Agents Decoded: When it's time to fire your client
Broker J. Philip Faranda knows how hard it is to give up on a client, especially after investing time and effort — but sometimes it's best to say goodbye.
The direction of your business depends on decisions you make every day. Agents Decoded can help you by presenting the perspectives of seasoned pros who have been there, made mistakes, and found success.
In the depths of the Great Recession, I fired a client for the first time. It was heartbreaking because business was slow and I really needed a commission — but it was also a considerable relief.
I had shown them dozens of homes in multiple counties. I spent countless hours counseling them on the nuances of the market and negotiation strategies, and I poured my heart and soul into making them happy. Despite my best efforts, we couldn't seem to find "the one."
After about six months, I began to feel that they were not looking for a home, but a unicorn. This was not a matter of educating a consumer on reconciling their budget with their tastes; something was unsaid, unspoken, and I was frustrated that I couldn't seem to hit pay dirt with them.
I'm not the only agent with a story like this. In my case, as with thousands of real estate colleagues, we occasionally run into a client who we cannot serve for one reason or another.
The mistake I made with these folks was that I continued with them for far too long because I felt the need to be compensated for the time I had already invested in them. I would later learn that I fell victim to the "sunk cost fallacy," which explains that people are naturally reluctant to abandon a plan they've invested in, even when it would be better to cut their losses.
I'd love to tell you that I invoked the fallacy when I told them I could no longer help them, but I wouldn't learn that phrase for another few years. The final straw was when we finally put together a deal that was, to be modest, an absolute home run — and the husband killed it over a triviality in the home inspection.
I called him later, and he shared an unlikely, third-hand story a work buddy told him about some guy who bought a foreclosed new construction home for a fraction of market value. As motivated as his spouse was, this client wasn't thinking about getting a home for his family. He was thinking about how to snag a bargain.
Years later, when I oversaw agents in my company, I'd share this experience when it was clear they were dealing with a client they were better off not engaging.
The two primary types of difficult clients are those who "crossed the line," displaying imbalanced, disrespectful or abusive behavior, and those who couldn't, for one reason or another, pull the trigger.
While not a scientific observation, my experience has been that it's always tougher to know when to fire the latter. If you call me at 9 p.m. while I'm putting my kids to bed and yell at me about something beyond my control, such as rates rising, I don't need an oracle to tell me to bid you adieu. But the clients who can't make a decision or a commitment are harder to let go because of the sunk cost factor.
Many agents have had this experience. There are the clients who walk away from a property that checks every box, but dismiss the idea of making an offer and ask what else you can show them. There are those who want to make an offer with unrealistic terms ("Hey! You never know!" is not a business model, Tex). This can also happen with seller clients who, for example, can't clean up, price right or confirm showing requests. But the result is the same: the goal posts keep getting more distant.
When you start to realize the only reason you're staying with a client is because you've already invested so much time in them, it's probably time to cut your losses.
When one door closes another opens, but in an industry where time is such a precious asset, you'll never see the other side until you send that Dear John letter.
J. Philip Faranda is a real estate broker-owner serving Westchester and Putnam Counties, just north of New York City. He founded J. Philip Real Estate in 2005, now the top independent brokerage in the two counties by transaction sides, and his real estate blog has been cited by major media outlets. The views expressed in this column are solely those of the author.