Sunday, April 5, 2020
The Value of Trust
I recently had the privilege of hearing a talk about trust that Stephen M R Covey gave to the students at Liberty University. He is ths son of the man who has given us books like 7 Habits of Highly Effective People. The apple did not fall from the tree with this fellow. He spoke of trust as being a business virtue in addition to being a human virtue. He talked about activities and organizations where trust is present operating with more efficiency and speed along with being more satisfying to work with.
I got to thinking about how this applies to the real estate business, whether it is working with agent buying a home or as an investor rehabbing a house. I thought back to some of my experiences with and without the quality of trust. While I didn't see it that way at the time, it turns out life proves his theory.
Hardly anything can be done in this field without a team of people. Trust is the lubricant that smooths the rough edges and fills in the bumps in the road. When I first moved to the Sunshine State I knew no one and had no connections. My first deal here was wholesaling a small house in northern Pinellas County. It so happened that the investor who bought it connected me with a title company that just makes things work.
I didn't know them or the investor, and we worked through several issues. Over time I developed a degree of trust with the investor and I believe he, with me as we have done other deals smoothed out with familiarity and trust. This is even more so with the title company as we have done multiple deals and they have come through every time. I just have to email them the paperwork and I know things will be handled professionally and legally. I don't waste time with worry or excessive follow up.
When working on houses, the same holds true with the tradesmen involved. They can make your profit or kill it. You need to have people you can trust, not just to do the job, but do it on time for the quoted price. When you start out you have to go by recommendations if you can get them. Learning this by experience can be quite expensive, but sometimes it is necessary. For the investor, it involves forming relationships with other investors who may have come across your situation before. For the new home owner getting to know they neighbors is a good place to start.
I had a water leak in a second floor condo that had to be fixed NOW! I did not have a plumber at the time so I relied on one recommended by a lady at the local REIA. It turned out to be a good choice. Even as a new client, the guy showed up within the hour and the situation was resolved... and he didn't take advantage of the situation with the bill. From that one experience he earned my trust and I have used him on multiple jobs satisfactorily.
As time went on and he developed some health issues he recommended another plumber to do the work he was no longer doing. I didn't hesitate to call the new guy because I had confidence in the man who recommended him. He turned out to be just as good. This saved me a lot of time and aggravation looking for replacement.
The reverse of this situation is also true. When you depend on someone who promises to get the job done and they bail on you, you lose time and have to pay more to get another tradesman to finish the job... if you can find one who is willing to pick it up in the middle.
I had this situation on another job where my electrician that I had used for small jobs in the past started the job but was not qualified to finish it. He disappeared without a word. I wasted time trying to find someone to finish the job. Then I got another recommendation. It was a young Vietmanese guy. It seemed he had just gone out on his own. He pulled the permits got the job done and he will be called next time I need an electrician.
So what do we get from all this? What happens when your trust is misplaced? Yes you learn, but you don't stop trusting. If things look good at the beginning you have reason to trust until you see a reason not to... but you don't go looking for reasons not to. If someone is untrustworthy they will reveal it themselves.
Of course it is better to deal with people you know and trust. But how do you find them? Where are they?
The place to start is to be trustworthy yourself. In my case, no investor would risk their relationship with someone important to their business if they thought you were a jerk and going to treat their guy badly. Then you need to, using common sense and wisdom, show some trust in the people you are dealing with. If they sense you don't trust them, it will be hard for them to trust you and become dependably trustworthy. You have to do a cost benefit analysis. Build trust on smaller efforts and let it work it's way up. When it does you will spend far less time and get more done.
I go to meeting with a group of investors. There is a certain trust built into that group. You are expected to treat each other fairly. If someone talks about a rental property they want to sell, it is understood that you will not bother the tenant. If it is a contract to be assigned, it is expected that you will not go around them to the owner and try to cut them out. People that can't work with this way are banned from the group. Her lack of trust not only slows things down, it brings it to a halt. You only cheat someone once.
Most people will live up to your expectations. There are those who will try to take advantage of you, but its kind of like the old adage – if you want a friend, be a friend. It also helps to pick your friends wisely. Don't hang out with shysters.
You can find out more about this concept of trust being a business virtue as well as a personal one in Covey's book Speed of Trust. Living that kind of life will make things work better and you will feel better than if you are trying to hustle everyone.. Better to have people trust you than have them count their fingers after they shake your hand – like I do with most lawyers.