Publicly, most agents say that they never represent family or friends. But upon closer analysis, most agents end up doing it anyway – and then regretting it. Then, swearing they will really never do it again. Then, doing it again. It seems that attempts to help out family and close friends is a temptation agents can’t resist.

The reasons to help out a close friend or family member are always compelling; the Uncle that helped out your family when your Dad was laid off has a son, your cousin, who is going through a divorce, and is strapped financially. So you offer to list his home for a reduced commission, and before you know it, your nightmare has come true – everything that could go wrong, does. Miraculously, you get a difficult home sold and closed, but your uncle has not spoken to you for three years because he feels like you took advantage of his son. You are still miffed that you not only received no commission, but ended up spending $1,200.00 out of your own packet to cover expenses and to pay your broker’s split, and somehow, some of the family still thinks you didn’t give up enough of your commission.

How to Avoid the Disasters

The funny thing is that the answer is so simple that most agents reading this won’t take me seriously. The secret to avoiding problems is total and complete communication. The problem is, when it comes to working with family and friends, most agents don’t communicate at all. I believe most agents have a misguided belief that their family and friends know more about real estate than they really do, and that since they are family and friends, they will simply trust that you are working hard and doing a good job on their behalf.

First Step: Define ‘Commission’

The first thing that you must discuss in detail is the commission. A number of years ago in a casual conversation with my son, I told him that when he sold his house, I would waive my commission. Months later, he started to get serious about finding a new house. While we were talking, he said, “I have been trying to figure out how much I will walk away with when I sell my house, and saving that six percent commission is really going to help out.”

It is in these casual conversations that hard feelings are born. When I said I would waive my commission, my son heard he would pay no commission. I assumed that since my son had been around the real estate industry most of his life, he understood how it all worked. It is critical to sit down and explain in detail how commissions are split up and what your share of the commission really is. I have also found that in these situations it is critical to put it down on paper (a copy of which you give the person) exactly how the commission money is being split up. If you are giving them any break on the commission, show them exactly what they are saving in terms of dollars, what your gross is, and what your expected expenses will be on their behalf. Agents often assume with friends and family that they understand all the details, when most of the time they don’t - this is how seeds of doubt and mistrust are planted.

Stick to Your Routine

Next, follow the same service plan that you have for your other clients, send the same thank you notes, follow-up letters and make the same weekly calls. Many agents I talk with say they feel funny about doing the same things with family and friends that they do with “regular” clients. Trust me, it is critical that you expend the same amount of educational hand holding and reassurance with family and friends that you do with your regular clients. In fact, it is better to do even more. If or when your family members tell you not to go out of your way or that you don’t need to call so often, do it anyway. Remember, your goal is to help your family with out risking hard feelings.

Don’t Sugar Coat It

Finally, and maybe the hardest thing to do when working with family and close friends, be totally honest and upfront about any difficult issues that could possibly affect the transaction before you take the listing or write up an offer.

If your aunt’s house smells of cats and is in desperate need of carpet and paint to have any chance of selling, or your best friends desperately need to sell their home for five percent over market value in order to buy the house they really want, talk about the issues and put your recommendations and suggestions down on paper. If you have it down on paper, it’s easier for them to remember exactly what you said. If you fail to bring up difficult or uncomfortable issues, they will be become bigger and more difficult, and when they finally do come up, you will be the one who gets blamed for the situation. If you don’t put it down on paper, their recollection of what you said and what you actually said could end up being totally different.

Make it a Win-Win Situation

If, on the other hand, you follow these simple guidelines, you will be able to help your family and close friends feel good about helping them and they will think you are a great person and a professional Realtor. Remember, when it comes to working with family and close friends, there is no such thing as over-communication. Never assume they understand, because they probably don’t.

Published: March 10, 2003

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Co-founder of Hobbs/Herder Advertising and Hobbs/Herder Training, Greg Herder is recognized as the real estate industry's foremost authority on residential real estate marketing and agent productivity training. Herder is also a licensed Certified Residential Broker (CRB) and owner of MegaAgent Realty, and co-owner of JDG investments, a real estate investment company. Herder is a featured columnist on real estate marketing and training issues for Realty Times, Real Estate Executive Magazine, Savvy Executive Profiles, and, as well as a contributor to a variety of other industry publications, including Realtor® Magazine and Real Estate Business Magazine. He also authored the innovative how-to book “Satisfaction Guaranteed - 100% Satisfaction Guaranteed or Your Money Back," which ushered this unique concept into the world of real estate service. Greg has conducted over 1500 one, two or three day seminars over the past 17 years for the real estate industry and is a professional member of the National Speakers Association (NSA). He graduated cum laude from California State University with a BA in psychology and is currently working on getting his PhD in Organization Behavior.