Transparency is not just a buzz word, it’s an absolute—a necessity in business. You cannot be transparent on some issues and
ambiguous on others and then claim to be transparent. That’s called
being deceptive, and trust me—clients don’t like being deceived.
Either you’re transparent or you’re not!
Being transparent in your dealings is not as difficult as one
might expect, and it holds a number of long and short term benefits
to your business. A common misconception is that transparency is
“scary”—some commercial real estate professionals try and hide
some information from their clients because they feel guilty in one
way shape or form.
Well, to this I say: If you are decent at your job, you have no
reason whatsoever to be afraid. In the end, what exactly is it that
you're afraid of? Do you think your clients will figure out that
maybe you’re not as good as you said you were? Are you afraid
that if you are transparent about your compensation that your clients may wants some of it? If you are not transparent, you need
to take a good hard look at yourself in the mirror and ask yourself
why not? If concerns immediately arise, then perhaps you should
ask yourself if you really are worth what you expect to receive in
compensation.
Transparency should be an asset to your business, not a fear. If
it’s the latter, then you need to take a look at your services, and the
value of what you offer to your clients. On the other hand, if you
deliver sufficient value to your clients, they will recognize your
worth and entitlement to fair compensation, and more importantly,
you will be forever known to them as someone they can trust with
their money (hint hint: referrals).
You should never be afraid to tell someone how much you
think you are worth. In fact, disclosing that information with confidence will impress your clients more than anything. It is much
more important to your clients to do business with someone they
trust—someone who can say, “This is what I am worth, and this is
why I am worth it,”—than someone who is afraid to disclose their
compensation for fear that it may offend their clients.
If you don’t create a lot of value for your clients—if you’re
merely an old-fashioned real estate space jockey, doing little more
than driving your clients around the market, dropping them on a
landlord’s doorstep and expecting to pick-up a check when the
landlord completes your client’s deal—then you SHOULD be nervous! While you’re still providing a service and are entitled to be
paid, you’re probably not entitled to the same compensation as a
true professional real estate broker who can provide a superior service by helping his or her clients plan and negotiate complex transactions from start to finish. Like in any other business, if you’re
in it for a quick hit and provide minimal service and value, you
should expect to be compensated in a similar fashion, and frankly,
in a lesser amount than your competitors who really deliver!
By being transparent, your clients will also be more likely to
back you up when it comes time for you to be paid. How you
treat your compensation will most definitely affect your relation-
ship with your clients. For example: if you chose not to accept
discounts, and don’t accept bonuses, your clients will immediately
see that you are not out for your own best interest.
To go along these lines, another trick to building a relationship
and winning the support of your clients is to state your compensation requirements at the outset of your engagement. I’ve heard
of scenarios where brokers are afraid to disclose that a landlord
offered them a compensation bonus. Why be afraid if the compensation is deserved? When a landlord or seller then offers you a
bonus, tell them you must inform your client (that tells the opposition you can’t be bought). Then tell your client if you think you
are deserving of the bonus—you should not hesitate to disclose
that information. If you provide your clients with amazing service,
they may feel that you are entitled to keep those bonuses. Even
if they decide not to reward you with the bonus, your transparency throughout the entire process most likely went a long way in
building your relationship with that client. You’ll also likely find
that your clients will support you when a transactional opponent
attempts to under-pay you, or tries to put your compensation at an
unfair risk.
Additionally, if a rogue landlord attempts to force you to accept
a compensation amount or structure that is less than you would
ordinarily accept, inform your client of the situation, and let the
landlord know you’re sharing this information with them. Many
tenants won’t feel comfortable with a landlord who attempts to
under-pay their real estate advisor, as they often see that as a sign
that the landlord will be dishonest or unfair to them, and will likely
under-fund or under-deliver for them in response. Ask your client to support your efforts to secure fair compensation. If your client recognizes the value you’ve created for it, they’ll back you up
almost every time!
Heck! Even if you don’t get to keep a landlord-offered bonus,
think of all the incredible goodwill you’ll create with your client.
You'll also improve your ability to deflate the opposition’s intent on
swaying your negotiating strength by “buying you off.” By showing transparency and integrity you will see the benefits throughout
the entire negotiation process as well. You will be much stronger in
negotiating on your client’s behalf because of the additional concessions you’ll likely secure. Having a client who can trust you
with his or her cash will go miles in strengthening your reputation
and credibility, as well as the future business opportunities you’ll
likely get from that client…and that’s not even including referrals!
