So this question or topic comes up pretty often.
Not only just from home sellers, but also in the real estate community, there’s huge debates around this subject.
The question of, what’s wrong with me hiring my friend or family member to sell my house?
First of all, you have to understand, your friend or family member, by default, expects that you’re going to sell your house with them. They just expect it because they are in the business to sell houses, they let you know that they’re in the business to sell houses, and they want you to use them to sell houses.
The issue always comes up of, what if something goes wrong? What if something happens, in the transaction, that affects you detrimentally, or … just sheds a light that maybe they weren’t as professional as you expected.
We’ve seen relationships, change significantly because at the end of the transaction the home seller, (you), kinda goes, “hmm you know what, he or she wasn’t quite the person that we thought they were, you know, that left a bad taste in our mouth as far as doing business with them”.
So you have to take those things into consideration. And so here’s a couple little tips that you can be thinking about as you’re trying to make the decision of who you’re hiring and if it includes friends and family.
Don’t Ask For Advice Until You’re 100% Ready To Hire Them
Number one, first of all, whatever you do, don’t ask your friend or family member for advice. Just don’t ask them for advice at all until you’re 100% sure that you’re going to hire them. And I’ll tell you what. Think about it like this. What if you owned a pizza shop and your friend went down to the store and picked up a couple of Digiornos and walked into the store with those and said “hey can you throw these in the oven for me?” Right? What would you think? You’d think, hey man this is my livelihood, this is what I do. I make pizzas for people and you’re coming in here bringing a frozen pizza you jerk! It wouldn’t feel good at all. And so it’s the same thing. You ask advice from your friend like: “hey well what should we do about this? “Do you think we should fix this up? “Should we remodel the kitchen to get more money?” A variety of questions that come up and you’re asking advice. At this point a couple of things are happening.
Number one, you’re laying the groundwork, in their mind, that, they are in fact gonna get hired by you to sell your house.
Secondly, you’re having them do work. If you go to an attorney and you say, “hey can you give me some advice?”, they’re gonna tell you “yeah sure for $300 an hour”. If you go to a doctor’s office and you walk in and say, “I have just a question for the doctor”. First of all you’re never gonna get in because doctors are too busy. But their time’s extremely valuable. And it’s the same thing with the real estate agent. You ask them questions, they’re working, because they’re pulling from their knowledge and their experience and their expertise over years and years and years assuming that they’ve been in the business for years and years. So don’t ask them questions, or for advice, until you’re 100% sure that you are in fact going to hire them.
Are They REALLY Qualified For The Job?
Here’s the other thing that you need to really take a good look at. They may not be the most or best qualified for the job. You know the analogy that I use is you find yourself in a legal situation. Do you go get the guy, your friend, who just passed the bar exam, to represent you to keep you out of jail? To protect you? To.. Stand by you in the courtroom and have all the answers. I would say probably not. Because you don’t wanna go to jail right? Same thing, you go to a doctor and you say “oh boy I’ve got this tumor and this thing needs to come out because it’s gonna kill me if it doesn’t” but you suddenly realize that your friend just .. finishes getting their PhD and they are just starting their career, you’re probably not gonna go to them because you want the best of the best right?
Same thing with real estate. A lot of people think real estate is kind of a hobby. People think it kinda doesn’t matter who you pick because they all do the same thing. But, I’m here to tell you that’s not true. That is not true at all. Like any industry, you have people who are professionals, who’ve been in the business, who’ve been committed to the business for years…or decades.
In my case I’ve been selling real estate for over 20 years. Most agents don’t survive more than two years. Almost hardly any survive five years.
So, how long has your friend been in the business?
Secondly, how many transactions have they done?
Statistically across the entire United States if you took every active agent and averaged out how many homes those agents sold per year, you would have two measly sales per year. So now do the math on that. If your friend makes two sales a year, even if you’re in Orange County, California, where probably… you could expect anywhere from… a 15,000 dollar gross commission. That’s before splits, before taxes, before expenses right? So more like $8,000 net to your friend in the end. So they take $8,000, they do the national average of two per year, they makes $16,000 in the year. Are they surviving? Are they living? No, not really. Maybe they have a working spouse or something like that that’s helping supporting the household which is great. But it doesn’t mean that they’re a highly qualified agent to get the job done for you.
To me, this makes no sense whatsoever but a past client of mine did something that blew my mind. There was a lady she befriended who lived in her her condo complex. She decided to sell her condo and she told me “you know what, I want to hire this lady.” Now, I’ll give her some credit because she was upfront with me about it. She continued “I wanna hire this lady because I just wanna give her a chance. She’s my friend.” And I get it. Every new started somewhere, I started somewhere, I had to close my first transaction, at some point in time. But, the problem with that was in the end, and cut to the chase here, is that… When she sold my past client’s condo, She actually sold it for $40,000 less than the comparable sales in that complex. And so I get it. My past client was trying to reach out to her and give her a chance and help her out and do all this stuff. But at what expense? She handed over $40,000 of her equity to the buyer. To be clear, the seller LOST $40,000 on the sale just to give someone a shot.
So this is a real big problem. If your friend or family member isn’t doing business consistently every single month ongoing transaction after transaction so that they stay in practice then they lose or never gain the skills to begin with. Like anything, if you don’t practice, you don’t stay good at it right? So definitely… take that into consideration when you’re deciding if you should hire your friend or not?
Full Time (for reals) or Part Time
Are they full time or they part time? Careful though, this status could be a little misleading because if they do have a supporting spouse, that brings the majority of the income into the house and your friend does their real estate business and claims to be doing it full time, it may not be real. Again, even if they say they’re doing it full time, how many transactions are they doing? And folks, the reality is, in this business, a license is really easy to get. It’s really, really easy to get, but, this business to run is hard and expensive. So if they’re only doing a few transactions a year and they’re just barely paying any bills. How are they funding their business? How are they funding the marketing for your home? So things to think about.
A Good Test
A good way to test to see if your friend or family member has your best interest in mind, do this. Call them up, and say “look, you know we love you tons. You’re a dear friend of ours. And the most important thing to us is our relationship with you. And we have an incredible fear, that, if something went wrong, or even if things mostly went right. If even a couple little things went wrong, it would damage our relationship indefinitely. I also know that if I just outright hired another agent you would hate me forever and you would not want to be my friend anymore because your feelings would be hurt. But I have a solution. We wanna use another another agent but we wanna set it up so that they give you a standard referral fee which is 25% of the commissions paid. And that way… you, my friend, my family member, you’re making a good amount of money without having to do any work. And our relationship stays 100% intact. The good part is if that other agent that we hire ends up messing stuff up, then you’re out of the loop on that. It’s all on them.”
And so.. If you sit down with your friend and you kinda explain that to them. If they get really upset and say, “no but we’re friends, you’re supposed to hire me and we’re supposed to do business together and blah blah blah” and all that stuff, you really got something to think about.
What’s more valuable? Friendships are always way more valuable right? But in the end of the day, if you’re putting more money in your pocket because you’re hiring the right agent to do the job, you can make it up to them somehow. And I think any good, mature, individual whose been in the business for a while might say “you know what, I respect that, I appreciate that.”
Frankly for me, at this point in time of my career, if somebody says they wanna just send me a referral check I’m happy as a clam to take it.
So. just do a little recap here. Just keep in mind that your friends and your family members expect you to hire them. They just do. And their feelings are gonna get hurt if you don’t hire them. Especially if you ask them questions and make them work. So address the issue upfront before it gets to that point.
So, if you have any real estate questions at all, you’re selling you have questions, you’re buying you have a question, feel free just to give me a call, my number’s on the page here somewhere.