I sold real estate “on the side” for seven years and was a terrible real estate agent. Not because I was bad at selling but because I spent so much time helping my customers understand their financial situation. Often, I told them to wait to buy a house instead of closing a deal.
This was pre-2008 and every single client I steered away from a home was approved for mortgages they couldn’t truly afford. Because I was only working with friends, family and referrals they would tell me how much they were approved for and because I knew them, I knew there was no way they could afford those monthly payments.
Focusing on client needs vs wants
I ended up doing a lot of credit counseling when I could have been doing a lot of selling. Fortunately, I did make money but not as much as I could have if I had focused on getting clients in to their dream homes instead of homes they could afford.
At the height of the market, I had one client that had terrible credit and a low paying job. We were looking at homes in her price range when we drove by a new development and stopped. She found a model she fell in love with, and the builder approved her for financing at 13% for 30 years. However, she’d need to get a second job to be able to pay the monthly mortgage payment. The builder convinced her that she’d build equity in two years and could refinance at a lower rate. Two years isn’t that long to work two jobs for the home you love right?.
My client was a family member of a co-worker at my day job. I felt responsible to help her not put her in a position that could hurt her. Pulling her aside, I said if she wanted to buy the house she’d need to work with another agent because I couldn’t help her buy it in good faith knowing that she would be over her head. I recommended that she move home for 6-months, work on her credit, get a second job to save a down payment and come back in a better position. They just started the development so there would be inventory.
She reluctantly agreed but was so mad at me. That night she talked to her parents and made plans to move home and start saving. About 2-months later the housing market crashed. I got a call from her saying thank you. I could have made almost $10,000 on that deal but I did what was right for her.
You have a choice in business
The choice is, do what the clients asks or do what is right for the client. Now, I’m not saying people who focus on selling real estate and leave the finances to the mortgage people are wrong. They are certainly more financially successful than I was. But what I am saying is once I knew the situation people were in, I couldn’t turn a blind eye. I learned there are always choices to make in business. In fact, it is a lesson I learn over and over. You can be in it for you or you can be in it for your client. I’ve found being in it for the client might not make me as much money in the short-term but the trust that is built pays dividends over the years.