You just graduated from real estate school and are excited to begin your career. Your instructors have advised you to interview several companies to see what they can do for you as it pertains to training, mentoring and guidance they will give. All companies have the same tactic: tap into your “sphere.”

  • To avoid problems working with friends and family, make sure you understand their situation, set expectations, justify your value and don’t let commission become more important than relationships.

You just graduated from real estate school and are excited to begin your career. Your instructors have advised you to interview several companies to see what they can do for you in training, mentoring and guidance. All companies have the same tactic: tap into your “sphere.”

You hear it all the time.

The no. 1 question posed is: “Who are all these people in my sphere?” The answer is — everyone. It’s your doctor, mechanic, the guy you met sharing an Uber yesterday as well as your aunt, uncle and best friend from childhood.

It’s every person that you know or have come into contact with. Now, in certain instances, some of these people make great clients and are a pleasure to work with; however, many times, they are the exception to the rule.

Here’s some anecdotal proof: Last week, I had closings on two of my listings. Both came from my sphere.

One client — let’s call him John — is a guy I play “weekend warrior” basketball with. (You know the kind. Everyone starts out hustling and playing great defense, and as the games go on, everyone starts walking up and down the court, but I digress.)

The other client — let’s call her Sue — is the wife of one of my best friends. They were just married, bought a house together and needed to sell her previous homes.

I started out by visiting the two homes to find out what was important to them, pulling comps and talking numbers.

As you know, the more work you put into a home to get it ready for market, the better it shows — and the faster it sells.

John was on board all the way. We made a list together of home improvements, and he got right to work.

Sue, on the other hand, took a stand and informed me that people are getting a used, lived-in home and that she wouldn’t be putting any work or money into the house. Fine be me. Everyone is entitled to his or her opinion.

Both sellers wanted top dollar, and I wanted to get them top dollar. Low and behold, guess which one sold faster and for more money? John’s did.

Two days, 13 showings, three offers later — it sold for full price.

Sue’s sat on the market for 60 days, and after a price reduction, finally got an offer. After negotiations, we accepted at a 7 percent discount. She was upset with me for not battling over a few hundred bucks and potentially losing a deal.

However, John was ecstatic with me, and we walked out of that closing room closer than ever.

After that experience, I’ve put some considerable thought into why working with friends and family often ends in disappointment. My four reasons are outlined below.

1. Finances are personal

Money is the driving factor in our world today. I wish it wasn’t, but it is. In our culture, it’s somewhat taboo to discuss our finances with friends or family.

Everyone wants to appear financially “comfortable.”

In real estate, that can get sticky, really fast. Your friends may lie to you and waste your time looking at homes they can’t afford when looking to buy.

They may even not come clean about their real motivations when looking to sell. They could really need the proceeds from their sale to pay off massive debt that you don’t know about.

A lot of times, money can be the sole cause of distrust in a real estate transaction, tarnishing the relationship. After all, solid relationships are built on trust.

2. Expectations won’t be met

It’s vital to set realistic expectations so that everyone is on the same page. Your friend may try to monopolize all of your time or call you at all hours of the night about a listing they have to go see.

It’s extremely important to be upfront with your client, no matter who they are, about what you are or are not willing to do as well as when you are available to talk.

Additionally, discussing goals and creating a game plan to reach those goals is crucial for controlling the expectation. People will take advantage of you, whether friend or family, so as a professional, you need to control the situation.

3. People want more for less

This one is pretty straightforward. In life, it’s not about what you know but who you know. Pretty much everyone knows anywhere from five to 10 real estate agents if they think about, and some may be tempted to ask for a commission discount or “friend” discount.

If agents gave all of their friends discounts, when would anyone make any money?

The real estate commission model may be extremely affected if agents started taking listings at 4 percent because then that would be the expectation for everybody!

Don’t get me wrong, it’s awesome to be able to help out, but your time is valuable, and your expertise comes at a price. I can justify my commission by the value I bring to my clients, and you can too!

4. Relationships can be ruined

This is the most important reason in my humble opinion. Whether you have been friends for one, five or 50 years, a real estate transaction is one of, if not the largest, investments of a person’s life, and that’s a lot of responsibility and liability resting on your friendship.

Things can go south very quickly, and I know a large number of both agents and clients who have lost relationships because of a not-so-great experience.

Is losing your relationship worth gaining a commission check?

Sometimes working with friends and family works, and sometimes it doesn’t. When everyone is telling you to work your “sphere,” just make sure to think of all of the possible outcomes.

If you decide to go to work for your friends or family, be cautious about the way you approach the situation. I urge you to weigh your options.

Sean Smith is a Realtor with Berkshire Hathaway Home Services Realty Center in Chattanooga, Tennessee. Follow him on Facebook or Instagram

Email Sean Smith

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