Do you think kickbacks are a part of the real estate business?
Not from where I stand!
Wow, who knew wedding planning could be so tiring!
It’s not even the constant interviewing, searching, researching, and decision-making; it’s putting up with all the opinions that you never asked for!
A friend of ours was telling us the other day, “Your wedding planner is getting kickbacks on everything! You have to be careful! Make sure you don’t use her recommendations!”
Isn’t that why we hired her? To get her recommendations? Aren’t we using her because our lives are insanely busy and we want her to do the legwork for us – not to mention she plans 100 weddings a year and we have never planned one?
For example, our wedding planner suggested a stationary-person (what’s the name for that?), and I figured “Great, let’s go with that person. I don’t care who we use, and I don’t want to shop around and interview ten places.”
But our friend said, “Your wedding planner is getting a kickback!”
Let’s assume that the stationery for invitations costs $400. Even if this stationery store has a 100% profit margin, that means they’re still only making $200.
Are we really going to assume that on a $200 profit, the stationary store is going to pay a kickback to our wedding planner? What – $20? Really?
I don’t know, and frankly – I don’t care.
I’m often asked if I get kickbacks in my business, and if the question was never asked of me, I would have never even considered the idea in the first place.
For the record – no, I don’t get kickbacks in my business, nor would I ever solicit them.
Sure, there are some minor perks sometimes (like what cynics would call kickbacks), like being invited to a large golf tournament, but have I ever received an envelope full of cash or even a lucrative gift? Not on your life!
The thing people have to realize is – I don’t need a kickback. What I need is the service and professionalism from those around me.
These people represent me, and I’m judged by my recommendations.
Take my mortgage broker, for example.
I’ve been working with Joe Sammut for nine years now, and he has represented hundreds of my clients.
I consider Joe to be an asset to “my team,” since he is partly responsible for each deal I do with a buyer-client. I know that Joe is one of the top mortgage brokers in Canada, and that his knowledge is simply unsurpassed. I feel privileged to have him work with my clients, and our satisfaction rate is about 99%.
So do I need a kickback from Joe?
No. I need Joe to help my clients obtain mortgages so that I can sell them properties. I need one of the top brokers in Canada looking after my clients’ needs, because part of my service is setting my clients up with the best professionals related to our industry.
Over the years, I have streamlined my buying and selling process to make it as easy, comfortable, and lucrative for my clients as possible. Part of this is knowing the right people, and involving them in our transactions.
I recommend Larry Lychowyd as a real estate lawyer, and he has likely represented fifty of my clients over the past two years. I consider Larry an asset to my business. He’s knowledgeable, experienced, professional, and he’s fast! Sometimes we only have 48 hours to review a condominium’s Status Certificate, and Larry is always finished early. He’s thorough, diligent, and exceptionally detail-oriented, which as an extremely obsessive-compulsive individual, is something I value highly!
I’ve bounced around between a few different lawyers, but I’ve settled on Larry. I used to refer two different gentlemen, but times and situations change, and once you find a person who you would value highly and would recommend to your own mother – you stick with him or her.
Larry appreciates my referrals, but he doesn’t give me kickbacks, nor do I ask for them.
I’ve used Ken Haller Home Inspection Services a few dozen times, as have I recommended Joe Roberto from Lighthouse. I’ve never asked these gentlemen for an envelope full of cash, although, that doesn’t mean it’s never happened to other people…
Earlier this year, a long-time blog-reader emailed me and said that one of his colleagues was relocating to Toronto, and had a massive falling out with the Realtor that was referred to him by his company. He wanted to switch Realtors, and my blog-reader recommended me.
What was the falling-out over? You guessed it: kickbacks.
My client (now he’s my client…) asked his then-Realtor how much a home inspection would cost, and she said $2,000. She also said that she would facilitate the inspection, and she could act as the go-between and collect the payment. My client gave her cash, and she took care of the inspection.
A week or so later, my client asked around and was told that a home inspection should not cost anything close to that, and he figured perhaps he had been taken advantage of. This is one of the nicest guys I’ve ever met – a VP with a huge financial institution who is smart beyond belief, but in this case was too trusting, and the results were disappointing.
He asked his then-Realtor for a receipt for the home inspection, and of course she game him excuses.
He then called the home inspector to ask what he would charge to inspect another house, and he said, “Ask your Realtor – she’s got it under control.”
Do we have any actual proof that there was a kickback? No, we don’t. But in subsequent conversations with his then-Realtor, she alluded to the fact that people have been known to scratch each other’s backs.
Imagine that – $2,000 for a home inspection! I wonder how much of a kickback she got. Well, in the end she lost a client who might have done $10,000,000 worth of business with her over the years, all for maybe $1,000.
So yeah – kickbacks happen. I won’t pretend like they don’t.
But that story represents maybe one in a thousand Realtors, and if you think I’m being naive, then say so.
I’ve recommended my painter, Barry Miller, about thirty times in the last two years, and I don’t expect, nor would I ever accept, anything from Barry. In fact, when Barry painted my own condo, he charged me exactly what he had charged another client of mine to paint a similar condo of the same size, and I wouldn’t have it any other way.
The same goes for my “flooring guy,” Djuro Babic from D.B. Flooring. He’s done work for me at several condos, and charges me market value – and does NOT give me kickbacks on the business I sent him.
I think that’s the best way to to business.
It’s just the best way to act in general.
A client of mine who just moved to Toronto asked me for help buying a car over the weekend! He said he wanted a Mercedes and asked if I knew anybody, and I immediately told him how much he would enjoy driving a Lexus, and that he should call my good friend Alistair Baxter at Lexus on The Park. Why? Why not!
Why not refer people? Alistair took excellent care of me when I was buying a car, and the service, personality and price made me wonder why I ever walked into BMW and Mercedes in the first place! They’re great cars, and they have the best customer service of any of the mid-luxury brands. I feel comfortable knowing that if I send people into Lexus, they won’t be disappointed.
Isn’t that the most important part of a referral – the result? Do we really need a kickback to do what’s right?
A friend of mine from high school is a personal trainer and I’ve referred him to friends, colleagues, and clients. Why wouldn’t I help him out, when I know how great he is at what he does? Do I expect anything for it?
Again, maybe my “Be a nice person and refer business to others” mentality is naive, but it’s just a part of my business.
I’ve surrounded myself with top-notch professionals: mortgage broker, lawyer, home inspector, painter, movers – you name it.
Actually, I should disclose that S & Sons Movers sent me a flower basket earlier this year – but it was completely unsolicited!!! It was sweet, and a nice way of saying “Thank You.”
But as for actual kickbacks like envelopes full of cash? I hope to God I’m not the only one who thinks that’s a big no-no…