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Episode 48 Transcript
Home Series 4 of 8
Hello future millionaires and welcome back to the get rich slow podcast, we’re your hosts Adrian Shermer and Rob Delavan.
Rob Delavan 00:09
Good morning and we’re missing Lance at the basics himself today but we’ll see him on the next one…
He will be missed and today we’re going to be talking about home buying and real estate professionals. This is really about the people that you work with in the industry. This is part four of an eight part series and we’re going to start off with a success story. This is not my success story, but I’m excited about it. The branch that I work in, my manager, his wife specifically and another one of my co-workers both had a baby on the same day. So, we have two branch babies sharing the same birthday.
Rob Delavan 00:49
Oh, that’s a win and everybody’s healthy.
Probably not sleeping, fingers and toes accounted for, sleep questionable, we’ll see how it rose.
Rob Delavan 01:02
Love it so upcoming events, please go to ROI-FA.com/events. We have a movie event for clients coming up as a spring event the movie is “sing two” so that’s a fun one. I haven’t seen it yet. So, I guess I’m gonna watch sing two here shortly and then of course, a link to that will be in our show notes and also, our websites will be in our show notes for ROI Delavan Realty and Adrian Shermer, loan officer at director’s mortgage.
We’ve got links on our site as well on the get rich slow podcast site.
Rob Delavan 02:10
And all the different places cross referencing 47 different ways. For our episode ahead, today, we’re going to be again discussing home buying and real estate professionals. It’s the same article that has been coming out for what was it 30 plus years now and from the National Association Realtors, there you go. 40th Anniversary Edition, not 30 sorry, I just started them a decade and it is for part of 2020 through the majority of 2021. We will also cite that in our show notes down below and the information provided supplies understanding from the consumer level of the trends that are transpiring and affecting us today. Again, this is number four out of eight.
All right, Rob, based on the statistics in this report from the National Association of Realtors, 90%, this is actually higher than I would have guessed 90% of buyers stated that they would use their agent again or recommend their business to others. In your opinion, how important is referral based business to your brokerage?
Rob Delavan 03:34
Well, we do the vast majority of our business, in essence by referral, the personal referral is the gold standard and I don’t know the platinum standard is that I just is like the ultimate honor is hey, mom needs to sell her house or buy a house that sort of thing. Like if I can work with every client’s mom.
Like that is a huge honor, I’ve had that before
Rob Delavan 04:04
You know insert my eight year olds like your mom joke here, right?
Rob Delavan 04:16
But that is a big deal, so the statistic is that 90% would use their agent again or recommended their agent to others. What’s funny is there’s not always, they would but they don’t always do that. So, that’s where like having an actual relationship and being a true resource, not just during a transaction, but hey, the transactions done and now they’re doing renovations or you know, if you’re using TurboTax, you’re not adulting anymore or you’re not adulting yet, so they need tax help you frankly can’t do real estate without about tax and you can’t really do tax without financial advising because a big part of, like and then lending consultative. You become if you’re truly earning those referrals, you don’t just get somebody a killer deal. You also right become a person that sits at their financial table and that’s the piece that, it’s worked for us in the sense that we don’t have to chase business. Thank goodness, the phone rings. A fella that I knew way back in the day, this is the long way around answering your questions of how important is it for our business? When I was in my early 20’s, I was working for a bank, which I won’t name and we had to make a lot of cold calls and to sell financial products that people didn’t need and this fellow who was about 10 years older, who at the time, he seemed really old, he’s probably like 32, he told me he said, hey, Rob, someday when you master the sales process and you’re gonna figure out and this was, I had like a flip phone not you’re gonna master sales by having your phone ring rather than making somebody else’s ring and I’m like, oh, that’s cool, how do I do that? He goes, I don’t know, I haven’t figured it out yet and in the couple of decades, since then, I really should call him up. I knew him in Southern California. His name was Tommy Lee and Tommy Lee, if you ever find me again, reaches out. Anyway, the less famous one and he said, I haven’t figured it out yet and well, here’s the thing we have figured it out yet and it’s the referral process. If you build trust, that someone knows, likes and trusts you with not only their own transaction and that a good example, is mom’s transaction. That’s the answer and that is how I make my living. That is how important the referral is, I don’t ever solicit business, I just respond to hey, can you connect and help my fill in the blank friend, family member, and business associate, whatever it is. So, that’s the thing and the amazing thing is 90% of buyers would use their agent again or recommend their agent to others and the thing is unfortunately, in the real estate world and frankly, most lending, financial advising, tax, frankly, pipe fitting or electrical, there’s your bottom 80%, 90% and then there’s your top 5, 10, 15, 20%. At the end of the day, you really want to be working with the top 10% of whatever professional you use. So, that’s the…
That’s really interesting too because anecdotally, I mean, I’m not going to throw shade necessarily, this is these are some generalizations, but I find it funny that a lot of the agents who advertise a lot and who get their clients out of basically just spending money to be in front of people or to be at the top of Google search results often don’t offer the best experience the client experience, just in my anecdotal evidence, I don’t have any data to back this, this isn’t another thing. But it’s just interesting to direct referrals. There’s a reason that those workouts so often, that’s the reason that my business is 100% referral base, I’ve done cold calls, the amount of distrust that you have to break through when you do something, you know, a process like that and it does kind of beg the question, I mean, I guess the answer is money but you know, why do you have to get clients that way is a business that doesn’t advertise potentially, more, likely to be a business like yours, where the quality is high enough that they don’t have to go to that well, it’s possible. I’m sure there are plenty of people who do tons advertising who run excellent businesses and machines, but it is sort of interesting, the referral-based businesses kind of proved themselves to be successful.
Rob Delavan 08:07
So, I’ll drop a couple other statistics on your from this assertion. So, 47% of buyers usually used an agent that was referred to them by a friend, neighbor or relative and 13% use an agent that they had worked with in the past by herself. Yet 90% of buyers would use their agent again or recommend their agent to others. So, there’s some unpacking there is now remember, like a big portion of the population is not doing their second transaction. I mean, it’s just typically people they’re doing one and then that have the second or third or fourth or fifth transaction and many people don’t do third or fourth or fifth, usually people do two or three…
Or that 20, 30 year family gap, you have a couple kids and then you’re like, well, I’m not gonna move them in school districts or whatever and all of a sudden, you’re plugged in for the next two decades.
Rob Delavan 10:24
So, I mean, so there’s an element of that, but it seems like 13% is probably 30% used an agent that they had worked with in the past. So, I wonder, this is again, it starts getting anecdotal and I don’t have the deep dig here of what percentage is the second home, so forth? I do know that basically, in 2021 34% of buyers, were first time buyers, which basically means that, 66% of buyers were second time or more, but only 13% are using who they worked with in the past. So, there’s a little bit of a breakdown. Oh, yeah, I use them again and then they don’t and I think what that is, is lack of engagement and then I mean, a lot of people are moving to different areas, people are relocating. So, there’s an interesting piece there and I’m sure that’s something that we could explore in a future episode. Also, I will say 73% of buyers interviewed only one real estate agent during their home search. If you’re using somebody for the first time and do not have a direct body of work. This real estate sale, you’re hiring somebody and you’re paying them 10’s of 1000’s of dollars to do this job, on the hope that they’ll make 10’s of 1000’s more 1000 on your behalf in this transaction you should probably interview more than one person. Unless you have a body of work and you’ve worked with them before and had incredible multiple results, you should probably be interviewing more than one person. Of course, everybody’s great when they sit down. Ask them about their statistics. Ask them what they do, ask for references, check out the references. I mean, anyway, I could go on and on there; I won’t do that to our audience here. Okay, so the next question I have for you, Adrian is how important is a realtor relationship when it comes to the home buying process and frankly, realtor lender relationship is what I’m really looking for here.
Yeah, absolutely, mission critical. In my book, I’m going to talk to every single realtor that I work with, if I get a client who isn’t working with my favorite team, then, I want to connect with that that real estate agent, I oftentimes have meetings with them before we do our first offer, if I haven’t worked with them before, you got to be comfortable. It’s the same thing as the relationship that you have with your lender and realtor directly. But they should be talking in the background, we should be doing industry speak and we should be talking about you I know that sounds maybe a little creepy or scary to some people. But we need to be having a dialogue we are in this industry. We know the psychology that goes in, people get stressed out, right and there’s a hand holding that needs to happen and there needs to be a unified message and some of the worst transactions that I had been part of, even when I was working as an assistant for other lenders and working my way through the career were ones where that had that communication breakdown and there’s a bit of scapegoating and passing the buck that I’ve seen happen before and it can just be you can have like a bad realtor who just goes That’s the lenders fault, you know, as a catch all to cast blame off themselves and then the lender blames the realtor and the dissonance that the client gets in that situation and the way that it makes you feel just uncertain about the ground you’re standing on at that point that communication is just so key, just the ability to communicate the ability to, if my agent texts me. Worst case they’re going to be hearing from me the next day. Many of the agents I work with honestly are just the result of horror stories from the lenders that they worked with. So, thank you crappy lenders. Thank you to the awful lender who pre-approved a client who had a bankruptcy less than two years ago that I got through just wasted this person’s time. It’s super upsetting. I mean, I literally I teared up, I got furious. There’s no repercussion for this stuff, which is crazy to me, but that’s the way the industry works. This way a lot of industry works like you can mess up and it can be the client who asked to eat the bill for something. So, having that communication, knowing that everything’s in the right place and then knowing that certain things are gonna be taken care of, you don’t have to double check on certain things and that you can call each other out. That camaraderie works really well when you can give constructive feedback. Like, hey, client wants to talk to you. So, they haven’t talked to you in a little while, then pick up on the minor details and you trade that with each other and you can give just the greatest customer experience.
Rob Delavan 15:31
Yeah. So, don’t play hot potato or musical chairs as a blame game. Oh, it’s, you know, pointing fingers and that sort of thing. Just own it, just integrate, I’ve recently, obviously not with your lending team. Adrian, recently had a lender, we had some questions on the representing the buyer and they called and we’re working with them and the lender said, well, you know, I can’t release a whole bunch of personal information. Well, there needs to be a level of permission there from the buyer, where we can actually have a frank conversation. So, we can control the purchasing process and if we’re going to be delayed on a close, we need to know why. You don’t just nebulously say, oh, well, we had some lending issues. Sometimes things take a little bit longer if an appraisal in this case, it was an appraisal was just taking longer and we knew a week ahead of time that we just weren’t quite going to make it on a closed date. Let’s communicate early and often with the other side, because that’s a negotiation piece. It’s an important connection with between the lender and the real estate broker to really work hand in hand and if there is reasons for lending delay that are due to personal finances, that permission needs to be provided. Sometimes it requires a three way call that sort of thing, depending on what it is. Let’s have those. Let’s have that level of engagement.
And that level of trust and I’m going to throw one more thing out there. Rob, you and I have done tons and tons of transactions together. How much have I paid you for those transactions?
Rob Delavan 17:21
I’m pretty sure it’s $0
It is illegal, dangerously illegal, I’m talking lose your license, I’m talking go to jail. I’m talking millions of dollars in fines. There are examples of this every single year, every single year someone gets caught with their hand in the cookie jar, if you have one of our professions recommend you the other profession if a lender says this is my number one realtor, if a realtor says you’ve got to use this lender, I’ve been burned by other ones too much, please use this person. It’s not because they’re getting a kickback because it is illegal to get a kickback. I mean, unless you’re in the middle of them getting caught in fraud, but the technology is advancing it’s so it’s so much harder to cover your tracks with stuff like this every single year. All the workarounds have been figured out to people tried to do clever, now it’s a giveaway. It’s you could win a trip by giving me leads. Nope, they catch everything and they’re listening on every the regulators are listening to this podcast even and it’s important because it gives honesty and it keeps us to our fiduciary responsibility to pass people to a professional based on the ethics based on their performance in the past and you can’t see that, we have very few reviews on websites compared to say like a restaurant, you go to restaurant for four or five times and come up with an opinion and share it with everyone online, you can be one of 10,000 reviews. Realtors and lenders often have maybe double digit reviews. So, even after years in the business, so it can be hard to look at data like that. But if you’ve got a direct endorsement, you can be pretty sure it’s authentic and I mean, I’ve found myself, I probably don’t even know how many times I’ve been on speakerphone in meetings in your office when you guys have your group meetings. But that’s the kind of trust that it gets established over time is hey, let’s just call, Adrian let’s call the lender that we trust, based on experiences, not just fluff and just what they sold you in a meeting…
Rob Delavan 19:23
And you can still engage in trust but verify, right, one of our silly presidents over the last 30, 40 years I think and the concept is its okay to ask a question or a few follow up questions and it’s okay, I recommend this person. Oh, great, when’s the last time used? Could I talk to a client that used you both? Do you have a good reference for that if it’s hard to dig that up? Oh, hold on let me check into that. Well, they’re not ready for that question. Really dialed in team should be read for that question for that reference, what are some of the best situations that happened there? Why is this person going to bring you extra value versus say, the next person down the road? Just ask those questions. Listen for cues. If people have a hard time answering those questions, then they’re probably not answering them truthfully. So, follow up questions, there’s never such thing as too many questions when you’re going through that process.
So solid advice, Rob, how often do you get asked to recommend a realtor or lender to your clients and why do you feel like having the right team? You know, we’re kind of touching on this, why is the right team is so important for the client?
Rob Delavan 20:48
Well, this is an interesting one. I mean, obviously, you know, as a realtor, I’m generally oddly, oftentimes putting like one of my clients; I’m always working with a team member. So, I am actually referring one of my senior brokers, to any referral that comes in, this is the worst kept secret in Lake Oregon, or in Oregon as a whole, Rob doesn’t actually do a whole lot of transaction inside the transaction, I’m more strategic and then I have basically a crack team that’s so much better at the job than I ever was actually providing the results. So, I’m referring that realtor of the right fit for the right person, depending on where they’re at in their journey of real estate, multiple properties, one property, physical, geographic search, area, location, depending on where my real estate brokers are planted and so forth. The clients are asking for that, they don’t always know. They’re also always asking for lender and part of this question was actually geared towards Lance Johnson on the ROI financial side, from financial advising, they’re referring all the time and they have to, just like you and I, in our lanes, we’re licensed and there’s fiduciary responsibility requirements and ROI financial, if you’re a financial advisor, you’re a fiduciary responsible person and to document that and so forth, you can in the show notes, well, you can go to their website and learn all about the disclosures and the requirements. We also have disclosures in this website in the show notes and you can link to those and there’s a ton of things that they have to do, legally, ethically and worst case scenario, you go to jail if you don’t do this, they have to act in their clients best interest and to do that, they have to recommend a great lender who’s actually going to positively impact that client’s finances and same thing on the realtor side. So, why is having the right team so important for the client? Well, the negative answer to that is if you don’t you could get in serious trouble lose your ability to make a living. Hopefully, that’s a big factor. But yeah, it’s true. I mean, that’s one side to consider on this conversation. The other side is, remember, the whole referral conversation that we had at the beginning of this is, how am I going to get great results if I’m referring a schmuck? I mean and I’m never gonna get repeat business. I put my name on the line every time I refer somebody, every time you refer somebody, Adrian, same thing. Every time ROI financial, our tax clients, our contracting side, I mean marketing, I mean, you name it, when we refer people our name is on the line and if they suck, then I don’t know. Rob, he kind of sucks because he has a really, you know, crappy…
Who trusted this idiot, it can lose business for us both and that’s part of why those referrals are so powerful because now everybody’s on the line.
Rob Delavan 24:17
So so don’t trust idiots is I guess the answer and have a high level of connection. It’s so important to have those lines of communication and those expectations and the…
The accountability is fantastic. If you can go back to the person who referred you, if Lance sends someone my way and I do a bad job, they’re going to tell Lance. Lance is going to tell me and that’s, every referred client is more important than someone who just walks in off the streets just the reality of the business. I want to treat everyone has equal importance, but that weight will carry with you I started in this industry with a giant bank, one of the big ones, the United States, again, let’s not name names, but two week program and I was sitting there at a desk able to originate loans. Plenty of mistakes were made in that building and I’m sure some of them on my plate. So, a lot of people feel like they have an affinity to the bank, they are with right or maybe it’s even a direct referral from Uncle Bob or whatever. But there’s only so many experiences that that person has to draw on referrals from your financial advisor or your real estate agent. They’re getting a monthly maybe even weekly connection with this person, they’re probably going to give you a better quality of…
Rob Delavan 25:47
You better believe if something goes sideways and it was something where we dropped the ball on each other’s refer client we’re all over each other’s asses like you wouldn’t believe like what the hell happened there? Doesn’t happen very often but if there’s a ball drop, we got accountability partners…
It might be game over on that relationship or ideally, it’s an opportunity to improve if both parties are level headed. I mean, Rob, you’ve helped me be a better loan officer, I can say that with certainty and it’s a state of constant improvement, right and anyone who’s the best at something is always improving that you never stop.
Rob Delavan 26:34
Exactly, it’s just a question of engagement.
And that’s a wrap on our home buying and real estate professionals episodes. Please stay tuned for our next episode. This is part four in an eight part series. We got four more to go and then I believe next subject we might be getting into some crypto, but we’re gonna mix it around we’ll let you know as we move along but for more episodes to come.
Rob Delavan 27:04
Number five is it’s specifically has to do about statistics within financing the home purchase so it’ll be fun one, we’ll be picking your brain pretty hard.
Awesome, good data, we’ll talk to you next time.
Rob Delavan 27:17
Okay, thank you.