Ways to Serve and Sell a listing
September 18, 2023
Ways to Serve and Sell a listing. Is that hot ice and cold fire? Maybe, let’s start with a couple definitions:
According to Webster’s: A sale is a transaction that includes an exchange of services or goods for a certain amount of money, and a salesperson performs the act of selling for money—note there is no inherent fiduciary obligation to the buyer or seller other than the exchange of goods for cash in selling. Whereas Service is an act of helpful activity; to help; to aid or to do someone a boon—note that money is not a feature of service, in fact, in the code of ethics we have promised to serve without regard to remuneration. The act of selling is fundamentally focused on self-interest, but the nature of service is altruistic. So, there is an argument to be made that service and sales are inherently antithetical! Yet most of you reading this screed are REALTORS® and have sworn to uphold this dichotomy. It is true that many simply give lip-service to the oath, rather than giving real service to their clients, but that doesn’t beg the question. Bad eggs are not in the majority, though it may sometimes seem so in our very competitive market. As a friend once told me, why assume malice when ignorance will suffice?
I can hear some of you now: I work for a living and expect to be paid; how will selfless service earn me a reliable paycheck? Isn’t it really about the long view rather than instant reward? Let me explain using the prisoner’s dilemma. If you aren’t familiar with this thought experiment, here is an example from Wikipedia:
Two members of a criminal gang, A and B, are arrested and imprisoned. Each prisoner is in solitary confinement with no means of communication with their partner. The principal charge would lead to a sentence of ten years in prison; however, the police don’t have the evidence for conviction. They plan to sentence both to two years in prison on a lesser charge but offer each prisoner a Faustian bargain: If one of them confesses to the crime of the principal charge, betraying the other, they will be pardoned and free to leave while the other must serve the entirety of the sentence instead of just two years for the lesser charge. If both betray, they split the sentence.
This leads to four different possible outcomes:
A: If A and B both remain silent, they will each serve the lesser charge of 2 years in prison.
B: If A betrays B but B remains silent, A will be set free while B serves 10 years in prison.
C: If A remains silent but B betrays A, A will serve 10 years in prison and B will be set free.
D: If A and B both betray the other, they share the sentence and serve 5 years.
What would you do? The logical choice might seem to be to betray, as at worst you’d get 2 years and might go free, but is it? If it is a one-time choice then self-interest might make sense, but what if the choice iterates, as in real estate? We do many deals and if your focus is the long run, self-interest doesn’t serve you or your clients.
Here’s a real estate example: Agent A (the Listing agent) charges their client 6% in their listing agreement and advertises a coop fee of three percent for the selling broker (Okay, this is not a Sherman Anti-Trust violation… this is only for illustration and not a suggestion of what any independent broker might or should offer or charge).
In this scenario, imagine the agents are at the closing table and, through no real fault of anyone, there is not enough money to close, the transaction is short 2%. No one else is going to come up with the dough and it won’t close without a commission-ectomy. If you are either agent you can certainly refuse to participate, putting the burden on the other agent, but what if they refuse as well? So here are the four possibilities: No one cooperates, the Seller doesn’t sell, the buyer doesn’t buy and neither agent gets a commission. One agent says okay I’ll cooperate and the other doesn’t, one gets 1% the other 3, or both cooperate and each gets 2%.
This one is easy, because no-one is at fault…clearly, service to your seller (or buyer) suggests cooperation, as that ensures the sale, but how is this act of altruism beneficial to you when you could have made that extra one percent? It’s more difficult when you are in the right, but the prisoner dilemma still applies. We do real estate in the same sandbox, and everyone gets to see the settlement statement afterwards. We know what we know, and real estate agents don’t forget.
When an agent becomes known as a shark, one who will not share in a situation as above, the word gets out, not only to other agents but to potential clients. The world is a small place and contrary to Kevin Bacon, my experience is we have only 3 or 4 degrees of separation between us and almost any other person in this world. Here at my office, for example, I am only two steps away from folk (alive and dead) as diverse as Ozzy Osbourn, Ghandhi, Trump, Obama, Burt Reynolds and Einstein. We are, any of us, just one step away from any other agent here in the state.
So how do we best serve while also selling? Cooperation is the key. Bet on the long run, and, while being right is good, it doesn’t always serve your client or get you paid. When we play nice with other agents, whether it involves our valued commission or not, we reduce our risk and increase our reputation, which increases business in the long run. Are you here for a quick buck or to build a solid business that will last? Serve, and resist the temptation to be right when it gets in the way of your clients.