The three most important words in real estate are “location, location, location.” Running behind in a close fourth is reputation. Reputation in real estate is extremely important. It can even be said that in this business, reputation is everything. Think about it. You are dealing with assets that can be worth millions of dollars. You are also trying to convince people to either sell you those assets or buy those assets from you. Many deals in real estate are made on reputation alone. Sometimes you may even beat others out of a potential deal just because of your reputation.
Newbies (and some more experienced folks) often do not understand just how important reputation is. The real estate investing field is often much smaller than people realize. The number of people in your part of the world who are active, seasoned investors with the ability to put together deals and work with you on yours may actually be very small. Word will travel quickly through these circles as to whether or not you are someone with a favorable reputation.
In my twelve years in the business, I have seen a lot investors come and go. Many were simply not cut out for the real estate business. Others, however, showed some promise but chose to use practices that eroded their reputation. How? By not following one or more of the following ten ways to keep your reputation secure.
10 Ways to Build a Reputation as Your Market’s Premier Real Estate Investor
Do What You Say You Will
This seems rather obvious, but it needs to be said. If you say you can produce a buyer, then produce a buyer. If you say you will sell at a certain price, then sell at that price. If you say you can meet at a certain time, meet at that time.
Don’t Bite Off More Than You Can Chew
If you are a newbie and have your first deal in the works, perhaps it is best to get that one finished before taking on another one. If you are not familiar with an area, perhaps it is best not to work with properties in that area until you are better educated. Do not think that you can jump into real estate investing without some careful analysis and education.
Don’t Play Games
Seasoned real estate investors watch the market very closely. We see the games that are played all the time. We see the properties that are sold after only one day on the MLS or the prices that are changed right before the properties are sold, etc. You may think it is cute, but we take note of who is playing these games.
Make Sure You Have the Deal
If you present me with a potential deal, please have the property tied up somehow, either in your possession or under contract. I hate noting more than wasting my time looking at a property, only to watch the deal slip away because the other person was too foolish to tie it up.
Don’t Inflate (or Deflate) the Numbers
When offering a potential deal, be realistic and straightforward about the numbers for that deal. Do not inflate how much you think a retail value will be, or how much you think it will rent for. On the flip side, do not deflate how much is needed for repairs and upgrades. We more experienced folks can see right through all of that, and you will quickly lose credibility.
Do Not Take Advantage
Lots of folks out there want to get into real estate but have no idea what they are getting into. Don’t take advantage of these people. Again, we watch the market and we can see it happening. You do not want to become known as a shark. To you newbies out there, here is a warning. I have actually had a person say to me upon confronting their numbers that they were looking for a buyer less astute than me. Thankfully, they are no longer in the business since they lost their reputation, but not before they got a few folks.
If you say you will close on a property, then do so unless something drastic comes up. Also, don’t hand me a contract with dozens of escape clauses, as I will not accept it. Keep it simple and have your affairs in order to be able to close. Nothing builds credibility and repeat business better than being able to close.
Pay fellow investors if they bring a deal. Pay your contractors for work performed. Again, word will spread very quickly if you try and stiff someone. On the other hand, it spreads just as fast if you pay people on time.
Don’t Do Shoddy Work
Slapping lipstick on a pig may make it look a little better, but it is still a pig. The same holds true for real estate. If the products you are selling are falling apart in 6 months or a year, the rest of us will hear about it. Again, word travels fast.
Communication is one of the keys to success in real estate, even if things begin to go south. Always remember to communicate with others involved in your deal. Is everything going great? Let them know. Is the deal falling apart? Don’t put your head in the sand! Let them know. Especially let them know if the mistake was yours. People can often overlook things if you are upfront, honest and communicate about it.
At the end of the day, your reputation as a real estate investor is really all you have. Are you someone that others trust, look to for advice and actively seek to work with? Or do people shy away from you and react with guarded skepticism to the “deals” you propose? Hopefully you fall in the first category.
Once lost, a reputation can be very difficult to revive. It can be done with enough time and effort, but other investors will always be wondering if you have “slipped off the wagon” again. So it is best not to lose your reputation in the first place. Of course, we all make mistakes and newbie ignorance will at first be forgiven, but you had better quickly learn from those mistakes or your days in the real estate investing field may end sooner than you think.
Investors: What would you add to my list? What reputation-tarnishing habit bothers you most?
Leave your comments and tips below!