In a world without flaws, people are honorable in their business dealings, and life in general. There is a spirit of abundance, open communication, and collaboration towards a common goal. There is good will, and good faith. Honorable people deal with each other honorably by talking straight about all material issues; they deal equitably with each other by seeking first to understand before seeking understanding, and establishing clear expectations with mutually agreed rules of engagement to nurture mutual respect, consideration, efficient business dealings, and eventually, mutual trust.
Under-Handed Tactics Benefit Nothing and No One
When people use under-handed tactics to gain an advantage; when they add questionable items in their agreements and avoid addressing the concerns or questions; when they expect someone to produce results or work without any assurance of compensation, they are operating in ways that are less-than-honorable; it is the mark of a fearful and protective soul with bad intentions.
In an industry where people will no doubt run into each other again over the course of doing business, it is worth the time and effort it takes to communicate in a manner that does not diminish the value of the other person. It’s all about addressing the tough issues with the intention of maintaining and developing fruitful business relationships over time.
Aspiring Towards a New Norm
It is the quality of our relationships–whether business or personal–that makes life rewarding. Good relationships are worth the effort; the rewards are beyond measure and they are self-evident. It is about collaboration, and not competition; it is about aspiring to a spirit of abundance, and not adversarialism. We can raise the bar in our industry; we can change the landscape from cut-throat to cooperation, and we can all still thrive regardless of any differences we might have. We can do this!
There is a common complaint among multifamily buyers. These buyers complain of seeing the same listings over and over again from a barrage of brokers that do nothing more than push paper around, and yet these buyers do not realize how they are co-creating these conditions. They never really grasp that in order to improve the quality of their buyer-broker relationships, they must contribute to the solution through their own attitudes and behaviors in the market. There are a few common reasons why this is a challenge for some individuals and businesses:
- These buyers are used to a certain way of doing things and because of this; they do not know how to distinguish between brokers that add value to their transactions vs. brokers that expect compensation for merely making introductions.
- They treat all brokers the same including the ones who could have been a valuable resource to them, and to their businesses.
- They alienate good brokers by expecting them to invest significant amounts of time sourcing properties without any written assurance of compensation. This brings to mind a good question. Would any reasonable person work without the assurance of compensation? To be sure, it is as unreasonable and asinine as it sounds.
Serious buyers, listen up!
In order to improve the quality of properties you are receiving from brokers, you will need to change the dysfunctional relationship you have with them. Learn to recognize good brokers and realize that developing solid and enduring working relationships with them takes mutual consideration. Realize that sourcing off-market deals is a very time intensive activity. It is an activity generally reserved for trusted buyers. Even if a broker wanted to, they could not reasonably expect to invest the time it takes to source off-market deals for every single multifamily buyer in the market. To attempt such a thing would leave no time for anything else…no time for family, no time for friends, and no time for self.
The Way Forward…
For the reasons mentioned above, any professional broker with common sense—and an ounce of self-worth—is going to require a service agreement of some kind before engaging a project and investing any significant amount of time working on it; otherwise, they are gambling with–and wasting—valuable time. For a buyer to simply say, “bring me a deal first” is pure ignorance, because it imposes an unreasonable expectation on a broker to invest time without the assurance that the time is worth investing in the first place.
Here are four things multifamily buyers can do to improve the quality of their buyer-broker experiences:
- Learn how to recognize brokers that bring value to transactions, and remember that not all brokers are created equal.
- Be responsive to questions and requests for feedback—don’t leave them hanging. It’s just plain rude.
- Establish expectations of a working relationship in writing. Don’t leave it up to chance.
- Don’t expect a good broker to work without compensation, or at least without the assurance of compensation at close of escrow
Multifamily buyers have nothing to lose—except a barrage of stagnant and old recycled listings—and they have everything to gain including continued growth, prosperity, and loyalty from brokers that prove themselves to be a continuous valuable resource. It just takes a little mutual respect and professional courtesy to make it happen.
The Federal Reserve set out new polices for banks that decide to rent out foreclosed homes, endorsing a strategy for managing the huge number of distressed properties that have piled up during the housing bust.The central bank said in a six-page policy statement Thursday that the Fed’s regulations permit the rental of foreclosed properties to tenants “in light of the extraordinary market conditions that currently prevail.” The policy clarified that banks that would otherwise be required to sell off the properties more quickly can turn to rental as a strategy.
via Fed Blesses Banks’ Foreclosure-Rental Approach – Developments – WSJ.
What defines a serious buyer? The first thing that comes to mind is honesty. This means, someone who is honorable and forthright, and are putting their very best into making a deal they want, “fly”. As in all phases of life, business is no different. There are steps to be taken in order to make something happen successfully.
In Multi-Family, an LOI (a letter of interest), and POF (proof of funds), are imperative from serious buyers. These show simply that they have interest in a particular property, and that they have the resources to fund the transaction, if all is acceptable to both sides of the deal. In many cases there exists “buyers” who will not comply with this, and therefore are considered “tire kickers”, and time wasters…”trolls” in the world of multifamily real estate. More often than not, these types of “buyers” are not buyers at all, but elements of “daisy chains” using deceptive maneuvers to get on the money train. This is a dishonorable element that has no place in the real business world. What makes a successful win-win situation, are honest buyers and sellers working together towards establishing a positive end result.
A welcome attempt to restore the appeal of initial public offerings in America
Mar 31st 2012 | from the print edition
HAVING spent years heaping new rules onto its financial markets, America is about to take a modest step in the opposite direction. On March 27th Congress passed the JOBS or, rather ludicrously, “Jumpstart Our Business Start-ups” Act, which aims to revive growth by easing the regulatory burden on companies seeking to raise capital (see article).
The IPO drought does not mean firms cannot raise capital. There are plenty of other ways for them to do so, from private equity and private placements to bank loans. But the public markets serve a unique purpose: they provide capital directly to young, growing firms, give early investors a means to cash out and enable ordinary investors to stake a claim in the fortunes of those firms.
via America’s JOBS Act: Uncuffing capitalism | The Economist.
The House overwhelmingly approved a measure Tuesday designed to make it easier for growing companies to attract investors and comply with securities laws. The bipartisan measure, strongly backed by both parties and the White House, passed 380 to 41.
The Jumpstart Our Business Startups Act, or JOBS Act, first passed the House earlier this month with wide bipartisan margins and the Senate approved it last week after adding amendments that provide additional safeguards on “crowdfunding” to prevent credit scams. The House needed to approve the changes before sending it to the White House for President Obama’s signature.
The legislation lifts Securities and Exchange Commission restrictions on running advertisements soliciting new investors and permits “crowdfunding” so that entrepreneurs can raise equity capital from larger pools of small investors. Small private companies also would be able to sell up to $50 million in shares as part of a public offering before having to register with the SEC, and could have as many as 1,000 shareholders, up from the current cap of 500.
via House passes JOBS Act, sends bill to Obama – 2chambers – The Washington Post.