S.E.C. Real Estate Observer

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Jack Jones, as he had done countless mornings before at the local Starbuck’s, stirred a little sugar into his first cup of “high test” and opened his Wall Street Journal to purvey the happenings of the day. The news remained mixed. The usual political and economic turmoil, oil production damaged by cancellation of the Keystone Pipeline, conflicting economic indicators, personal freedoms threatened by the “cancel culture”, politics in a divided country, continuing deleterious affects of the COVID pandemic, open borders, and  middle-class Americans under duress. The only real bright spot was the current real estate market propelled by low interest rates and an appetite for hard assets. An economy heating up with perhaps a shaky underpinning.

However, in reading about the world in disorder, Jack was reminded of previous times of distress. He recalled an underlying anticipation that there is, as so often has happened before, a resilience of America to weather uncertainty. But he also recognized an anticipation, as yet unrealized, that may promote a positive environment or a further negative one. Jack often thought of recessionary affects as the “black swan” of business and markets. Something happens that the best proformas and feasibility studies do not anticipate.  He recognized that with the euphoria of real estate activities of the day, many had forgotten that the financial world often teeters on the head of a pin. Jack was reminded that all markets rise and fall and in today’s world that can happen with lightning speed. Jack knew that Real Estate practitioners needed to be ready to serve their clients no matter the conditions.

Jack appreciates and is comforted by his station even with these uncertain times, but remains unsettled by the future.  More recently he took stock of his own modest success and some of his failures. To him, in the later years of his career, it has certainly been a time of reflection, a time of sorting out weaknesses and strengths, a time of looking back on what made him successful in spite of the ups and downs of past market turmoil’s and wondering how his successful journey through many prior “hard times” could possibly help others. Especially with a real estate market where everything is positive and negative at the same time. Obviously, his comfort was the product of many practitioners who asked for nothing in return for imparting their wisdom upon him, except the burden of transferring the knowledge they imparted to be passed forward to another worthy real estate soul.  Jack wondered how at this stage in his life he could make a difference. Would anyone listen? How would he be received? Where would he start?

Jack had always played his cards a little differently. In many respects local commercial real estate practitioners viewed Jack as an oddity in the business.  He was always a bit of a contrarian who had been held as almost suspect by using strange approaches and concepts to the real estate landscape. Something that his local counterparts never really understood and were therefore a little suspicious of.  Above all, however, Jack had been successful in maneuvering through several cyclical downturns and had actually made more money at these junctures than when the real estate market was in top form.  He credited most of his enlightened success to the members of the Society of Exchange Counselors who graciously invested their time and talent in his success. Now in answer to his contemplation about the worldly real estate outlook and looking for some way to “pay it forward”, Jack found a way to give back.  His successful differences have been noted and he recently accepted an invite to share his insights of his strange world with several hundred fellow commercial brokers at the State Commercial Real Estate Convention.

Jack put down the Wall Street Journal and started making some random notes in anticipation of the upcoming event.  Would these conventional “blue suede shoe” commercial brokers be receptive to some new ideas about doing business in an upside-down world? Could they possibly break some habits to create new ones for success? What could he say that would entice at least one person to see the real estate world differently?  Would they even care in a heavily influenced cash only environment mentality?

He realized that unconventional thinking was a hallmark of many successful real estate practitioners and that slashing and burning through the wreckage of deals gone bad, and bouncing aimlessly from one “good deal” or supposed “good client” to another always expecting great results and being continually disappointed, was the territory of the unsuccessful “jungle fighter”, as his old friend Chuck Chatham once noted. Jack took a moment to reflect on his own uninformed ignorance thirty years ago and tried to place himself in that mindset once again. It seemed such a foreign territory, but as he reflected, he started to recall the hardships and anxiety he had experienced and how the words of gifted real estate mentors, many of whom are now gone, imparted knowledge and wisdom that started Jack on his way.

He thoughtfully started to recall the first time he heard alien thoughts from his early mentors, and he began to write.

• Augment your time and talent.
• Never let your enthusiasm cloud your judgment.
• There is always another deal, work only on the ones that are motivationally enhanced.
• Real Estate is a sequential business.
• Counsel…Counsel…Counsel. Become an Expert.
• Problems always have a beginning and an end. Shorten the time.
• There is no problem property, only people problems.
• The church does not do real estate and you should not try miracles.
• Nurture your faith, you will need it.
• Don’t share what you do or how you do it unless it is with those who are equally informed or slowly with one who is seeking a different path.
• Perfect the art of “conversation”.
• Perfect the art of asking “non-threatening questions”.
• A “down home” approach is universally accepted,
• Your body is a temple not an amusement park. Charity begins at home, take care of yourself first.
• Don’t overpromise.
• Be prepared for the eventual problem.
• Guard your integrity. There are those who would steal it from you without hesitation.
• Admit mistakes.
• Your luck increases with the intensity of your work ethic.
• Down Markets Always Provide the Best Opportunities.
• Creativity Flows through You…Not In You.
• You can never stop learning….Read…Read….Read.
• It’s okay to say “No”.

Jack stopped for the moment to finish his coffee.  He reflected on how these simple words had stuck with him so long.  By now many of them had been ingrained in his actions and business dealings without thought and yet these short ideas spilled out. He surmised that these points would be the context of his offering at the Convention in the hope that if just one practitioner was helped, he would have made a difference. Jack picked up his notes, his newspaper and filled his coffee cup as he parted with the satisfaction of and expectation of finding that “One” practitioner who would benefit.

With the success of Jack’s debut as a speaker at the state Real Estate Convention meeting, which he was invited to share and impart his real estate wisdom, he was asked by the organizers to remain for a more intimate round table discussion after the main festivities. Jack, uncomfortable with the modest notoriety, was however heartened that the extension of the meeting and further definition of his business philosophy would hopefully help those looking for a new and different perspective to incorporate into their brokerage  and real estate world.

Jack had apparently hit a nerve with some in the audience with his explanation of people being more important than real estate and other related topics.  He had no illusions, however, about the implications of his speech being dismissed by several in attendance as hyperbole and jaundiced hoo-doo real estate.  He knew that the hard core “Blue Suede Shoe” brokers, many of whom were struggling, were probably not very receptive to this foreign philosophical approach. However, this was not new territory as he had weathered this “closed mindedness” many times over his career.  Experience showed that people whose pride did not allow them to grow in the business were soon gone. Most were self-absorbed wondering where the next commission check was coming from.

In the moments following the announcement of the late forum, Jack with his modest perspective, was not so much fearful of giving to little information, but more so of giving too much.  Giving freely the full monty on the matter in which Jack saw the real estate world, and how he had successfully traversed the business for so many years, was a drink from a fire hydrant for most.  He recognized that very few understood it if given in large doses early on.

The organizers consulted with Jack and later announced a decision to conduct the impromptu round table in a breakout room announced for 6:00 pm that evening. Jack figured most brokers would have no interest in hanging around that long for the session.  In any event, he figured the group would be culled down to a manageable size. It was to be an open forum, where more intimate questions could be asked of Jack by those attending.

Of course, Jack fretted a bit, not wanting to seem overly omniscient and yet sincere in his responses.  Again, he figured that if one or two practitioners heard the true meaning and character of his responses and took them to heart in their operations he would have made a difference.  So, he took a breath and hoped he would not embarrass himself too much.

As the inevitable cocktail party wound down, Jack located and entered the room at the prescribed time and immediately noted the round table with inquisitors sitting three and four rows deep around it.  A surprising site, but apparently the participants were much more interested to hear some sort of gospel that would lead them to the “Promised Land” and shed a new and different light on their practice and lives.

Jack took his seat and asked who had the first question.

• “Hi, Mr. Jones, my name is Jane and I have been in practice for 10 years, starting in residential and then advancing to commercial about four years ago.  Can you more fully explain why people are more important than real estate?”

Jack hesitated for a moment, knowing that this question was one upon which all real estate business was predicted.

• “Jane, real estate is an innate object.  Brick, Steel, Wood, Plumbing, Mechanical and other elements which really have no value.  Even land. These elements have no emotions, motivations, desires, ambitions, or dreams. However, when people become involved or uninvolved the landscape changes.  Buildings don’t move, get a divorce, die, or create profits or value.  It is only when the application of the human element becomes involved that the intangible elements of real estate start to come alive.  If you have ever driven through a small town whose grand old buildings are vacant and boarded up, you will validate this concept. An old established inner-city location once considered a  commercially viable area now hampered by crime, drugs, and economic decay, is another example.  Equally so, if you drive down Rodeo Drive and note the incredible activity of people moving in and out of shops, apartments, hotels, or other venues, you will see the antithesis or opposite end of the spectrum.  So, if a property is valueless, or if it is valuable, only people make the difference.”

“Next question”, Jack said.

• “Thank you for being here Mr. Jones. My name is Charles and I have been in the commercial business for three years.  What is it that people seek when buying, selling, and leasing or otherwise transacting real estate business?

Jack contemplated.

• “The real factor for all real estate transactions is people “benefits”.  If there are no benefits to the participants of a real estate transaction, there will be no transaction.  Perhaps the single biggest reason for failed real estate transactions is the inability of the broker agent to define the benefits necessary to satisfy his client’s objectives and to determine how to achieve those benefits for the client.
• Many brokers are more anxious to get the listing than taking the time to understand the client’s needs. An example would be a landowner who owns his property free and clear and needs income. The biggest benefit of land ownership is that it is management free.  No tenants, no maintenance etc.  In the reverse, a retail strip owner may be fatigued in managing his property.  The benefits to the land owner is cash flow. The benefit to the shopping center owner is to be out of management.  Both properties have benefits and shortcomings, but each client expresses different desires. This is where a good broker comes in.  Recognizing the different needs and benefits of each party is the objective. Once determined a plan can be orchestrated by the broker to accomplish the objective of each. In this example if the two clients exchanged equities, they would both have the benefits they are seeking. 

“Who has another question”, Jack said.

• Jones, my name is Lisa.  I am relatively new to the commercial business.  How do I find out what benefits a client is seeking? 

Another Pause.

• “Lisa, the key to discovering the needs or benefits desired by a client is to use “counseling”.  This technique is primarily associated with listening and questioning. Most agents talk far too much, with too much emphasis by the broker on “selling” the client. Listening to what a client says and then asking non-threatening probing questions that cannot be answered “yes” or “no” is the true key to finding out the motivation.  People do not like silence and will continue speaking within a few seconds if there is no response.  Be still…let them talk. You must listen patiently, and you may have to meet with them more than once or twice to determine the true motivation and need.”
• The art of using these techniques may prove that your client does not need your services or that his expectations are impossible to fulfill.  Finding out what is best for the client is your job. Selling his asset or investing in one may not be the best alternative. The best way to practice this technique is to use it with young children as “pseudo clients”.  Ask them questions.  Don’t make statements.  You will find a remarkable difference in your relationship with them. Then try it on family members and friends. Then clients.
• Questions may be, “Mr. Jones, you presented me with the opportunity of marketing your net leased commercial building. It has a nice income, why would you consider selling such a good asset?”, or “Mr. Jones, in the event we can find a buyer for your property, what do you intend to do with the proceeds?”, or “Mr. Jones, who will be assisting you in making your decision to sell (or buy)?” 

Another question out there?

• Jones, said Amy, should we entertain dealing with every client seeking our services? 

Jack responded.

• You must augment your time and talent and practice being a “don’t wanter”. You must decide who to work with based on your criteria for taking on acceptable clients. Those standards should be in writing and defined by you. Refusing a client’s property or problem situation, is so unusual that I have had clients actually come back to me and ask to reconsider my involvement.  This places the control of the relationship in favor of the broker.  The client oftentimes tries to sell the broker on the value of his property or his high expectations about its qualities, yet he has come to you, the professional, to solve his problem. Who is selling who? Take your time analyzing both. Think before getting involved.  

One more question, said Jack.

• Jones, my name is Jim and I have had trouble being paid for my services. The buyer and seller as well as unscrupulous brokers always look for ways to thwart paying commissions for my services. Is there any way you can help me?

Jack replied.

• Payment for your services should be established by a contract or listing agreement, long before you begin work. A good client will expect this and a bad client will challenge the agreement. A sign that may defer your decision to work with them.  More importantly, you can have the best listing agreement and no control or no listing agreement and the best control.  The difference is your assessment of the client.  Is this someone that will honor their commitment to pay for your services once performed?  You validate a surreptitious buyer or seller’s negative impression of you when you take less than what has been previously negotiated. Do not take less even it if jeopardizes the transaction. If the transaction hinges on payment of your predetermined fee, then you have not adequately solved the problem for the client and the transaction should not close.  The difference is whether your opinion of your work is somehow less at closing than it was before the property problem or client problem was solved.  You can either work for tips or be paid as a professional.  Your call.

As the evening wore on Jack continued to answer many more questions.  Two hours later, he ended the session and thanked those in attendance.  As Jack walked through the hotel to his car the night air seemed to sooth his mental exhaustion. “Mr. Jones, Mr. Jones”, a voice called out. A middle-aged lady approached.  “Mr. Jones, my name is Joyce and I have been listening to you this evening.  I had been seriously thinking about abandoning my fifteen-year commercial real estate career as I have been disillusioned by the business.  You have revealed a new and different way to conduct business tonight that is refreshing. May I call upon you to learn more?” Jack, fatigued and yet grateful for the inquiry said, “Yes, here is my business card.  Call me tomorrow and we can talk more”. “Thank you”, she said and disappeared into the night air.

Jack’s hope of affecting at least one person with his day’s activities had been fulfilled. There may still be a future for passing along his insights on the philosophy of real estate. Jack thought, maybe she is the “One.” And maybe…just maybe, there are “Others” out there.

Editor’s Note:  The author requested that his article be published exactly as submitted, with no editorial changes.