How Professionals Add Value

How Professionals Add Value

How Professionals Add Value In the digital age, it’s all too easy to shop online. While referring to products and goods, I’m also referring to professionals. Like amazon, or other retailers, it’s incredibly easy to find the best deal on a product you’re looking for. But we’ve all experienced it, where the “best” deal online turns out to be a cheaply made product from some third world country, and the American-made, slightly more expensive alternative would be a product you could’ve used for years and realized value from. The same concept can be consistent with choosing professionals as you progress through your career. As a millennial (24) immersed in the real estate industry, I’ve learned some valuable lessons the hard way, and hopefully can impart some wisdom to save and make you better investors and business partners in the future. Like I mentioned above, we’ve all been trained to shop online and try to find the best deal, the nexus where price and appeal meet, and it becomes a good purchase. I’m here to tell you, the same ‘shopping’ experience applies to professionals that you’ll work with throughout your lifetime, and that contrary to the Google experience of shopping for the best deal, over the long term it’s beneficial to “have a guy/girl”. Now, what I mean is when you off handedly tell a buddy, “Yeah I’m looking at getting a new truck” and he responds, “Oh talk to my buddy X, he got me a great deal on a rig, I paid fair price but he knew mechanics and analyzed the Carfax to make sure it was a solid truck”. That’s having “a guy”. This doesn’t just apply to cars salesmen, but to almost every industry. Building a network of professionals that you’ll use throughout your life is very important. Creating a relationship with someone offering a service and utilizing them for your needs down the road creates a stronger bond, and loyalty between one another. Keep in mind, just like shopping online, the cheapest professional is not always the best. I’m going to highlight a couple examples. In 2020, with the government assistance to the general public and business owners due to the Covid-19 epidemic, many business owners were eligible to receive 2.5 months’ salary expenses to assist them with continuing costs they would incur while likely shut down due to the epidemic. Me, being uneducated in the tax laws, reasoned that being a real estate broker would not entitle me to this financial assistance, and stood by while millions of business owners received a subsidy from the government, and paid my bills out of my savings, trying to scrape by. After contacting my CPA and tax professional to work on my taxes for the previous year, he calls me and asked if I had applied for the Paycheck Protection Program. Feeling as I wasn’t the “owner” of a business, I replied that I hadn’t. Unknown to me, being a sole proprietor and real estate broker associate, I was eligible to participate in the program. If I had just gone to the cheap H&R block down the street to pay $100 to get my taxes done, they likely would have gone through the motions and completed my taxes with the bare minimum amount of effort, and I wouldn’t be receiving a substantial influx of capital to continue running my business. But, working with the same CPA who provides a great service, at a higher than normal rate, my taxes are in great shape, and he caught the program I was not educated enough to know I was eligible for. Having an investment advisor can be equally as important. Per a friend’s recommendation, I got in touch with an investment management company, as their smallest client. They took me under their wing knowing I was a young entrepreneur, gambling that at some point I’d be an individual with a high net worth, and I would use them as my advisors. I sure hope they’re right. When the stock market tanked in 2020 due to Covid-19 shutting down the economy, I was restless. Watching my hard-earned investments dunk, losing money every day, I was ready to sell sell sell and cut my losses before they got worse. But a phone call with my advisor, Holly, put my nerves to rest, and we rode out the dip in the market. Now, my investment accounts are back up above where they were before the quarantine. Another friend, who manages his own retirement investments, didn’t have counsel from someone who works in the investment advisor field, and pulled all his investments out THE DAY BEFORE the market leapt back upward by 10%. I haven’t spoken to him since, but that day he was realizing a $13,000 loss unless he could catch the market in another dip and reinvest. Once again, my advisor that isn’t so cheap, saved/earned me more than what I pay to compensate her. Insurance, it’s the same deal. Package your truck, home, and health insurance with a professional, and you’ll likely get a better rate than if you try to shop the lowest insurances for your car, home, and life policy independently from different companies that can save you a couple bucks per month. You may not save money using the singular location for all your insurance needs, but it’s sure easier than paying three different companies every month, having to keep up to date on three companies’ policies, and watching three different premiums. Lawyers? You’ll need one too. And having already been involved with multiple situations requiring legal counsel, an “attack dog” lawyer that you pay the big bucks to is worth their weight in gold (and you’ll pay for it). Getting substandard legal advice from a cheap attorney that barely passed the bar exam for a small issue in county court might work for smaller issues. Having a professional that’s so good to the point that the other party in a lawsuit politely asks you, “whatever your lawyer is doing, please make him stop” is a good feeling, and in the long run, he likely saved us thousands by resolving the situation quickly and not drawing out the legal process, milking us for months on end. The same can be said for real estate brokerage. Yes, there’s tons of small offices in your town, with your local soccer moms selling homes in subdivisions. And let’s be honest, they’ll probably do a good job for you selling your house in the neighborhood. But when it comes to your investment properties, income-producing assets, high value ranches, and intricate businesses, that’s where a qualified real estate brokerage shows value. Does the local small broker have knowledge of 10-31 tax-deferred exchanges, Delaware Statutory Trusts, or Deferred Sales Trusts, and qualified intermediaries in their contact list to save you over 30% on your tax bill when you sell your investment property? I know we do. Can your local broker put together a marketing plan, marketing budget, and actualize the project to auction off and sell 35 individual commercial/development land/hunting land parcels? I know I can. What’s the point of investing in land, commercial, or residential real estate if you’re going to pay Uncle Sam 35% for your capital gains? Our job doesn’t end after providing better marketing, negotiations, higher market prices and representation for our clients. That’s just the beginning. Market knowledge in mineral rights, water rights, Colorado hunting GMU information, the next identified transitional land parcels for development, up to date knowledge on market conditions, farm land pricing, knowledge in hemp and cannabis, commercial square footage pricing, knowledge in Google indexing for websites to bring buyers, social media, the list goes on. I’ve seen countless situations where a seller opts to go with a small, local brokerage because they charge 1% less on commission than what I do. Then, the property sits on the market for a year at an overpriced listing price, becomes stigmatized, shows “377 days on market” and Zillow suggests “Why? Likely overpriced”. Properties that are undermarketed and overpriced typically will sell for 10% less AND in a longer time frame than if they had been appropriately priced and aggressively marketed. Then, we’ll typically get the listing a year later and be tasked with selling that parcel against what the online metrics are telling people. Or when buying a property, why go to the listing agent to write the contract? You can engage a buyer broker for free, that will represent you and your interests, do market research, and more often than not counsel you on a fair purchase price that in most situations will save you money. I know a colleague that once told a client looking at buying a luxury home, “you’re going to pay me an extra 1% commission over what’s offered of the purchase price, but I’m going to save you $1 million off the listing price.” Well, that client ended up paying my colleague an extra $xx,xxx but when the dust settled, he negotiated the transaction for that client and saved him a heck of a lot more. Just like you should have a tax advisor, insurance agent, investment advisor, and lawyer that provide you counsel, protect your investments, and protect your interests, you should also have “a guy” in the real estate industry. Written by Jake Hubbell, Broker Associate