Sunday, September 4, 2011

Six Steps to Protecting Your Money

Real estate agents are giving their money away to clients everyday and for no good reason.

With every sales concession agents are literally taking money from their own pocket and giving it to their client.  This is being done at an unbelievable rate when compared to how much money they give to their loved ones.  Think about this:  if your son or daughter or niece or nephew were to ask you for $500, how quick would you be to just give it to them?  Odds are you would give them the third degree; what are you going to use it for, why don’t you use your own money, are you going to pay me back, might be some of the questions that you would ask.  Yet when a client of ours asks for a concession, how quickly do we concede?

Much of this behavior comes from thinking that we know the client’s circumstance and believing we need to do this to “keep the deal together.”  We believe that we know the client’s circumstance because they have told us.  They tell us things like, “we need to net X thousand dollars from the sale of our house, or we just can’t do this,” or “we don’t have any money to bring to closing, so if we don’t at least break even, we won’t sell.”  There are many more similar statements that seller’s make that are rationalizations for not paying for the home warranty, or for convincing us to pay for title insurance, or for not including an appliance, or for persuading us to lower our commission.

They use fairly convincing arguments, but in reality how much do we really know about the seller’s circumstance.  For instance, do you know how much cash the seller has in their bank accounts?  Do you know the balance of their 401k?  Do you know the credit limit on their credit cards?  Do you know how well off their nearest family member is?  If you don’t know these things, then can you really know how much the seller “needs” your help?

If you want to stop giving your money away hand over fist, then you must be slow to concede or stubborn enough to never concede.  Here are some basic steps that you can follow to turn your generosity away from your clients and toward your family or charitable organization:

  1. If you think you know, tell yourself that you don’t.  You don’t really know the clients circumstance, so when you find yourself thinking that you know, just stop and tell yourself:  “I really don’t know.”
  2. When negotiating gather and present options to buyer or seller.  Present even the most preposterous options that you think would have a snowball’s chance in hell.  Remember, you don’t know. 
  3. Advise about potential outcomes based on available options.  This is the crux of our job:  to advise our clients what might or might not happen if they follow a certain course of action.  Be objective, not judgmental.
  4. Get out of the way and let your client decide.  Do NOT decide for them.  This is their business decision, let them decide.
  5. When they ask for your contribution, just say no.  No is the most powerful word you can ever use in negotiation.  Think of how effectively your parents used the word with you when you were growing up.  “No,” it has such a definitive ring to it.
  6. Give where your heart tells you to give.  Identify the charities that you would like to give to and find the address to where you can send contributions.  Find a loved one who could most benefit from your generosity.  Having these giving alternatives in mind ahead of time will help you remain strong when you are most vulnerable to giving in.

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