Last year, I had lunch with a wealthy Brit who told me a great story. He said he had recently interviewed a top real estate agent in London to discuss listing his Kensington mansion. The agent, apparently wanting to impress his prospective client, showed off his Presidential Gold Rolex.
“That’s quite a watch,” said the Brit.
“Thank you,” said the agent.
To which the Brit pulled up his sleeve to reveal the very same timepiece on his wrist and said with a thin smile, “Here’s what a real one looks like.”
In our world where fake news and “alternative facts” are fast becoming the new normal, honesty seems to be in shorter and shorter supply. Yet in spite of this, or maybe because of it, honesty has never been more important.
That is certainly true in real estate.
Not long ago, a standard home sale in California needed only a one-page document. Today, thanks to our increasingly litigious society, the same transaction requires a stack of disclosures as thick as a phone book. As a result, it is especially important that both buyer and seller not only act in good faith but also fully disclose all information that might have a bearing on the sale.
Sounds great in theory.
In practice, it doesn’t always work that way.
Some buyers exaggerate their financials. Others agree to a sale price with no intention of paying it, planning instead to renegotiate the price downward through a repair credit after their home inspections. And should a seller cancel a contract due to a buyer’s lack of performance, that buyer may refuse to sign the cancellation, essentially preventing the seller from putting his property back on the market – as a way to force the seller to agree to the buyer’s terms.
Sellers can be equally difficult. Many fail to disclose negative information about their home, even to their own agent. Others can have a change of heart – say, if they receive a more attractive backup offer – and may deliberately obstruct a buyer from doing his due diligence in hopes of getting that buyer to cancel.
Into this volatile mix is thrown the Realtor, who has a fiduciary duty to his client while also – according to a recent landmark decision of the California Supreme Court – owing a similar duty of fair and honest dealing to the other party in the transaction as well.
That’s why when I meet a new client, I always talk about the importance of teamwork, communication and transparency. How a successful sale is a collaborative effort from start to finish. How essential it is for us to communicate on a regular basis, so that neither of us are ever wondering or guessing what the other one is thinking or doing.
As Shakespeare once wrote in one of his plays, “No legacy is so rich as honesty.”
Words to live by.