Graham Wood is senior editor for REALTOR® Magazine. He can be reached at firstname.lastname@example.org.
The Friends and Family Conundrum
When friends or loved ones become your clients, make the business relationship your priority.
May 13, 2015
Sylvia Tsang had plenty of reasons to pause when her brother asked for her assistance with the purchase of a new home in Houston. Their relationship had been tense for years, and she was well aware of his tendency to dismiss thoughtful advice from anyone on just about any matter. But eight years ago, Tsang was new to the business, and her doubts about her brother gave way to her more pressing interest in building her client base. Plus, he was family—and that itself heightened her feelings of obligation. Tsang successfully closed the sale, but the angst-ridden experience taught her a valuable lesson: Sometimes it’s better to say no from the get-go.
Amid the competitive chase for business, friends and family members are a tempting client well, particularly in the early years of your career when good leads can be harder to come by. It's also understandable that relatives and pals may seek you out because they feel more comfortable signing with you than with a stranger. But mixing your personal and business lives can be trying—even when the relationships are healthy. The key to emerging from such transactions with both your professional and personal relationships intact is to establish and maintain respectful boundaries and protocols. But practitioners who've been there say, no matter how much experience you have, the blurred lines can trip you up.
Tsang, now broker-owner of Absolute Abundance Realty in Houston, is still haunted by the emotionally fraught transaction with her brother. She bristles as she recalls his effort to navigate the townhome purchase by himself, even trying to write up the sales contract. He demanded that she pay him two-thirds of her 3 percent commission, insisting that he did most of the hands-on negotiating with the seller. Tsang admits that she acquiesced on the payment mostly to keep the peace in the family. "He's the worst client I've ever had," Tsang says.
When he approached Tsang again a year ago to help with another transaction, she didn't hesitate—to say no.
You have to be able to recognize when a working relationship isn’t good—regardless of your connection to the client—and act accordingly, says Henri Ellis, a sales associate with William E. Wood & Associates, a Howard Hanna company, in Virginia Beach, Va. "We can’t allow ourselves to be bullied into something because of the pre-existing relationship," she adds.
Over her 11-year real estate career, Ellis has represented at least two dozen friends and six family members, most recently handling listings for a brother-in-law and a sister-in-law. Ellis says every one of these transactions was successful because she set clear expectations with each of them up front.
"Don't assume that they understand you don't take client calls after a certain time," she says. "Don’t assume that they understand the buying or selling process because they’re in your world and they see you working all the time."
You also do yourself and your client– loved ones no favors by being agreeable to everything they say. As with any client, when they push against your advice, you should be ready to justify your stance. Mark Wilson, an agent with McNamara Realty in Ashland, Va., says of the seven or eight friends he has worked with over the last four years, a common disagreement has been over list price. "All sellers and buyers have in their head what they think a property is worth," he says. "So I spend time on comps with them to show them what a good price is."
But just as family and friends have to understand your expectations, you have to meet theirs. Your personal connection doesn't permit you to go lax with your business communication. "Don't think that, because they're your friend, you don’t have to call them back, or because they’re family, you can postpone an appointment," Ellis says. "Don’t take advantage of the relationship."
Prepare for the Pitfalls
At the outset, talk about the potential downside to working together, and decide how you'll handle moments of frustration, advises Denver-based sales coach Liz Wendling, who has worked with brokerages such as Keller Williams and RE/MAX.
"Set it up right from the beginning: 'You and I are entering into this business relationship, and like any relationship, it’ll hit a glitch or a bump or a barrier. Can we commit now that if we get to that point, we can work it out or feel comfortable to move on?'" Wendling says.
As you talk through potential sensitivities, make it a warm conversation. Let your friend or family member know that because they are close to you, a successful transaction with them can positively affect your business practices. "Explain that because you value their opinions so highly, they can make you even better at what you do," Wendling says.
Once the business relationship begins, try suspending the personal side of your connection and discontinuing or reducing personal activities until your work together is done, suggests CC Underwood, who leads the Sellin’ With CC Team at Keller Williams Realty in Jacksonville, Fla.
Friends and family want both your expertise and your emotional investments in them, Underwood says. "But it's our job to take the emotion out of the process, so you have to try and tamp that emotional side down. Stay away from personal conversations and make it clear that you’re going to treat them as you would any other client."
It's natural that parties in any relationship will have disagreements. In a business relationship with loved ones, though, conflicts can have greater emotional fallout. When you reach an impasse, keep your cool and reaffirm your commitment to their transactional goals.
When Underwood helped her Aunt Dottie sell her home two years ago, the house sat for months with no offers and little buyer foot traffic. Still, Dottie expressed frustration when Underwood advised that she lower her asking price. "I just kept going back to the 'why'—why I’m here, why I want to accomplish her goals, and why my suggestions will accomplish them." Dottie ultimately agreed to a price reduction, and the home sold shortly thereafter.
Still, when loved ones feel uneasy about some aspect of the process, like discussing their finances with you, it's important to address their discomfort. Reassure buyers that you have a limited role in determining what they can afford—loan officers and mortgage brokers will get into the detailed information about their credit score, debt-to-income ratio, and financial history. If your clients are seller, you'll need to know how much they owe on their mortgage and whether they are current on their payments, but you don’t need granular details on their payment history.
If they still show a reluctance to share financial information you need to know to work in their best interest, talk openly with them about it. "Often, people will give us clues about their discomfort but won't verbalize it," Ellis says.
"If I address my observations head on, I can avoid problems later in the process. Sometimes just acknowledging that this is an awkward conversation is all that is needed to alleviate the discomfort and gain their trust."
During a recent listing appointment with a friend, Ellis could tell the friend was worried about being able to afford repairs to her home that were needed before putting it on the market. "I finally asked, 'How do you plan to cover the cost of these repairs?'" Ellis says. "She relaxed when she realized that I understood the repair costs were significant, and we were able to come up with a plan that worked for her."
Talking about your commission can also be a minefield to navigate with family and friends. Some will expect you to cut your commission because of your connection. While commissions are always negotiable, don't automatically agree to a reduction. Try to explain your worth first.
"I’ve had friends say, 'Gosh, you’ve made X number of dollars off me. That’s really a lot of money,'" Ellis says. "They just needed a little bit of a reality check. It doesn't automatically register with them that this is how I make my living." Educate them about how you arrived at your commission percentage, gently reinforcing that you don't get paid until a deal is closed. "Once I remind them of that, they become real advocates for protecting my commission," Ellis adds. Plus, consumers often don't realize that their agent pockets only a fraction of the commission check. Make sure family and friends know that, too.
A Peace-Saving Alternative
There may be no greater joy than helping a friend or family member navigate the biggest financial transaction of their life. As a professional, think and talk openly about the potentially awkward issues that might arise. Stay calm and collected as you strive to get to the closing table. But if your personal history with friends or loved ones makes the likelihood for contentiousness too high, there’s no crime in turning down the business. You can still serve them in the most professional way possible: Refer them to another practitioner you trust.