Saturday, February 03, 2007

Don't Hire Your Friends

by Osman Parvez
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Does buying or selling a house have to be a painful experience?

A friend shared a horror story with me the other day. It was his first home and like many, he chose a friend to be his agent. It went badly.

Choosing a friend as your agent is a common mistake. Whether from loyalty or a belief that friends would never steer you wrong, people often choose friends to help purchase or sell a home. At first glance, it might seem as if there is nothing wrong with that. After all, if you can't trust your friends, who can you trust, right? It's only when you look deeper that you realize how much trouble can arise.

Here's 5 reasons why hiring a friend can be a big mistake.

1. Communication Challenges. Buying or selling, you want honest, straight forward communication. Nothing less. Sometimes it's hard to be completely honest and forthright with friends and family. Straight talk is a lot easier if you’re not worried about offending the person you care about.

2. You Become a Lesser Priority. When an agent is juggling multiple clients, the needs of personal friends (or even family) might come after others. Think about it. You're probably more forgiving of friends in general than hired professionals with whom you don’t have a personal relationship. You’re more flexible and forgiving of friends, and ultimately this allows the agent to de-prioritize you when they're working with multiple clients (which is most of the time).

3. Unnecessary Compromise. Friendship can sometimes cause compromises that are not to your benefit, perhaps even impacting negotiation strategy. When you're buying a house, it's normal to expect some tension and conflict during various points of the deal. If you have a difference of opinion with an agent-friend, this puts you in an awkward position, influencing getting the deal done, perhaps decreasing financial return, and possibly even wrecking your friendship.

4. Personal Disclosures. Buying a home, agents often play therapist. We often spend weeks (sometimes months) showing property to clients. Because of this, we'll inevitably learn a great deal of information about a buyer’s financial situation, the ability to afford certain homes, the state of their marriage, and more. We've been in the middle of many arguments, seen shouts, threats, and tears shed. Of course we hold our clients information confidential, but do you really want to your friends to see the dirty laundry?

Finally...

5. You Can’t Fire Friends. At the end of the day, you'll spend thousands of dollars for the service of a real estate agent. Just like every other professional relationship, you should try to get the best service for your hard earned money. If you find that your agent isn't performing, you'll want to hold onto the leverage of a big hammer - the ability to fire them if you need to. The potential to lose a client is a powerful motivator but because of the nature of friendship, most of us would never fire our friends, even if they were horrible in every imaginable way.

Bottom Line?

Like many agents, we enjoy helping our friends and family. In fact, we're currently working with friends now. We value their business and work hard to do right by them, but in some cases we use our skills and connections to find other agents instead. At the end of the day we want to preserve the friendship over making money.

Be careful choosing a friend as your agent. As I've said many times, it's time to raise the standards in real estate. When you blindly choose a friend, not only are you probably getting less value for your money, your choice is also creating an inefficient market and that impacts the entire profession. If you feel guilty about using someone else, have a candid conversation and ask your friend for a referral. Explain the logic. Print them a copy of this post. Your friend can earn a referral fee for using their connections to put you in touch with another, equal or better qualified agent. You'll keep your friend and get the most value for your money. Isn't that what it's all about?

Remember, if they're really your friends, they'll want what's best for you. They'll understand.

Image Credit: Caitlinator



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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

1 comment:

  1. Our next door neighbor apparently used his friend as a real estate agent. The reason I know this? the agent came dressed like a pimp to the Halloween party. :) Also, the previous owners were upset about being in a dual transaction (or whatever it's called). I imagine it's hard to be unbiased when the other client is your buddy. In fact it strikes me as a little sketchy...but then again, may thee among us without sin... :)

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