Things you should know about your advisors, but don’t.

Dated: July 19 2019

Views: 116

 

First let me get my real estate related background out on the table.

 

I first got my real estate license in 1973. I took the class here in Florida hoping to learn something about real estate. Indeed the only thing the class taught me was how to pass the license test and what the laws were.  I never did anything with that first license. Over the next 25 years I took classes on investing, on real estate analysis, and being a landlord. I had my own manufacturers rep business and traveled all over the world while I bought over 50 residences, built two of my own and developed many more and learned real estate from the buying, investing, and developing side.  I got licensed again in 2000.  By then I thought I had some expertise that I could build a real estate agency business on. But I knew real estate, not managing an agency.

My expertise was in the field: Buying, Negotiating, Selling, Flipping, Analyzing. For most of my clients I have figuratively “put my money where my mouth is”. I built Market America Realty (My First Brokerage) on a foundation of that knowledge. I added marketing expertise and organizational skills and grew our business from that foundation. I have my money in real estate, stocks, REITS, and mutual funds. I have a regular savings program. Gail and I own disability insurance, life policies, and long term care insurance. Right now I am looking at acquiring commercial opportunities, land, and more single family homes. I have embraced “Net Zero” green homes. Recently we acquired an insurance agency. (Lots more to follow on that)   I am an avid reader,  post real estate videos and love to study trends like What’s Happening in Florida Real Estate and…I write this column weekly.

 

I write this column because I enjoy it. It helps me distill my thinking and build relationships with clients.   Today’s column began a few hours ago with the title “What are your experts doing?” What I really wanted to share with you was this: “Know the strengths of your advisors and what their perspective is.”

 

Perspective: For example, have you asked your stock broker what his perspective is or where he has his money? Is he buying the stocks he tells you to buy? What is his value add?  Have you seen his own portfolio?

 

How about your banker? Where does he have his mortgage? His savings? Is he actually buying CD’s is his own bank? Ask him!

 

If you go for tennis lessons or for help on your golf swing you would go to someone who actually plays the game. Wouldn’t you? Of course, he has to know how to teach as well as play, which is maybe why the best players are not coaches or teachers; but you want to know that your advisor or, indeed, even someone trying to sell you something, has the expertise that is needed to help you define and reach your goals.

 

Some experts deal from their own briefcase only. Have money to invest?  Go to see an insurance agent will she sell you insurance; a stock broker stocks, a gold dealer gold, and a real estate agent will sell you income property.  My wife came from the medical profession where surgeons operate, psychiatrists listen, and medical men will give you pills.   They all deal from their own briefcase and think inside their own box.  Investments are no different. There are a zillion ways to invest.

 

Be careful, however. In investing your advisor may not have the same objectives as you do. His portfolio may be more conservative or more aggressive than your objectives will allow.  He also may be myopic and only be looking in his own briefcase. I get a kick out of promotions by stock brokers that offer to review your entire investment portfolio and optimize your investments to fit your objectives. Somehow they always forget to mention real estate.

 

In real estate investing your advisor may tell you his expertise is analyzing what YOUR needs are, in helping you set YOUR goals, and then coupling them with the instruments to meet them.

 

If I am going to invest in real estate I want to go to someone who has the expertise that I may be weakest in. If I want to buy a shopping mall, for example, I would like to deal with a guy that specializes in listing shopping malls, and if possible one who has purchased and run one. Of course this is not always possible. The guy I may want will have the expertise to FIND me the shopping mall, not run it.

 

If I am going to buy a home in a wealthy area, I would prefer an expert in that area to guide me around. Furthermore, I may want someone who lives like me, and has the same tastes and needs I do – but that might not be the best for me – after all, I am already an expert in how I live.  I may need someone that knows about the local legal issues with the golf equity, or how to negotiate a tricky short sale acquisition.

 

In some purchases; a new sound system is a good example; you can get very good advice from a young sound geek that may not be able to afford the dream system you want to buy.  But you may be able to count on his advice even though he can’t afford the same system he wants to sell you, after all he is a sound geek!  In residential real estate you can get advice about a geographical area from someone very knowledgeable about the area, and who will have the experience to negotiate your contract for you, as those are his focus areas, even though he can’t afford the million dollar home you are looking at.

 

In other areas the best experts are the most difficult people to find, simply because they spend more time being experts and little or no time looking for new business or developing relationships.

 

I offer this advice – ask your real estate agent what his expertise is. What is his or her value add?   It may be geography, it may be marketing and sales, it could be technical.  It could be golf, boating, or condo living. If you are new to town the most valuable expertise may be local knowledge.  If you are new to investing it may be analysis expertise that you need.

 

At Market America Realty I am always urging my team members to become experts; to pick one thing and get known for that expertise, and then build on that foundation. Most successful agents have a core expertise but operate as generalists because this industry is too broad to only count on a very narrow focus. But: at Market America Realty we pride ourselves in nurturing experts in their core competencies and supporting their less competent areas with other team experts. I will not waste my time making sure every team member is an expert in every facet or our business; but I will take time to make certain that they know what team member to turn to for that expertise.

 

Thank you all for the positive comments on last week’s letter about Lessons my Father Taught me.  Have a great week.

 

Remember: “Fishing is often the best where the fewest go

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Gregg Fous

Real estate has been my passion since I took my first Al Lowery class on real estate investing in the 1970’s. I vowed during that class that I would buy one property a year. Over the next five ....

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