How To Use The Law Of Reciprocity In Real Estate

In real estate, client trust is your currency. But building trust can take a long while to accomplish if you take a passive approach. So what can you do to accelerate the trust building process, and become productive as quickly as possible?

Possibly the best way to do so is by leveraging the psychological effect known as reciprocity.

What Is The Law Of Reciprocity?

When we use the word reciprocity in real estate, one of the first things that may come to mind is the Multiple Listing System (MLS). This is after all a system also known as “agent reciprocity.” 

And while agents cooperating through MLS is indeed a form of reciprocity, this psychological effect has more applications than just cooperating with commissions, fostering cooperation, and helping each other sell properties.

What exactly does it mean to reciprocate?

In its most basic form, it’s the idea of “you scratch my back, and I’ll scratch yours.” It’s a social norm in which a good deed is likely to be rewarded by another good deed in return. The person who receives the first good deed may feel a real, mental sense of obligation to reciprocate.

This idea may seem antithetical in often cut-throat business environments, but it’s an essential building block behind building trust, teamwork, business deals, and even politics.

It may seem like a quaint remnant of a pre-economic barter society. But in fact, modern financial and social structures are based on reciprocity.

But why do we call it a law? Because it’s an universal aspect of human societies. Examples of the law of reciprocity can be seen in all cultures throughout human history.

What Kinds Of Reciprocity Are There?

While there are countless ways to show reciprocity, sociologists, anthropologists and psychologists generally agree that they all fall under three major categories.

Generalized reciprocity: Generalized reciprocity happens when a person does a favor to another without the expectation of a return. They do such acts of kindness because they feel that the other person would do the same for them.

This form of reciprocity is closely related to altruism, and is most often seen among family members and close friends. 

However, it’s not 100% relegated to close friends and family. Examples of generalized reciprocity can happen among strangers too in the form of simply doing goodwill, volunteering, charity, and community service.

Balanced reciprocity: This form of reciprocity involves a more or less equal exchange. The person doing the favor expects their favor to be returned within a specific time frame, and of similar value and utility.

For example, a real estate agent might help his colleague show one of his listings to a potential client while he’s on vacation, in exchange for the same favor when he’s on vacation later in the year.

Negative reciprocity: This kind of reciprocity happens when one or two parties try to get more than the other in an exchange.

A common example of this can be seen during a crisis, when essential goods become scarce, and sellers engage in price gouging. 

However, don’t let the name negative reciprocity fool you into thinking that it’s always about unethical choices, or choices in a zero-sum game in which for one person to win, the other has to lose. A better, more descriptive name for negative reciprocity could be “unbalanced reciprocity” or “leveraged reciprocity.”

For example, an employee may be extremely respectful and even subservient to her boss with the expectation that she may get a raise later. 

A real estate agent may call a past client to congratulate her on her wedding anniversary in order to stay on her mind if she ever needs real estate services again.

Both cases are examples of negative reciprocity, since there’s an imbalance of perceived value in each exchange. It costs nothing but a small investment in time to congratulate someone over the phone. But that simple phone call might lead to another real estate transaction. Neither party wins at the expense of the other, and both come out feeling good about the exchange at the end.

How Can You Use Reciprocity In Real Estate Effectively?

So far, we’ve established that reciprocity is an essential part of building and nurturing relationships. Why is that so essential in real estate?

If you’re a seasoned real estate veteran, you already know the answer: real estate is all about people, NOT houses.

While you do help facilitate real estate transactions, the relationships you build are the true foundation of your real estate career.

When you help first time home buyers get a home, you’re helping them fulfill their lifelong dream of owning a place to call home. A place where they can raise a family, decorate to their liking, and use it as a source of income in their retirement age.

If a home buyer or seller chooses you, it’s not usually because of your salesmanship, wit or marketing knowledge. It’s because they trust you. And they trust that you will help them fulfill their dreams.

It’s because you have built a relationship with them of trust. And they trust that you will help them fulfill their dreams.

Trust is never built overnight. It’s built through a series of exchanges over time. And to build that trust, you first need to demonstrate your value in every exchange you have with a new prospect.

Building Trust Through Reciprocity

1. Give Something First

In order to trigger reciprocity from a prospect, you need to give something of value first. It doesn’t have to be something costly or time consuming. However, the other person needs to get real value out of it.

You could offer a free market analysis, local guides, valuable content such as infographics, articles, video tutorials, etc. If you need more ideas, check out these lists of marketing and content ideas we’ve put together.

While you do want to focus on real estate when you give something valuable, you’re not absolutely limited to it.  

Since one of your goals is to become the local go-to expert for anything real estate, you can also contribute to your local area. Again, you have lots of options here: you can sponsor events, participate in charity, partner up with local businesses, and so much more.

As long as your prospects get something of value FIRST, before they even need real estate services, they will be much more likely to reciprocate back and hire you when they need real estate services. 

2. Don’t Give The Impression That You Have Ulterior Motives

We all want to believe that when businesses and organizations offer freebies such as 15 day trials, content, and product samples, they do it out of the kindness of their heart. But of course, we weren’t born yesterday. We know that they do so because it benefits them in the long run.

And you know what? There’s absolutely nothing wrong with that. However, if those freebies come across as transparent and sloppy attempts to bribe or trick clients into hiring you, you’re going to put them off and lose all of their trust.

Anything that you give away for free to your prospects should come across as generalized reciprocity. In other words, as if you have no expectations that the favor will be returned. 

In fact, if you’re genuinely giving out that valuable good or service because you ACTUALLY WANT TO HELP YOUR PROSPECTS, even better.

At the same time, temper your expectations. Just because you give a single valuable away, it doesn’t mean that your recipients will immediately reciprocate.

You will sooner or later influence prospect behavior and help establish long-term relationships with your clients. But just like a simple TV ad by itself won’t suddenly trigger an avalanche of clients, it takes a while to build trust with clients.

3. Make It Personal

People relate to other people, not nameless corporations. Even if your real estate brokerage is mostly local, and has become a local institution, people prefer to hear from “Ron, your friendly neighborhood Realtor®” than “Keller Williams” or “Century 21”.  

So in all of your messaging, outreach efforts, and marketing material, personalize it as much as possible for each recipient. 

Use your recipient’s name, and show yourself to be a real person. Avoid common real estate agent photo clichés, and brand yourself as an approachable – yet professional – real estate authority. 

By giving prospects a little extra personal attention, you are showing them that you genuinely care about them, and don’t see them as just a potential source of money.

4. Keep The Giving Going

Once you have a happy client that you help close a deal, don’t think this is the end of your relationship, nor the end of your reciprocity.

The majority of your clients will come from referrals. Many of those will be current and past clients that are happy about your services, and wish to refer you to their friends and loved ones.

Throughout the entire home buying and selling process, you have many opportunities to engage in reciprocity. 

You can offer a free moving service, goodie baskets and groceries as they settle in their new home, and you can continue to provide your clients with valuable and compelling information about the best renovations, tax deductions they can take advantage of, things to do in the area, and so forth.

How To Avoid Abuses Of Reciprocity

The law of reciprocity is very powerful, and can be a powerful tool of influence in the right hands. However, as we saw in definitions for the three kinds of reciprocity, it can also be used for negative purposes.

It’s not always an even exchange, and can easily be used against you if you’re not careful.

Research shows that people are more willing to do a disproportionately large favor after they’ve benefited from a small one. Marketers often use this phenomenon, and call it the “foot-in-the-door” technique.

For example, in a real estate negotiation, a seller’s agent may convince his client to make a small concession in your favor (such as leaving a piece of furniture), in exchange for allowing the client to remain in the property for 2 months after the closing date (without paying rent).

Another way reciprocity can be used against you is by making a large request that they know you will say no, and then making a smaller, more “reasonable” request (which was their intended goal all along). This technique is called the “door-in-the-face” technique.

This could happen when a buyer makes a ridiculously low offer, fully expecting a resounding no, and then making a much more reasonable, yet still low offer.

Two tips that can help you are:

Wait – Cultural psychologists agree that the urge to reciprocate is strongest right after the first favor is made. But the longer you wait, the weaker that urge becomes. If you realize that someone is trying to get you to reciprocate, excuse yourself, and give it some time.

Carefully consider the exchange – Once you’ve waited long enough, carefully consider the favor you were offered. In many cases, that initial favor doesn’t measure up to the favor they want you to reciprocate.

Conclusion

Understanding reciprocity can be a huge help in your career as a real estate agent. It can help you be more effective in our marketing, nurturing your leads, and keeping your current clients happy. 

And knowing why this psychological effect is so powerful can help you avoid falling for malicious and detrimental uses of reciprocity against you, especially during real estate negotiations.

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