How many times you have to say, "You Are Fired !"

Question

Recently I had to end two of my long term relationships, as I realized that I was being taken for a ride.  You build relationships in real estate so you could create a win-win situation.  Established relationships help in cutting down the time spent in searching for desired product or service.  A quick call to the plumber, a quick call to the electrician can get things moving rather quickly putting you ahead of the eight ball.  The vendor or contractor gets  income w/o additional advertising and also more referrals down the road.  They say it's easier to keep existing customer than acquiring new ones.

But the other side of that is one has to be careful that they aren't getting screwed over and it's good to do your due diligence despite of how established relationship is.

Instance # 1-  I have had a long time plumber. Mom & Pop operation. Folksy wife handles the books, and husband takes care of the plumbing. They got like one additional person working for them. Real small operation.  Prices were very reasonable in the beginning, and seemed like overall nice people.

The earlier this year, I had to replace a water heater due to age, so asked for a quote.  The lady quoted me $2400 for 50 gallon gas water heater.  The regular one (not the tankless one)  The breakdown was $900 labor and $1600 price.  Something seemed very off, so I decided to do some shopping.  Was able to find a Home Depot approved contractor, and get the whole thing done for $1400 including permits.  I was clearly being taken advantage of after the contractor and I developed somewhat of a friendship.  Will never use them again or recommend them to anyone..

When I called her out on this, she gave all kinds of dumb excuses ranging from, she is a novice to the guy working for her gave her incorrect model # of the water heater..

Instance # 2   The lender that I have been working with for last 5 yrs gave me an outrageous quote of 4.37% APR. I was able to find 4.00% APR in the market after I shopped around a little bit.   Even the most expensive one I found was 4.25%, which is 0.125% cheaper than my original lender.  Again, I have provided this person a ton of business through referrals for close friends and family members. Looks like he got too comfy with me.

For more detailed post on this topic Read This..  I may use him again, but he will have to compete with the rest and truly earn the business.

How often do you guys and gals have to say, "You are fired !!" from your boardroom?  Lets hear some stories.

Russell Brazil · Answer

Lenders access to capital changes with the market. An 1/8th of a point higher than someone elses quote isnt taking anyone for a ride. In 99% of those situations all you need to do is ask if they will match, they have to ask for managements approval, and you will typically get it.

Taylor L. · Answer

IMO, you may have cut the plumber tie too quickly. It may have been a legitimate mistake. I would have told them their price was too high, so this time you're going with someone else - or give them a second chance to tighten up their pricing.

One of my favorite principles is Hanlon's Razor- "Never ascribe to malice what can be adequately explained by incompetence." It's harsh, but I'd rather go through life assuming people make mistakes versus assuming people are trying to screw me over. It's easier to be forgiving and understanding of mistakes than of malice.

Current situation w/ a lender: I've switched lenders on the property I'm currently buying, because someone else came and gave me far more competitive terms after I got the property under contract. Much like the situation you're in! The first mortgage broker was legitimately trying to help me, but his company is just too expensive to keep going forward with. He offered 4.75%, someone else offered 4.2% with much lower fees.

He did help me though, so after I close the property I'm going to send him an Amazon Gift Card to thank him for his time. He wasn't trying to screw me by being more expensive, that's just how it came out. Someone else was way cheaper, so they won. He did invest time in helping me, so I'll express my gratitude.

Past situation w/ VAs: I've had to fire a number of Virtual Assistants and Virtual Assistant agencies. Terrible quality work, half done at best, late, with no course to correct. I gave them MANY chances to improve, LOTS of feedback, and I tried hard to help them get up to par. If you want to know a Virtual Assistant agency NOT to use, send me a PM. I might be able to save you some time and money. I won't publicly put them on blast.

Long run you're better off sharing feedback with people who have lost your business in a competitive scenario. "Hey, lender guy, I went with someone else. They gave me a 4.00% APR and competitive closing costs. Too good to pass up. Thank you for your bid, I hope we can work together again in the future."

You're making it clear that the numbers are important, and in the future he needs to sharpen his pencil. Real estate is a relationships business, and by giving service providers constructive feedback you can help them improve their game and strengthen your relationship.

Of course, sometimes people are not open to feedback - that's their decision. I believe putting your best foot forward and extending the olive branch is a more fulfilling way to live.

Jim K. · Answer

@Chinmay J.

Instance 1: I have to disagree with @Taylor L. here. $2400 for a 50-gallon gas water heater, when you can buy one for $400 and putting it in is two water connections and a gas connection and MAYBE an expansion tank...that cannot be explained by incompetence. My plumber would never pull this on me and expect me to talk to him on a professional basis again. Then again, my plumber knows me and my business model well and would never expect me to call him to replace a water heater in my area. You did the right thing. While Scott has a point...no, the range of product quality cannot justify that kind of money.

Instance 2: I pay premium to work within my own bank across the board, personal and business lending. I don't know enough about lending to judge. I also unreasonably love my bank, love its history in the region. Dollar Bank is awesome in many ways.

Maybe you should have gone back to the lender and said, "Wait a minute, Bubba." Maybe not. But as you saw, you had no choice with the tradesman. I don't know what it's like up in Northern Virginia, but there's a code among men who work with their hands in Pittsburgh, and if you transgress the code you're OUT, and that's final.

Alex K. · Answer

@Chinmay J. I Never get friendly with your contractors or people you’re doing business with that you’re paying. Neither do I laugh at their jokes or anything else in that nature. I’m in the Detroit market and also a builder so I have to deal with subcontractors on a weekly basis and as soon as they start to get a little comfortable. Out they Go.

I do have some that have been with me since I started that eventually I started laughing at their jokes. Buying them lunch etc. but they even know if they try something funny they’ll get my 👢 up their u know what.

Chinmay J. · Answer

It's a water heater for a Single Family Household.. 4 people live there.. The tenant, her 2 kids, and old mother.. There is no need for any frills or anything fancy.. This is not for a multi family unit serving 10 households.. lol.  Trying to sell something to someone that they don't need is another way of cheating..

Jim K. · Answer

Either that or long-distance real estate investing just ain't what it's cracked up to be.

Scott Mac · Answer

Hi Chinmay,

I don't know if this applies or not, but

some plumbers have access to better models of the same brand water heaters than Home Depot is allowed to sell.

Thicker tank linings, heavy duty controls, dual anodes, etc...

It might not have been an apples to apples comparison.

There are models that only plumbers can sell, and models that home depot sells. The home depot ones will be lower quality.

Good Luck!

Henry Bronez · Answer

@Chinmay J. it could also be simple economies of scale, since you said its a very small mom and pop shop they may be more expensive than a larger company with better rates from suppliers or pure labor rates. Working for GC in DC and we see this all the time bidding projects - smaller subcontractors don't usually have the lowest rates but they may be more nimble/accommodating, or a higher bid on the front means we'll see a lot less tickets and costs come across on the back end.

And sometimes certain subs just give a higher bid that rules them out and we award the job to someone else, if you've worked with that plumber before and have a good relationship in the past I wouldn't write them off for one unusually high quote. Nice to have someone reliable who you've worked with in the past but would always recommend getting multiple quotes to keep bidders honest.

Chinmay J. · Answer

Those are some pearls of wisdom right there. Yes, I let the plumber lady get way too comfortable with me. I even accepted friend request from her on Facebook. She saw all my vacation pics.. Terrible idea I know.. No wonder she even got the idea to pull a fast one..

The thing is that I am overall a friendly person, and somewhat of a kid at heart.. To be able to be even keeled, and not letting people too close to you is quite a virtue.. I admire that..

Kris L. · Answer

2400 for standard water heater is pretty rough.  Might not be bad to look at someone else to team with and get bids from multiple players every few jobs going forward, just to keep prices tied to reality.

As for the banking, while 3/8% is higher than you found, it’s not so much that it looks like a rip off, they just feel the risk is a bit higher on that deal than another institution.  Would not use them on this one, but wouldn’t stop getting rates from them on future deals either as they might be able to work other projects at a more competitive price.

How many times you have to say, "You Are Fired !"

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