NO Requests for Proposals

Whenever you have a lot disruption in the world, it usually ends up disrupting your business and your job too. Over the past couple years, we’ve had the pandemic, inflation, supply chain issues and now a major war in Europe.

During periods of tumult, you’re likely to see some buyers, sellers, landlords and tenants behaving differently. As an example, I’ve had a few clients tell me that they’ve had more real estate clients asking them to answer Requests for Proposals (RFPs) lately.

Those who know me well, know I am not a fan of RFPs. I rarely respond to them. Clients who expect me to participate in an RFP are generally not good candidates for my customized, high-value services.

I dislike RFPs, because they are one-sided, manipulative tools that reduce your offerings to disposable commodities and ultimately deliver mediocre results to the client. Everybody loses in the RFP process:

1. A company decides it needs a new real estate broker, so several employees sit down and think of all the things they do and don’t want and then dream up a bunch of hoops for would-be brokers to jump through.
2. They send the RFP to every potential broker they can think of. It’s a real estate “cattle call.”
3. Prospective brokers practically do backflips trying to meet all the RFP requirements and end up rushing to meet the deadline.
4. The company that issued the RFP then examines all the proposals that were submitted and compares them. Ultimately, they decide that some of the proposals are basically offering the same products/services, so they choose the lowest-priced bid.
5. And it can get even worse. The finalists are sometimes pitted against each other in a bidding war to see who is willing to discount their commission or the sale price, or the lease rate to the lowest number. It’s a race to the bottom.
6. The “winner” ends up doing a lot of work for too little money.
7. The client gets a result that is watered down or perhaps delivered by an inferior broker who was willing to “give away the farm” in order to get the business.

This is not a recipe for happiness and high profitability.

Generally speaking, I recommend you respond to RFPs only when your relationship with the client is so strong that you are essentially guaranteed of winning. Some companies have policies requiring that vendor relationships go out to bid periodically. If this is the case at one of your best client companies, tell them you will help write the RFP. You can then write the RFP to favor you and the way you do business.

If you don’t write the RFP, or at least have heavy influence on the RFP, it very well could be an expensive waste of your time replying to the RFP. An exception would be when the RFP is a mere formality designed to make shareholders feel better and you are the pre-chosen winner.

Now, I realize that there are some industries where RFPs are a rooted part of the culture. In other words, they’re so common that there’s no getting around them. Those brokers who work with government entities know all about that.

That’s not the case in most industries. When at all possible, avoid RFPs. You have little chance of winning. Meanwhile, you spend tons of time and money preparing a proposal and get no revenue in return. If by some miracle, you are chosen, you’re probably going to get skewered on price.