The Master Mind Team

Real estate is a complicated industry.

It’s an industry that requires a unique knowledge of the law, an empathetic understanding of human emotions and a strong tolerance for risk. Very few people achieve success in life alone. When you are preparing to sell a property, it is best to gather a group of experts that can be used for advice when needed.

This chapter will discuss the different roles and responsibilities that you will find on your real estate team. Team members are the professionals it takes to make a real estate deal come together for a desired result.

Each specialty is used for various situations. Some experts will be utilized on a daily basis while others may not be needed. Having some trusted advisors will help you avoid pitfalls and common errors that may arise from a transaction.

Seasoned veterans deal with their specialties on a constant basis. This allows them to see certain situations and understand the potential outcomes. With the right experts on your side, your likelihood of success increases.

Take the beginning of your sales process and think about the experts you will need to help you. Before you begin talking to potential buyers, decide on the skill sets you need then fill those roles.

For example, will you need an attorney, an accountant, a banker or any one of the hundreds of unique specialties within the real estate industry?

Real Estate Masterminds

Let’s take a look at the core team members that are needed for a real estate transaction.

• Accountant
• Appraiser
• Attorney
• General Inspector
• General Contractor
• Insurance Broker
• Mortgage Broker
• Real Estate Broker

Accountant

Trusted accountants are a vital component to a successful real estate team. Look for a professional who is experienced with the tax advantages and options regarding real estate. Make sure they understand the capital gain tax liability of your real estate profits and how to minimize your tax liability.

A great accountant will help you organize your finances and make sure you are keeping up with the tax requirements of the transaction. In most cases, I recommend my clients to seek a tax accountant first before making the decision to list a property.

In terms of a real estate sale, which is our topic for this book, capital gains taxes impose a serious liability on many transactions. A great accountant should know the ins-and-outs of a real estate transaction in terms of tax liabilities. They should be able to know which deductions you can take advantage of to limit your liability and make sure everything is counted correctly to avoid future headaches.

Appraiser

While having a licensed appraiser is usually vital to the real estate process, if the buyer is trying to obtain a mortgage loan, the lender will choose an appraiser. For the purposes of having an appraiser on your team, it is highly recommended to find an individual who has certifications and all required state licensing.

Although there are viable arguments as to the worth of bureaucratic licensing requirements, at the very least such licenses and certifications provide essential codes of conduct for the licensees. You are less likely to find a licensed appraiser with shady business practices as they have more to lose due to the amount of time and money invested in meeting the licensing requirements.

As you’ve gathered from reading in prior sections, an appraiser calculates the current property value on the home in question. They will perform a walk-through of each room noting the condition of the interior. Subsequently, the appraiser analyzes the external condition of the property. If there are additional amenities or safety code violations, the appraiser will make note and factor those aspects into the valuation.

Even though lenders have certain appraisers with whom they work with, finding a reliable appraisal professional could help you in the initial process of establishing a home valuation for listing purposes. 

Attorney

A real estate broker can take care of a typical transaction without the need of an attorney or they will have one at their disposal but a great attorney will certainly help during a complicated transaction.

In the United States, only attorneys can give legal advice on behalf of a client. They can help you wade through letters of intent, purchase offers and sale agreements. They can even help with discovery clauses that may have an effect during the transaction.

A growing trend is homeowners that attempt to sell their home without a real estate broker. For sale by owners usually try to avoid the broker commissions in exchange for a flat-rate real estate attorney fee.

A real estate attorney can draft documents related to a transaction on the owner’s behalf. They can also set up trusts or facilitate specialized needs and terms of the transaction.

The downfall is when an owner relies on an attorney to perform the same scope of service as a real estate broker. Attorneys are not familiar with the nuances of the property, the emotional state of the buyers, the marketing efforts required and many of the agreed upon real estate association forms. In short, real estate brokers handle sales and marketing, while a real estate attorney focuses mainly on the legal agreements.

Real Estate Attorney


There are many types of attorney specializations. Make sure your attorney is experienced and specializes in real estate law.

What to Look For…

• Availability of time to do the work
• An understanding of professional limitations
• Portability of past knowledge, wisdom and judgment
• Openness to engaging the assistance of other lawyers or law firms
• A willingness and ability to work as a team player
• Experience in various forms of real estate transactions
• Experience with complex finance structures
• Demeanor and approach to the practice of law
• The support of the law firm – how deep is the bench?

What to Watch Out For…

• Past malpractice claims
• State bar complaints
• No experience with real estate contracts, business and litigation.
• A incompatible personality and/or demeanor
• Inflexible on price
• Only charges by the hour

 

General Contractor

General Contractors are managers of a construction project. They are responsible with the coordination between architects, engineers and the client in order to execute the project.

In certain scenarios, a properties value can be increased through renovations and development. Larger projects such as adding a new bedroom, renovating a kitchen or adding a guest house require skills and legal expertise. Most states require that a contractor hired to conduct these renovations be licensed, bonded and insured.

General contractors hire sub-contractors to complete certain portions of the construction. Electricians, plumbers and foundation experts would be an example of sub-contractors. Ask your contractor about their specialties and keep them to firm deadlines for all the work needed.

Handy Man

When choosing to sell a property, many home owners hire a handy man to do small maintenance jobs throughout the property.

Unlike a general contractor, a “Handy Man” is a person with a wide set of skills for repairing real estate properties on a small scale. This includes interior and exterior jobs. These jobs might include painting, plumbing, simple electrical work and other minor repairs.

General Inspector

A licensed General Inspector is an expert at examining real property for defects and hazards. In most cases, a general inspector is used during the Escrow process of a Real Estate Transaction.

Home inspectors should have training and professional certifications to perform the job. The inspector should take detailed notes, photographs and present a written report of the findings. The home inspector describes the condition of the home at the time of inspection but does not guarantee future condition, efficiency or life expectancy of systems and components.

Insurance Broker

One of the necessary evils in our world today is insurance. An insurance broker generally has access to multiple types of insurance products. In most cases, homeowners insurance will be required as part of the real estate transaction. In certain circumstances other insurance products such as general liability, earthquake and renters insurance may be needed during a real estate transaction.

Mortgage Broker

In today’s age, the majority of real estate purchases are financed with a mortgage for a large percentage of the equity. In general, banks offer different financial products to consumers looking to borrow additional funds to help them afford a larger home.

Large banks like Wells Fargo, Chase and Bank of America offer      in-house Mortgage Bankers that work specifically for that bank and offer only products within that bank. In most cases, this limits the options available to the consumer.

A Mortgage Broker on the other hand is slightly different. A broker has access to multiple banks and financial products and works to find the best fit for the needs of the client. In general, buyers would be better off working with a Broker compared to a specific banker.

The ability to secure financing and the macro-lending environment has a dramatic impact on the Real Estate market. When lending is easy with low interest rates, few regulations and many banks to choose from, borrowers can take out a larger loan, meaning they can afford to pay more for a home.

When interest rates go up, new regulations limit the industry or other economic and political factors effect how banks are lending, this makes it more difficult to take out a loan and limits the amount of qualified buyers in the market.

When you are deciding to list your house for sale, partnering with a great mortgage broker could help get your home sold. In most cases, your mortgage broker can create marketing materials that demonstrate the down payment and monthly payment options to purchase the property. This helps buyers make a decision to purchase your property.

Real Estate Broker

At the center of more than 97% of real estate transactions in the U.S. is a Real Estate Broker. Brokers are a person or company that acts as an intermediary between sellers and buyers of real property. Their main focus is connecting the perfect buyer or tenant to the right property that fits their needs and negotiating a win-win deal.

In the United States, real estate brokers are generally licensed and regulated by the state in which the transaction takes place. Unlicensed persons or companies representing buyers and sellers in a transaction are illegal but buyers and sellers acting as their own representative in a transaction is allowed.

Real estate brokers may be different than a real estate agent. A broker is the only party that can legally represent clients, while licensed sales agents may work under a broker to help facilitate business under that brokers supervision.

Most clients in the United States refer to licensed Real Estate Brokers and sales agents as “Realtors.” A Realtor must be a licensed broker or sales person who is an active member of the National Association of Realtors, which is the largest real estate trade organization. The term “Realtor” is actually a registered trademark of that association and has no official status with states beyond their trademark protections. Membership to the NAR requires adherence to their code of ethics, which go beyond most state level requirements.

When real estate brokers represent sellers in a transaction, they have a fiduciary (legal) responsibility to act in the best interest of their client. When representing the owner of the property, they are generally referred to as a “listing agent” or “listing broker.” These responsibilities include the marketing, showing and negotiations on the seller’s behalf in order to accomplish the wishes of the clients in good faith. In general, the goal is to sell or lease the property at the highest possible price with agreeable terms.

When acting as a buyer’s agent, real estate brokers and sales agents assist buyers by helping them purchase property for the lowest possible price with the best terms. This includes navigating the escrow process, presenting useful data to the client and helping coordinate the transaction.

The real estate broker owes fiduciary duties to whomever that broker services as a client and must look out for their best interest honestly and ethically. If the broker is helping both the buyer and the seller, this is called “dual agency.” Some states have specific restriction for dual agency brokers and require the approval and disclosure to both parties in a dual agency transaction.

Optional Master Minds

• Architect
• Property Manager
• Engineer
• Electrician
• Painter
• Real Estate Stager
• Tax specialist
• Estate sale specialist
• Hard money lender
• Full-stack marketer
• Photographer
• Home warranty
• Graphic designer
• Escrow Officer

The Effective Engagement Letter


You should require an engagement letter with each member of your real estate team. This is customary for attorneys and realtors but expect the need to create an engagement letter and terms for the other members of your team as well.

Most professionals will provide an agreement or you can hire an attorney at a fixed rate to prepare one. This may also be an agreed upon estimate and invoice for the work to be completed. Partners like inspectors and appraisers are less formal and will be done with an agreed upon price for the project and an invoice paid by check.

For larger work such as hiring a real estate broker, accountant or attorney make sure you spell out all the fine points and each party is in agreement.

For your protection, make sure the following points are included:

• Spell out the scope of work,

particularly the roles of each party.

• Specify the nature and timing of payment,

including the timing of service and due date.

• Define the particulars of termination.
• Be specific on needs and deliverables due.
• Disclose conflicting relationships.
• Identify and allocate known risks.
• Dispute resolutions.
• Limited liability.

Rome wasn’t built in a day. The same goes for a real estate transaction. From hiring a cleaning team to improving the condition and signing with a top agent, the outcome is directly related to the quality of your team.

Ask for Referrals

Team members are the deciding factor in a transaction. That’s why it’s important to find the best partner for each specialty. Many times, the best business partners are introduced to you by a mutual friend; a trusted advisor, like an accountant, realtor or family member.

If you don’t know of an expert in a certain field, a great real estate broker can help you find the experts needed for your situation. Be sure to do a background check on the referral as well. Although your friend and advisor may have the best intentions, always verify the person and company.

In today’s online world, you can discover great partners using review sites like Yelp, Google and Realtor.com. Read the reviews and then start calling. The best way to know if a partner will be a good fit for you is by having a conversation with them.

Partnership Agreements

When working with others in a formalized business capacity, such as a partnership, it’s important that all team members are clear regarding the who, what, when and where of the relationship.

Gathering a team of experts will make your life far easier than attempting to shoulder all of the real estate complexities by yourself. You may have excellent people skills but cringe when it comes to paperwork. You might be the exacting personality type where legal details and bureaucratic processes are your expertise but you shy away from dealing directly with the sales side. This is why specialized experts are important to produce a greater result.

The first step in building a great team is self-analysis. When you lead a team, you’ll be managing several different personalities who won’t always see eye-to-eye on every issue. Your leadership style will dictate whether these disagreements are settled amicably or encourage more drama. What is your leadership style? Are you dictatorial? How do you handle someone not pulling his or her weight? How do you reward the team members who meet deadlines, provide outstanding work and/or go above and beyond? Are you able to accept when you’re wrong and change the plan accordingly?

Next, analyze what type of experts you will need on your team. It’s up to you to help bring out the best in your team members. You’re the head coach not just the boss. Successful teams aren’t predicated on the head coaches’ ego but on the sum of all parts.

Sure, you’ve got skin in the game (i.e. your time and money) and your ego is definitely invested but you’ll chase the most valuable players away if you go on a power trip tirade over every mistake.

Ask how you can activate your team members’ talents? Who are the experts and where do they shine? Human beings seek mutually beneficial relationships (although an obvious statement, people tend to forget this when they are focused only on their objectives).

Although this is a business relationship, the word to focus on is relationship. Consequently, you’ll also need to ask yourself what is the “give and take” balance between you and your team of experts?

After you have examined your team members in relation to your leadership style, it’s time to give a clear and consistent definition regarding each person’s role and responsibility on the team. To continue with the sports analogy, real estate is a team sport. Team responsibilities are inherently interconnected. As a leader, you’ll need to be aware of how the collective expertise can be leveraged towards a common goal and also how each team member fits into the team culture.

If you’ve ever watched a reality TV show that centered around real estate agents and professional home flippers, you’ve witnessed both positive and negative examples of team leadership and culture. The successful leaders are demanding but they also appear to treat their team with respect for their expertise while hiring only those who fit in with the social expectations of the team.

For example, Jeff Lewis on his show “Flipping Out” maintains a culture of both intense hard work and unexpected work place humor. Some may cringe at what Jeff’s team chats about in the office during their down time. It works for Jeff and his team but it should be food for thought as you gather your own team together.

For human beings to learn, there must be a feedback loop. Don’t wait for a problem to rear its ugly head before you communicate with the team. Knowing when to demand more from a particular associate and when to give positive feedback is more of an art than a science. Why? Because each team associate has a unique set of values regarding what motivates them externally.

While there may be moments when you’ll have to give negative feedback, the unique team dynamics should be used to inform your approach. Feedback isn’t a one-way street. Great leaders are also great listeners.

Celebrate success and communicate the who, what, when, where and how of what success should be. Though you’ve had the leading hand in what went right, you’ll have a more loyal team if you celebrate all of their contributions. Certainly reward individuals whose efforts were outstanding but consistently recognize success as a team effort.