Testing

 

Today was final exam day for a group of my agents in training; the stress was evident on their faces. Testing seems to do that to people. I tried to reassure them that this is part of the learning process. Reviewing what you missed will focus you on what you need to study. We have lots of formulas and calculations in commercial and investment that agents need to know to provide accurate information.

 

Testing is a part of the real estate world starting with having to pass the licensing exam, which in NY is now a 75 hour course and a tough exam. To earn Real Estate Designations requires taking courses and passing exams.

 

Our clients test us, most commonly to see if we will reduce our fee. “Your competition is willing to list my property for 2% less commission; will you reduce your fee?” My favorite reply is: “Is this a test of my negotiating skills? No, I don’t reduce my fees.” Half the time your completion did not even make a proposal, this was a test of your negotiating skills! One of the skills we need to learn is overcoming objections (or how to conquer tests).

 

We need to test our customers, prequalifying them, do they have the money? Or have they been watching “No money down” at 3:00 am on TV? You need to know your market, how much a month is a typical 1,000 SF store renting for, what are office buildings selling for per square foot? When the new customer comes in and wants to buy a 10,000 SF office building you advise them, I can help you with that. In today’s market that size office building will probably cost $1,500,000 (because you know office buildings are selling for $150 PSF in your area). Are you purchasing all cash or will you be financing? They are financing – you say, do you realize you will need $525,000 cash (30% down $450,000 plus 5%closing costs $75,000)? Do you have the money?

 

In your market landlords may want first and last month’s rent and two months security. If the size store your customer wants typically costs $2,500 a month they need $10,000 cash to proceed. Do they have the money?

 

Are our client’s expectations realistic? Do they want you to put their property on the market for $2,000,000 when it is worth $1,400,000 to “test” the market?

 

Those “low-ball” offers, just to see what will happen, just to start the negotiations – a test, of course! In fact we can think of the negotiating process as a series of tests, probes to see who will concede a point. Both sides will ask for more than they expect to get, challenging the other side.

 

Even the DOS has “testers” checking agents and brokers on discrimination and other issues.

 

Testing in our industry is all around us, the recent economy has tested many agents resolve to stay in this business.

 

As I said to my students testing is part of the learning process. When we employ testing we gather information; when we are tested learn from the questions.