01 Feb Why Your Reputation Matters
You’re trying to sell a property you have under contract, but you can’t get other real estate investors to return your calls. Why? After all, this is a good deal…
Why won’t they give you the time of day?
Well, why should they answer your call, text or email? Have you given them a reason not to?
Here’s the thing — you need other people to work with you in order to do this business. You need sellers to sell to you, and buyers to buy from you, and contractors to do repairs, and loan officers, and private money lenders, and so on. What happens if you get a reputation for breaking deals, or making promises you don’t keep, or not paying your debts in a timely manner, or poorly estimating your deals? Would you want to work with someone like that?
Reputation Matters: Keep Your Word
This is crucial — don’t make promises or sign contracts you can’t fulfill. Your word is your bond. If a thought crosses your mind that you could back out of a deal with Joe because Mike will pay you more, flush that away fast! You had better close the deal with Joe, because he will likely tell everyone that you backed out of the deal. He also may be upset with Mike, thinking the deal was stolen from him. Even if it wasn’t signed yet, you had a verbal agreement. Now you and Mike have bad reputations, and all for a few dollars.
Instead, close with Joe. Tell him that Mike offered more money, but you already had a deal with Joe so you’re honoring it. You might take the next deal to Mike first if he pays more, but don’t screw Joe over. In the long run (maybe as soon as your next deal), you will lose much more than you made on this one.
Sometimes things happen in the course of a transaction and you might have to back out of a deal. This is real estate, and that’s life. But you don’t have to complicate things or let others get harmed in the process. Try to protect as many people as you can, or at least help them.
Be honest with everyone involved (including yourself). If something torpedoes the deal, let everyone know as soon as possible and apologize. It may not be your fault, but apologize anyway; it helps keep everyone on good terms.
Should you take a loss just to close the deal and not break your word? That’s something you will have to evaluate at the time. You might be able to go to one of the parties and ask for a renegotiation because you simply can’t fulfill the original deal, or because it will be a big loss for you. Again, just be open and honest with them. Most people are pretty understanding. If you’re helping everyone get the deal done, maybe the problem can be spread around so no one takes a major hit. Try to help everyone out as best you can.
In the end, you might decide to take the hit to preserve a relationship that has been profitable and/or may be in the long run (such as with a buyer or private money lender). If you do, be sure to let them know so they understand what you did. Don’t gloat or use it as leverage, but tell them you’re taking the loss because that’s the deal you made. It builds a ton of good will, and may be reciprocated in the future.
The worst thing you could do is run and hide. Answer calls and texts. Better yet, call first and explain what is happening. If you disappear, consider your reputation trashed. You will find it very difficult to work in this industry after that.
Stand tall and take your lumps if you can’t find a way to solve the problem. You will gain respect. Everyone in real estate has had a deal go bad on them. If you stay engaged, you can make the best out of it. If you disappear when times get tough, your business won’t be far behind.
Trust is the Key
Respect is given based on your behavior. Trust is earned because your actions have proven your responsibility. Going back on your word, even once, can destroy a reputation for years. You can ruin your reputation before you even get one by promising things and not delivering. Breaking agreements is the fast track to bankruptcy.
Trust is a reciprocal relationship. Those who trust you will give you more leeway than those who do not. You also will find it easier to work with other people, because they will know they can count on you. Reliability is an often overlooked characteristic to a successful business person.
Your Word is Your Bond
Treat your word as a blood oath with others. Don’t break it without a very good reason, and even at that you had better work like hell first to avoid breaking it. Because once people start believing that you always keep your promises, they rely on your performance. This isn’t “fake it ‘til you make it,” this is just “make it” from the start. As in, make your word be a core value and something you break only in the most dire situations.
You will find all kinds of benefits to keeping your word — deals will be easier because people will trust that your valuations are correct, that your description of the property is accurate, and that deals are moving and closing. If you have issues come up, talk to people. There is nothing that good communication can’t solve, or at least make the situation less problematic. The earlier, the better and the more thorough, the fewer problems.
Being trusted brings innumerable benefits. You will have bigger buyers lists with buyers eager to take your deals quickly, your contractors will know that they’ll get paid timely, you will have loyal and available private money lenders, bankers will make exceptions for you, and other people will help you when you need it (and you will from time to time).
Occasionally doing the right thing may hurt you or your wallet, but the value of good relationships is impossible to measure. You can’t buy them; you can only create them with your actions and ethics. And when you’re in a tough spot, those relationships can be your lifeline to getting out of the situation.
Who Do You Want To Be?
Keep this in mind: Are there people who have treated you poorly in your business or personal life whom you do not want to work with again? You don’t want to be that person. Instead, strive to be the person everyone wants to do business with because you keep your promises and over deliver. Be the one who fixes and saves deals, the one who always closes. Be the solution finder.
Be available to give advice or help, even if it’s for free or inconvenient. You can have reasonable limitations on this, but don’t be stingy with your knowledge or time. Giving back only elevates you in the eyes of others.
You will have times when you cannot keep your word or you have to cancel a contract. That’s life in real estate. Sometimes forces beyond your control intervene and you simply have to make a call. Exhaust all your options first though. Talk to all parties involved and keep them informed. Rack your brain trying to find a way to make it work. And in the end, an apology goes a long way if it simply can’t be done. Most people understand that things happen, but if you give it your best effort to see it through, they’ll appreciate you.
Most of all, keep your word. Be mindful of your reputation, and work to make it bulletproof.