” that you were told when selling a house?