“People don’t care how much you know until they know how much you care.”
That statement was shared recently by a colleague describing how we acquire client-relationships. As I’ve reflected on my 35+ years in commercial real estate, I believe no single statement more perfectly captures the essential components of the process.
Relationships rarely start out being complicated. Since we generally seek a degree of comfort in the company we keep, we consciously and subconsciously look for shared values or cultural norms we each honor. A sure-fire way to know an advisor understands this is in the number and kinds of questions he or she will ask when you have your very first meeting; i.e. does this person seek to understand what is important to YOU or are they spending all of their time telling you about themselves?
Let me offer the following five-step evaluation process that I have seen successfully engaged hundreds of times in the selection of an advisor or agent:
- Who is this person? Pilots will tell you that the best weather reports come from the plane that has just flown ahead of you 30 minutes earlier. Same with people. Testimonials from people you know and trust are the best “weather report” you can get on what to expect from the person you have just met, so, check-‘em-out. A good indication of success is how many repeat deals the person has done with the same clients recently. Make sure the “experience” you are hearing about is clearly in the area of expertise needed for your project. If not, then you are dealing with an amateur, no matter how many years-in-the-business he or she claims to have.
- What is this company? Is the candidate supported by a company or a reputation that reflects your business model? If he or she is a small independent advisor, is the support infrastructure in place and organized to get the job done? If it is a large company, is there evidence of real support or simply the illusion of ‘bigness’ that only strokes their corporate image? Again, look for referrals from people you trust and evidence of recent successful assignments resembling your needs. Very often small is better because it is more focused on your success instead of some corporate agenda.
- Does this person have a PLAN? Sometime ago, I was introduced to the importance of having a plan that is ”S.M.A.R.T.” (Specific, Measurable, Achievable, .Realistic and Time-bound). Failure to communicate with clients is the single most-reported failure in our business. A SMART plan will include scheduled reporting or “measurement” and eliminate that problem. Another useful tool I’ve used is the SWOT Analysis. “Strengths” and “Weaknesses” relate to the property issues and demand thorough knowledge of the actual “product” that is to be marketed. Weaknesses are those items that require most of the due diligence to resolve. “Opportunities” and “Threats” are market-driven issues that set the value of the asset in the context of the micro-economic context or neighborhood. Google “SWOT Analysis” and you will get an amazing education on this very useful concept.
- How much is it going to cost? Well, it wouldn’t be very smart if we paid too much for the services being offered, right? However, it is essential that the compensation be both competitive and provide the proper motivation for the best possible service. Let’s face it; you are choosing someone who has other clients to serve and you want to be his or her top, daily priority. What better way to guarantee that than by offering a competitive reward for that service?
- Will this be fun? I know this probably sounds out-of-place in selecting an advisor, but more and more I have found that making sure you are dealing with a person who has a sense of humor will be important when challenging moments threaten the assignment and/or the relationship. Again, this is a character trait of people and requires you to really know the person who seeks to be your advisor.
Notice if you will that none of the items I’ve listed include sophisticated financial analysis. Experience indicates that 99% of investment real estate is bought and sold by people who have their own very private way of analyzing the financial potential of a deal and most of it relates to an existing portfolio need or requirement. We provide some pretty basic analysis that most investors find helpful, but they take up the more involved analysis with their own capabilities.
Someone once showed me this sketch and said, “This is the business we are in.”
I’m sure your belly doesn’t look any more like one of these than mine does, but it makes the point that this really is a people-business and we need to take careful stock of the person whose name is on the business card and not just the company.