34. SELLING YOUR HOME- COMMUNICATING WITH THE OTHER SIDE (PT. 1)

SUMMARY KEYWORDS

real estate agent, client, negotiation, people, sell, question, agent, transaction, person, negotiation tactic, professional negotiator, house, money, real estate brokers, big, buy, top, Adrian, real estate, negotiator

SPEAKERS

Rob, Intro, Adrian

Intro  00:02

Welcome to the get rich, slow podcast. This is the stuff we and our expert guests wish we knew a decade ago to get the most out of our financial life will provide you with insight into wealth building activities and practices that can expand your net worth exponentially. get insight from top professionals who will reveal how to build wealth the long way, work smarter, not harder and identify your financial blind spots. With over 25 plus years of experience as licensed real estate professionals and a long track record of winning for their clients. Robin Adrian will teach you what it takes to be an everyday real estate millionaire.

Adrian  00:41

Hello, future millionaires. Welcome back to the get rich, slow podcast, I am your co-host, Adrian Shermer, joined by my fellow co-host, Rob elegant. Hey, Rob.

Rob  00:50

Hey, good morning.

Adrian  00:52

Today is an awesome one. I’m really excited about this selling your home, how to communicate with the other side, we’re gonna go over the all-important topics of the ins and outs of the actual negotiation process in real estate. Talking about where a broker provides value during that negotiation process, and sort of just the know how type of topics that you know, will hopefully help you in your own negotiations when it comes time to buy and sell. Right?

Rob  01:23

Yeah, this is a fun one. It’s near and dear to my heart. And it’s the core of what we do. We’ve you’ve mentioned in other in other podcasts, Adrian, that when you own a home, you’re in sales. Yeah. Yeah. If you’re just selling one thing, we had that episode A while back. And it’s, it’s sales? Well, how do you have sales without negotiation? Right? So absolutely, that’s the piece. So how to, if I’m

Adrian  01:52

selling something on Craigslist, even it’s a chaotic process, if you ever sold anything in your life, you know, how, how difficult it can be. And even if it’s something that you know, it takes time to learn, you know what the sales component of it, you can be an expert in a product, you can be the one who made that product, it doesn’t mean you’re gonna be good at selling it. And for a lot of companies that can be make or break, having a brilliant product is not enough. You know, they say things sell themselves. Rarely is that true? Honestly, in my experience, you know, I’ve worked for mega corporations that still had sales teams, mega sales teams, you know, everybody knows what Coke and Pepsi is. But they continue to spend tremendous amounts of money on advertising and sales, right? And there are lots of scientifically researched reasons for that. So let’s start with one of my favorite real estate questions. And I feel like you’ve probably answered this so many times that I could ask you in your sleep, and you’d mete out a response. But, sure, let’s give you the benefit of the doubt it’s sunny, you’re awake? Why should someone hire a real estate agent rather than going through the selling or purchasing process on their own? And to stretch a little further for you? What was the biggest area that you believe there’s value provided to your clients or any client of a real estate agent?

Rob  03:09

Well, this this is the answer to this has changed for me or evolved over the years. I’ve gotten to the point now, where I actually kind of push people a little bit off of their, their, what their expectations. And I say, well, actually, we’re really, really expensive in our world. Right? Yeah. Like, let’s, let’s just go with, you know, $700,000 house, which is, you know, upper average, you know, in the Portland metro area where we’re at. And I’ll just tell folks, man, I hope you see some value in what we do. Because you’re gonna pay, like, typically, we would charge $35,000 To sell a $700,000 house. That’s a lot of money. That’s a brand-new Honda accord with all the bells and whistles, right? It is, um, and the reason I do that, is that’s a lot of money. And I want to get the person’s attention. And I want to make sure that I’m articulating exactly what the value is that we’re bringing. The conversation from there usually goes, well, yes, I split that, so I only get half of it. I wish I got the whole thing. I don’t. And but the value that we bring the reason why you should list a house with an agent, a top agent, not just an agent, is because that were worth that $35,000 And then some. Typically, a top agent is going to sell for five or 6% over the average. The end depends Hang on market conditions and that sort of thing. But the average agent will typically sell below what the averages or the meet what the average is for the area. And we’ll be in a situation where we’re five or 6%, above the average, and most agents aren’t even average. So you can have a five to 10% very easily swing with somebody who knows what they actually do for a living. And what we actually do for a living is not take pretty photos and open doors and show houses NASA. Yeah, anyone can do that. That’s what’s called an Uber driver that opens doors. That’s your typical real estate agent. Hey, I passed a test with the state. And now I can sell real estate, which is high ticket items. So I get big commissions. Yeah, exactly. No, you actually are more than an Uber driver who opens doors, you’re actually more than somebody who pays a photographer 1000 bucks to make a cool 3d rendering of your house with a virtual walkthrough and, and, you know, pretty pictures and all that sort of thing. You’re actually more than somebody who brings in the stager to make the property look the best. All of those things are just setting the table for the actual meal, that is actually going to provide value, which is the negotiation. Real estate agents are professional negotiators that the highest level the top 234 percent of us in any given market. In the Portland market, the most recent statistics that I have is the top 5% of real estate brokers by production. So by volume, do slightly over 90% of the actual sales volume in the Portland metro area. Yeah, which is crazy. So the other, so I always look at the flip side of that is the other 95% of licensed people to do what we do are scratching and clawing at the bottom of that to get their market share within less than 10%. So and there’s a reason for that, because the professional negotiators rise to the top and they bring the value and their clients come back over and over and over again, to pay that crazy 30 to $35,000. Bill. Yeah, to sell the house because they know it’s worth it. It’s

Adrian  07:25

worth more than that. And that’s a concept we’ve looped back to a number of times in this in this podcast and over other episodes is the relativity of cost and expense. You know, if you go to sell your seminar, $1,000 house, yeah, 100 Records worth of broker fees sounds like a lot of money, but it’s all relative, you know, I know, we have that example, right, the one where you’re running across town to save five bucks, you go to a different store to save five bucks on an item that costs 50 or 100 bucks. It’s a 10% difference. And it’s crazy how much work people will put into certain tasks because of the relative or what they will spend what people will spend on something like a new car, because that’s what a new car is supposed to cost or that’s what you know, you got to break free from that mindset and look at the deeper value and especially again, you know, it’s all relative, when you have a transaction this large, it’s almost an imperative to spend that extra money to be sure that you have someone who is deeply familiar with this process and can do this, frankly, Master negotiating on your behalf. You shouldn’t trust yourself to do that, even if you’re very clever. And you’re great with words. And your you know, we’ve had this a few times actually where we have lawyers, lawyers, but the most difficult question clients, because they’re smart, they’re so clever. And we’ve had lawyers, you know, anecdotally in the lending industry, they’ll send back their loan estimate or something with lines crossed out and this and that. And it’s not even, you know, we won’t even take a liability for it. It’s no, it gets laughed out of a room because it’s you just can’t there’s ways that you can game the system. And there’s ways that the rules have been very specifically set up to protect all parties involved. And trying to reinvent the wheel or, you know, Rehab the entire industry isn’t just brave. It’s a foolish endeavor in certain ways. So I mean, what’s the difference between a good real estate agent and a not so good real estate agent during this this negotiation process?

Rob  09:28

Well, I’ll drill down to a very specific concept here, and this is actually more of a negotiation tactic, but it’s kind of a life tactic. And there’s just give you an idea. There’s 20, I want to say right now, so this is fall of 2021. I believe there’s right around 21,000 real estate brokers in the state of Oregon,

Adrian  09:50

who got back up over the 20. Yeah, number always dives when there’s a downturn and then yes, you know, yes, because the renewals go away, and all the amateurs go this is an expense Have hobby.

Rob  10:00

Yes. And they will exactly. And they just they don’t make a living. Well, and the vast majority of brokers unless they’re supporting those top 5%, folks are also not making living, even in the good times. So when things turn south, and there’s less transactions to go around the rich even get richer, so to speak. Because the, you know, my, my sister’s best friend’s cousin, you know, that does two transactions a

Adrian  10:28

year. No offense, by the way to the 1000s

Rob  10:32

of real estate agents will surely do it. She’s so nice, you know, so nice, such a sweetheart, but you don’t go to Walmart to buy a wedding dress, and you do these transactions, you know, and we can have 1020 $50,000 swings in a transaction pretty easily. Negotiation wise. So there’s a lot at stake. And my point on this, as I meander, of course, is the difference between a good real estate agent and not during the negotiation process is the one that can control their emotions. That’s the difference is they actually understand what they do. They’re professional negotiator. And when people start raising their voices and emotions get involved, so logic gets thrown out the window, and people get pissed or upset, or you know, what have you. When voices get raised? Yeah, they lower their voice.

Adrian  11:24

And I’ve seen this too. I’ve watched clients pick this, the difficult person, they see it as a negotiation tactic, right? I have to win the negotiation. No one. I mean, it’s, it’s, you got to make an argument that there’s a winner and a loser in any negotiation. But its negotiations aren’t binary. These aren’t binary agreements; you’re not going there. Either take it or leave it. And I’ve watched agents be deeply aggressive like that. And it’s funny because I’m behind the scenes and behind the curtain, the rest of us all talk about those difficult agents, and the way that they absolutely nuke their clients’ chances by being so hyper difficult, and I’ve watched transactions flat out, fail over the pettiest crap. Because someone’s just not seeing that bigger picture of how do I ask for that in a way? Or how do I position it in a way, you don’t have to give someone slack? You don’t have to give up that room. You know, we talked about that. It’s right behind me here, one of both of our favorite books never split the difference never split. That’s there’s plenty of lazy negotiation tactics. And frankly, if you go into this industry thinking that real estate agents are simply door openers. That is exactly what you will get.

Rob  12:41

Yes, yes. And, and that’s the it’s that concept. There’s the competitive negotiator who’s trying to go for the win? Well, it’s how you got to the end, they can’t How do you believe it? Exactly? That’s it is how do you define the win, I can serve my, the state of Oregon. And basically every other state, when you become a licensed real estate broker, you become fiduciary responsible for your client, as it relates to real estate transactions, and in particular, the one that your name is on, right. So at the end of the day, if I burned my bridge with, let’s say, Adrian, your fellow competitive negotiator who’s just we’re gonna grind each other. Yeah. Try to grind each other into the ground to just destroy the other person. Let’s say we get the deal done, right, both of the clients and you know, nobody’s really happy, but we got the deal done. Okay, so that client, yeah, okay, they got to buy the house, the seller, they got to sell the house, it happened, but there’s no handshake at the end. And let’s say two months later, I have another client. And so to you, I’m the seller, and you’re the buyer say the role switch? And are you serving your client? When you absolutely did everything, you could annihilate me on the previous transaction? Every dirty trick in the book, right? Yeah. And now you’re representing the next client and our roles are reversed? Did you serve the fiducial needs of that of the current client by a ribbon, trying to rip everybody a new one. Now, on the last transaction, those bridges and we got the same characters, they’re burned, your client isn’t going to get the positive result, right. Because right, you burn the bridge. Right? Right. So if you raise your voice all the time, then raising your voice becomes meaning the normal you know, one of the most important lessons was passed down through my family. My mother told me that her father,

Adrian  14:45

she could think of maybe three times like it was literally a specific number. She couldn’t give me the story for every single one that her father raised his voice, right. He commanded tremendous respect from his children. And this is a, you know, again, I’m gonna go back to never split the difference. But we’ve talked about how this is, everything’s in negotiation, even the fun stuff. So negotiation, right and a big, big piece of that you think about your interpersonal relationships that you have with other people. You know, those are those are built over years of establishing trust by not taking advantage, and you can even see someone, you can watch someone take advantage of someone else, and then lose face with the person who just witnesses you behaving that way. So it carries with the person that you’re working with. And the experience they have carries as well.

Rob  15:33

Right? It does. Yeah, that that. It’s, it’s your name, it’s who you are, you know, the roles we play can change, but who you are your good name, how you treat people. That’s, that’s it, that’s what’s going to carry you. And that’s what’s going to help that client in the long term.

Adrian  15:54

So let’s put this to the next step, then listener service folks out there who are listening right now. This This podcast is not an advertisement for us. We’re trying to spread financial knowledge wherever you are in the country. Whatever step you are in this process. So Rob, I’m trying to buy or sell help me, what are the questions I can ask? What’s the interview that I want to do? We’ve mentioned this before, in other episodes, you interview a real estate agent, you don’t hire them. Because no one even hires them. Really, truly. I mean, right? It’s an it’s a, you know, they’re paid out of the transaction. No one’s shouldn’t be shelling money up front. So how do I decide who’s going to represent me?

Rob  16:33

Well, I get this, I actually ask the question. Usually, when I’m, when I’m talking to someone about listing their home, typically, and into a degree, sometimes when we’re talking about representing somebody on the buy side, and we’ll ask them, hey, you know, who else are you interviewing? Chances are, I probably know the person in our local market, because like we talked about before, you know, top 5% are doing, you know, 90 plus percent of the volume. So I typically, I typically know they’re with the same

Adrian  17:05

as collectives that you exactly familiar with, if you’ve been in the industry for five years more.

Rob  17:09

Exactly. And, you know, we have the same memberships in the master’s circle, you know, just all of these different things. So, the question becomes, what I’ll ask is, hey, who are you interviewing? And quite often people say, oh, no, one, I’d say, well, you know, you should, even then they still don’t often interview if they’re not planning on it. But folks that are, I’ll say, oh, okay, you know, who is that? And I’ll just tell them, hey, ask three questions. Typically, three. The first one is, where do you own your home, just ask the agent, that if the agent doesn’t own a home, they’re obviously not a leader in their industry. Now, I have agents, you know, within my organization that in the past have not owned a home. And that’s not something that I coached them to, because then they’d be talking themselves out of a job. But it does remove a vast majority of, you’d be surprised at the amount of real estate agents don’t actually own their own home, because they just don’t make any money. So how can they? Number two, then I asked usually asked the question of, hey, where do you where do you own your investment properties? And if you get a blank stare, what not? Do you own them know, where do you own your investment properties? Because I want to know, if they practice what they preach, we’ve already eliminated the people that don’t own a home. Now, we want to go to the next level of folks that actually own investment properties, does at least the real estate broker practice what they preach not that the person that they’re buying or selling for, has to be a real estate investor. But, you know, there’s, there’s just that element of, we’re starting to winnow what we’re calling the herd of, now, you’re probably only dealing with the top five or 10%, of real estate brokers. And there’s some very good ones, and there’s ones out there that are better nine, that are that are absolute mentors of mine. And I would say, hey, they’re gonna do a fabulous job for you. I don’t even know that I can compete. Not that I can’t compete, but sometimes you don’t even want to share. Yeah, um, then the third question becomes, what is it that you actually do for a living that no one else is going to bring to the table? Yeah. And there is a correct answer. And, you know, surprise, it’s, I’m a professional negotiator. And if they don’t, if they go through the first two steps, awesome. They’re probably top 10% in their field. And then but you’d be surprised that the majority of those top 10% Don’t actually answer that question. Right. They usually go into Oh, well, I just love real estate and I love working with people and I love this, and I Love that. And oh, I just it just brings so much joy and all of these ancillary things, we do one thing. And that’s to provide value, and that is being a professional negotiator. So those are the questions that I always recommend somebody asked. And granted, yes, I’m stacking the deck. But though it doesn’t make those questions, any less important, because what you’re really trying to do at the end of the day is, I’m trying to identify the top 234 percent of people in my profession, if you’re talking to a couple of those people, you’re not going to go wrong, you’re not going to make a bad choice. Even if they choose somebody else other than me that’s in the top 234 percent. They’re going to be in a good place to succeed truly. Yeah, yeah. Hopefully that answers your question.

Adrian  20:43

It does. And it you know, I think that caps, kind of the like, how do we objectively look at this. So I’m going to tuck that aside, now that that’s the intro for you guys, you want to pick a real estate agent? The negotiation should probably come up. And then if it doesn’t, you know, because they’re used to whatever pitch they’ve got to do, bring it up and ask them the question I’m about to ask Rob. Every agent has their own negotiation style. And there’s not, I’m not gonna sit here and say there’s a wrong or right way to do it. I certainly don’t have enough data on my own to sit here and say, this is the way negotiation should always be we certainly did talk a little bit about the worst way to do it, which is to come in and kick everyone’s toys over and say that it’s sure your way or the highway. But can you speak to me a little more about your negotiation style? What are some of the components that you tie into a typical negotiation? And let’s the obvious stuff upfront, right? You do the research? You do the, what’s that? From our old episode, the three pillars, you know, you do learn your product,

Rob  21:43

right? So strategic positioning between price and product, right? The Holy Trinity, thank you pricing your home for sale, right. So assuming that anyone can do the homework, anybody can figure out the nuances of the property. Anybody can even price the property, although that starts to get into kind of the graduate level of selling real estate versus the, the undergrad. But my own style of negotiation. And there’s really only two styles. There’s competitive, and there’s collaborative. And I guess you could say the third style is just straight. Passive aggressive avoidance, right? They just run, you know, they just which you can make your you can call certain running passive aggressive tactics competitive, but I’m just talking about like, they just, oh, they turn around to the client. This is a tough conversation. What do you think? You know, that’s, that’s that third one where they’re just they’re literally just providing Scrivener duties rather than actual professional negotiation. They’re writing up a contract, they’re not actually providing real estate advice. And yeah, negotiating.

Adrian  22:59

They’re just raking facts from both sides and dumping it on the page and just put it all forward.

Rob  23:03

Right. And there’s no there’s no benefit upside value proposition other than maybe a very small percentage, which could be a flat fee to an attorney, you know, 1000 bucks, or whatever to do something like that. But competitive is, you know, I’m going to come in there, I’m going to be the big swinger. And just, I’m just going to try to bull in a China shop, knock everybody over and intimidate people. I’m going to use you know, different concepts of you know, kind of pull the red herring the distraction techniques, the use social norms and niceties to, to back you into a corner. Try to make you feel foolish, make accusations that are unfounded, but that are hard to come. Hard to respond to. I’m just gonna be an asshole, right? I mean, it’s just, it just it happens. And it happens a lot. And this actually happens even in the top that top 5% that we talk about. Just they’re assholes, and they push people around and there are people that get to a certain level by being that person, right, there is a limit,

Adrian  24:15

right? It’s like a bad debating strategy, let’s say you know, to use an example it’s using. If you were debating someone logical fallacies attacking the person that you’re debating rather than the issues. Presenting a great argument is very hard to counter. But when you start playing, you know, fighting in the mud, then that person is just going to drag you into a cage match and it’s not easy for either of you to come out a winner. Everyone just comes out busted and bruised, and that’s not, you know, it’s not a win. It’s got to be a collaborative effort. I like that terminology, that collaborative effort between both agents to reach because that’s a big component of this too, right? We And to look at it on the price value strictly, right, like there’s neither going back and forth. Realistically, it’s not that way, this isn’t the Gridiron, we’re not trying to make our way down the field to the goalposts or you know who’s going to who wins and losses. So it’s super toxic way to look at this. Because it’s, I don’t know, it’s almost like, what the love language stuff, you know, a win for one person can be an in ineffectual loss for the other, just don’t stop. And that’s it, you have to check what’s important to each party. And then you can start to move bigger things by going, okay, that’s important to the seller. So I’m going to give them this thing that’s really tiny little present to my client. And then we’re going to get the big win over here, where the seller didn’t care at all about that, that piece of it. And a great example of that, I think, is in the repairs, as you’ve mentioned, you know, people look at repairs as they leave a property as inevitabilities. So I’ve watched you and your team negotiate from a purchase side, tons of equity there because they just go well, that’s just you know, it is what it is. And there’s some truth to that. Those are the kinds of things you know, hey, it needs a new roof. Well, it needs a new roof, no matter who buys it. Right, remove this hole, we need a new roof. Now the buyer doesn’t need a new roof. They don’t care about that we came with like the property as it is. Sure once that’s on the table. Once an appraiser says hey, it needs a new roof. It’s incredible how it just gets waved off as like a Yep. Yep, got to happen. It’s got to happen. Right? Anyone who buys from you is going to want this. And that’s a really clever way to position without going this is important to us. So we must. When you say my client must X, Y or Z, given you’re handing power to the other agent, right? Right, you’re saying the pressure point. Go ahead and take this to your who you’re representing. And go ahead and like twist our arm over this.

Intro  26:54

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