Conflict in the real estate business is unavoidable. Whether it’s a buyer, seller or agent, the more deals you do the more conflicts will arise. How do you deal with these disputes? What strategies can you use to resolve them? These five rules will teach you how to handle conflicts and resolve problems as quickly and inexpensively as possible so you can get back to doing deals and avoid wasting time, money and the unnecessary stress of prolonged disputes.
Rule 1: Remove Emotion
Removing emotions keeps you steady in your decision making. It enables you to think clearly. When you allow your emotions to run rampant you end up making bad decisions. For example, what happens if someone is trying to take advantage of you and you get angry? If you get angry that could lead to a bigger problem; making it personal. By taking it to the personal level, you then offend the other person and now they’re more focused than ever on being right rather than being rich.
Keep Calm and Focus on Resolution: What you must do is keep calm while holding your ground because that way you’re able to think clearly. And the calmer you are, the more likely the other person will calm down too. They might start off angry; it may even be part of their negotiating strategy to get you flustered. Stay calm, focus on resolution, and remove emotion completely. A lot easier said than done, but an incredibly powerful tool when resolving conflict in real estate.
Rule 2: You Want to Be Rich, Not Right
Possibly the most important rule of resolving disputes is choosing to be rich and not worrying about being right. In almost any conflict you will need to ask yourself this question: Do I want to be rich, or do I want to be right? Most successful real estate investors have no need to be right in a conflict because their priority is to be rich. They will make decisions that lead to the most economically productive resolution.
This can be hard for most people to do because human nature tends to want to be right. People will often say, “It’s no longer about the money, it’s about the principle.” When you start down that road, you are now trying to be right, not rich and as a real estate entrepreneur you can’t act like that.
An illustration of this is if you have a deadbeat tenant and you need to get them out. You’re tempted to teach them a lesson, and hire an eviction attorney. However the process of legal eviction is long and drawn out. Instead, you could simply give the tenant a $1000 to get out immediately. Now, you won’t be teaching them a lesson and you won’t be right, but you will save yourself a lot of stress, time and money. You’re taking the route that is more economically productive. I call this a friendly eviction and it’s what I’ve done my entire career.
Rule 3: Steer Clear of Litigation
Real estate litigation is lengthy and costly and only the attorneys win. No matter who the plaintiff is or what the verdict is, at the end of the day, the attorneys get their fees and neither party is satisfied. It’s important that you try to avoid getting attorneys involved if possible. Regardless of how good your attorney is, they’re still paid by the hour and the longer it drags out, the more money they make. Every move they make will cost you money.
Mediation or Arbitration: That’s why all of my agreements call for arbitration. Thankfully, I’ve never had a dispute go to arbitration because I’ve always mediated and settled. In circumstances where people are potentially litigious. I’ll say, “Do you have any idea how much money we will spend on legal fees? It just doesn’t make sense for us to go down that road. You need the money more than the lawyer. Let’s focus on getting this resolved. “
Exception to the Rule: The one exception to not getting attorneys involved is when the government is involved. The rule of avoiding litigation still holds true, but you always want to hire an attorney anytime a government authority initiates the conflict or investigation. Whether it is a local, state, or federal government, if it’s any government related authority, get an attorney involved.
Governments aren’t concerned about being economically productive. They only care about enforcing laws, and they have an unlimited legal budget and their own attorneys on staff just looking for something to do. That makes the government dangerous in the world of real estate conflict. Anything you say, can and will be used against you. So, what does that mean? That means that if a government authority is involved, you say absolutely nothing and hire an attorney to do all the correspondence.
To sum up, try to avoid attorneys whenever possible when dealing with private individuals and certainly try to avoid litigation no matter what. However, if you’re dealing with a conflict instigated by a government authority, hire an attorney to do ALL your talking.
Rule 4: Be Discerning When Hiring a Lawyer
If you do need to hire a lawyer, how do you select one? Often people just work with someone they know or someone they trust. The problem with that is, if your trusted family friend isn’t an expert on real estate related matters like land use development or EPA, you will have to pay them to research it. Therefore, you need to choose an attorney who already has knowledge and experience with real estate litigation.
Whatever your conflict is, chances are someone else has been down that road before and paid a lawyer to learn all these lessons so you don’t have to. Research cases similar to your dispute and seek out those attorneys. An experienced attorney will be able to analyze the situation quickly, predict all the possible problems with pursuing litigation, and be able to recommend and negotiate a way to resolve the conflict quickly. With this strategy you may end up working with several different lawyers, but in the end it will save you money and lead to a faster resolution of the dispute.
An example of how this rule applies to real estate disputes would be evictions. If you’re a landlord, and you must go to eviction court, you need to find the best eviction attorney to work with. The best way to go about this is to find out which attorneys appear on the eviction docket the most and contact one of them.
Rule 5: Your Lawyer is Only as Good as You Are
When you hire a lawyer, you are still the boss, which makes it your responsibility to fully understand the law and the strategy moving forward. Let the lawyer teach you about it so you can lead them. This enables you to ask the right questions. You can ask questions like: Have we ever thought about that? Could we try this? Why are we going that route? Why don’t we try…? As an educated client you need to be involved in the process.
Ultimately, there’s an inherent conflict of interest between the attorney and their client. The client wants a speedy resolution and the attorney makes more money if they drag things out. So, your attorney is only as good as you are. You want to dive deep into the situations, understand them, and be able to articulate what’s going on. If you don’t understand something, ask so you are clear. Remember, they are working for you.