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Beware! The Real Estate SalesTick

Here in New Jersey we have the pervasive Deer Tick that spreads the dreaded Lyme Disease. I had a family member contract this debilitating disease after being bitten, and after a long painful illness she finally was able to overcome it. The strange thing is that she isn't the outdoor type. We couldn't figure out how she picked up the tick in the first place.

Me on the other hand, I've spent more times searching the woods for my golf ball than I care to count. I've played entire rounds, using my patented Slice-O-Matic, without having the ball land on the fairway.

I have taken the game to a new level that I've trademarked "Xtreme Golf". And, I'm planning to launch it as a franchise. Hitting the ball from the middle of the fairway is for wimps.

These days, for the sake of my sanity, you can find me hiking down a trail and through the brush to get to a secluded fishing spot. Yet, with all of this, I've never been bit. (knock wood)

But, I'm here to warn you about the Salestick. Some people may refer to it as a leech, but "leech" is not quite accurate. A leech has some medical benefits.

The Salestick is an insidious predatory parasite I've seen lurking in most sales offices that I've worked in. It can manifest itself into many forms. A friend, confidant, mentor, or even as a newcomer or naive trainee. It may be close. Sitting at the desk right next to you. Waiting, watching, listening, probing, smiling.

Perhaps you've encountered the Salestick and brushed it away as it came over to take a taste, then backing away because the stakes weren't high enough or the timing wasn't right. Always looking for an opportunity to bite into your lead, your deal and into the ultimate prize, all or a portion of your commission. Always planning for a portion of its annual income to come out of what it can suck out of its host victims.

And once it has plunged its hypostome into you, no matter how much you struggle to free yourself, it's to no avail. The Salestick then begins spin its lies about how you've stolen its lead. Its deal!

As you try to get your mind around it, you realize that you're having difficulty defending yourself. You're incapable of thinking this way. You don't have the mentality for it. You've crossed over into the Salestick's realm. The realm of Narcissism. The Salestick's argument is so convincing because it believes it to be true.

So you go to your Manager and you find that the Company doesn't want to get in the middle. It's a dispute between two salespeople and no mater what the outcome, the Company will still get its share. You're forced to settle, taking the Salestick as a partner in your deal and giving it a significant portion of your commission.

Now satiated, the Salestick drops off and crawls back to its desk, or it leaves the company to move on to another sensing everyone's defenses are a little too high.

And you? You're not the same. You're damaged on a few levels. Psychologically, you're suspicious of everyone. Your new motto is, "Trust No One". 

As you stare at the plastic sales awards hanging on the the wall above your desk, you feel betrayed. The Company didn't have your back. You come to the, all too real, conclusion that in the Company's eyes you're just a commodity.

Then there's the monetary loss. Perhaps you were planning to use it for a vacation, or to buy clothes for your kids, or to pay the mortgage because your spouse has lost their job.

The Salestick doesn't care. It's driven by narcissistic greed.

You take little solace in the Salestick leaving the company adding credibility to your "version" of the story.

The Salestick settles into its new desk and tells everyone the story about how at the last company it was screwed by you. As it sits;

Waiting, watching, listening, probing, smiling.  

Mini-Madoff (follow up)

  

In my Post Mini-Madoff I ended it with "the one thing Mini-Madoff has over Bernie is that he is still walking around free". The reason became apparent over the Summer. M-M is a snitch. An informant for the FBI. He took down forty-four politicians and religious leaders in New Jersey and New York in yet another New Jersey corruption scandal that is painfully and obviously ingrained in our State's political culture.

One greedy bastard was even selling human organs! No wonder the world views New Jersey as it was portrayed on the Sopranos. Although I never saw Tony Soprano selling kidneys.

You would think that these forty-four Morons would say to themselves; Hmmm, Let's see, M-M got busted ripping off $25 million. He's walking around free. He's talking about kickbacks. He's waring a wire! Run away!

Nope. These knuckleheads go ahead doing business as usual. I'm sure there are more that haven't been caught. You know what they say about roaches? You see one, there are a hundred more in the wall.

To paraphrase Groucho: They may look like idiots. They may talk like idiots. But don't let that fool you they really are idiots.

The Sales Contest

Yes indeed here we are. We've reached the end of another Summer and the beginning of the selling season. Time now races to the Holidays, so make hay while you can.  Sales meetings also start to take on a more serious tone. It's time to get down to business. And to light a fire under everyone's asses, it's also time for the sales contest.

Many salespeople revel in the competition and the opportunity to receive recognition and perhaps an award for being Top Gun. A natural food source to feed the competitive personalities and egos that are required to be successful in sales.

Me however, I've never been particularly motivated by these contests, although I've won my share. There's something about receiving a plaque or certificate that just doesn't do it for me. I'd prefer to win something tangible like cash (cash is good), lunch for two, a preferred parking space, or even a ham sandwich in the building's cafeteria. Anything that I can actually use.

I've also been around long enough to know that these awards have a double edge. The winner gets the glory and the company gets to apply continual subtle pressure as the plaque hangs on the winner's wall for all to see. The alpha dogs lick their chops waiting for a chance to win the next contest and the winner thinks; Like hell you are. You're not going to create a gap in my collection. Hanging a ham sandwich on the wall just doesn't convey the same message.

None of this has any affect on the walking-dead whatsoever.

At one huge residential and commercial company I worked at, we would have a Broker-of-the-Month award. The winner would receive a mass produced plastic plaque to prominently display above his or her desk. I received several of them. When the meeting was over I would discreetly discard them into the trash upon my exit. My Wife and Partner for over twenty five years would scold me saying: "Can't you wait until you get home before you throw it (plastic plaque) away!" I have to admit, the first time I did it was for me. Subsequent disposals were to watch my Wife's reaction. She's so cute when she's glaring at me.

This company also had an annual grand prize. If you hit a certain income level you won a trip to some island in the Caribbean. The problem was that all of the salespeople in the organization who qualified went there too. In the five years that I was at this company I won the trip three times. I never went. It blew Management's mind. I've witnessed too much during the 70s and 80s broker reception era. (For more on the ridiculous excesses of this period see my post Thick as a Brick) The thought of being on an island with a hundred and fifty or so half crocked real estate brokers and watching them charge the buffet table is more than I could stand.

The top producer in the commercial division once complained to me about how he had himself all set up on the beach with chairs and an umbrella that the hotel provided, and two women residential brokers came along and took it from him when his back was turned. Judging by the violated look on his face I think they may have also kicked sand in his face.

The real kicker was that at the end of the year you would receive an additional three to five thousand dollars added to your taxable income for the cost of the trip. That's just what I need. Pushed into another tax bracket. Thanks, but no thanks. If I'm going to go through all of the anxiety and stress that it takes to go away on vacation, I'm heading 180 degrees in the opposite direction.

I know I sound cynical. Perhaps part of my attitude stems from what old Sam use to say to me at the first company I worked at, during my formative in-training years, when my brain could still be molded like Silly Putty. Every once in a while old Sam would grab me, look me in the eye and say; "Kid, you're nothing but a commodity".

And I'm sure the major contributor to my lack of enthusiasm for these games is that while I was at my first company, I competed in the "ultra" sales contests, where everyone was a winner, or else.

Every Monday evening the entire sales organization, usually 50-60 salespeople strong would file into a stadium size conference room. Mounted on one wall was a blackboard around six feet high and thirty feet long. Upon it was written every salesperson's name and their entire production for the week, month and year. This included exclusive listings, open listings, leads, signs, pending deals, closed deals, and income. Everyone was fully exposed, naked for all to see. Literally the handwriting on the wall.

The first thing that became evident to me was that you don't have to be good looking to make a lot of money in this business. Some of the homeliest individuals on the Planet were consistently earning a fortune in commissions.

The procedure was that everyone had to take their turn, stand before the President and Senior Vice Presidents and report on their weekly production or lack thereof. If things were good you got an applause. If your production was off you were torn a new you know what by the President.

A good friend and I use to pass the time at these meetings playing a little memory game of trying to recall the names of all of the salespeople that passed through the perpetual revolving door.

We all knew that a "contest" was imminent when the overall production was down for that week. Take signs for example. If the count was down the President would announce that we were going to have a "sign contest". Whomever didn't get a sign by the next meeting was fined $250.00. That's right! FINED! It was credited against your next commission.

I called it "motivation through intimidation", or "fear" if you prefer.

I'm sure by today's standards this would be considered cruel and unusual punishment. But the company got fifty signs erected that week. Who cared if no one worked on anything else. The leads generated off of the fifty signs for the company would more than make up for it.

At the end of every meeting the President would bellow out; "And stay out of the office!".

To add insult to injury we were each charged $45.00 to erect the sign. We were also charged $35.00 a month for phone charges for the desk phone that we weren't allowed to come in and use. 

Maybe old Sam was right after all.

 

 

Mini-Madoff

 

So Bernie received a century and a half. You know, we had our very own "Mini-Madoff" in our area, except his Ponzi Scheme was in real estate. Aside from that, the scam was remarkably similar. Mini-Madoff was a respected Rabbi that had access to the very wealthy and very private Syrian Jew community here in Central New Jersey. His buying spree was so fast and furious that within a couple of years he had acquired 350 properties. 

I have to admit that during his spree I developed quite a resentment for M-M. I kept asking; What qualifies this Guy to analyze, buy and manage real estate for investors on this scale?

My resentment was rooted in the fact that he was screwing up the market. When I would go for a listing or talk to a potential seller, I would hear; Why should I do business with you? I'll just wait for Mini-Madoff to come along a pay me top dollar for my property. And he buys all cash!

He was also screwing up the valuations. I heard from more than one appraiser that because he was buying in such a tight geographical area, when they would appraise his next acquisition they were picking up the comps on the properties that he had previously purchased. He was actually creating his own bubble!

M-M's empire cratered shortly after he deposited a bad $25.2 million check at his bank. He wrote the check from one account to be deposited into another. The first account had been closed, but he told the bank employees that he had talked to "corporate" and that the closed account was being reopened with enough cash to cover the check. The bank employees accepted his story and allowed the $25.2 million check to be deposited. This particular bank allows instant access to money moved between its accounts. The next day, he wired away $22.8 million, but never paid the bank.

I feel sorry for the bank employees that allowed the banking transaction to go through. They trusted M-M based upon an on-going business relationship, and the lack of better judgment got the best of them. Really, would a Rabbi lie?

The other thing that bugs me are the "inner circle" of real estate brokers that fed M-M the properties. There's no question in my mind that they couldn't get the properties in front of him fast enough, without questioning if these purchases actually made sense. The whole thing was driven by pure greed.

Personally, I'm glad to see him go. There's still remnants of Mini-Madoff in the market. An unfinished office building here. A bunch of boarded up houses there. It's amazing the junk that this Guy bought!

Still, you'll hear people say what a great and kind person Mini-Madoff is. But isn't that the hallmark of a good Con Man?

The one thing that Mini-Madoff does have over Bernie, at least as of this writing, he's still walking around free.

 

 

Conga Line

 

I was relatively new at this real estate company. One day, I had just gotten off the phone talking to a prospect looking to purchase a building, when a salesperson who overheard me, came over to let me know that he knew of a building that might fit this prospect's requirements. He asked me if he produced a building would I agree to share the commission with him? Now, I have no problem working with other salespeople if they can offer something of value, so naturally I agreed.

A few minutes later he came back to my desk with another salesperson in tow and introduced this salesperson as the one who had the actual connection to the building that was for sale. Wait-a-minute, I said, what your doing here is "brokering a broker"! I was planning to ask around the office if anyone knew of a building anyway. What value are you bringing to the table? He looked at me perplexed, as if I were speaking in another tongue.

During my tenure at this company I observed another time that this "brokering a broker" business took place with two salespeople in between the buyer and selling brokers. What an interesting way to make a living, I thought. You never have to actually go out a sell. Just canvass the salespeople in the office.

In theory, I suppose, this conga line can stretch on into infinity. Happy little salespeople spanning the space-time continuum shaking their booty, and the commission split down to infinitesimal amounts tinyer than a quark.

Perhaps a new challenge for Steven Hawking?