Being in Real Estate is a Speculative Sport
Real estate is such an interesting business model. I know you’ve all heard me say this before, but the more I lean into this sentiment, the crazier I realize it is. Real estate is a speculative sport. It is unlike almost any other professional service-based business. Why? Because we work for absolutely no compensation up front and without any guarantee of reimbursement for our time and money spent.
Financial planners charge a fee upfront. Accountants charge upfront or work off of a retainer. Wedding photographers charge a percentage of their total fee upfront, with a contract in place to be paid upon completion. Attorneys collect retainers. Architects and interior designers charge for services upfront or in increments based on work completed. The real estate photographers, videographers, and stagers that we use get paid upfront for the services that they provide, regardless of whether or not the home they are providing services for sells.
We get paid IF and only IF a home sells. And let's face it…..there are endless components to every transaction which are completely out of our control that could cause a deal to NOT close, yet we have front-loaded time and money. Crazy, right? Yes! The answer is a loud YES!
How do we navigate this craziness? With better conversations! While we all fully understand the magnitude of the upfront expenses involved in each transaction, do our clients? The answer is probably not because people often don’t know what they don’t know.
Ensuring our buyers and sellers understand everything we put into each deal can create stronger relationships. It can help forge greater respect for the service that good agents provide. It can also help weed out clients you may not be in alignment with. The results of these frank conversations with my clients have been so interesting. I've had sellers ask how much they can contribute to the upfront costs of getting their home to market and buyers that decide that they will drive by any listing that seems interesting to them before we schedule a time to see a home together. I have also had sellers who have insisted on paying for staging upfront, even though we run an in-house staging company and provide staging as a free service to all our sellers.
Having meaningful conversations with our clients about time and money is absolutely not meant to guilt anyone. It is meant to provide clarity on the process and demonstrate your value.
