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As a real estate sales professional, we all want to conduct greater business volume and generate more sales commission. Therefore, most of the conversation is usually about how to acquire more clients. However, a Realtor friend recently told me that she wants to terminate a client relationship. Although she already spent a significant amount of time working with this particular client, they just do not work well together. It truly gave her lots of stress and headache.
Can a Real Estate Agent Fire a Client? Yes, a real estate agent can fire a client. We are in a free market economy. Unless there is a contractual obligation, if clients can terminate a working relationship, I don’t see why it cannot go the other way around.
Having said that, you should try your best to end the business relationship peacefully. Besides, there are still situations where firing a client might not be a good idea.
In this post, you’ll find the top reasons why a Realtor would fire a client and practical tips to reduce the backfire in letting go of a client. I’ll also include a termination letter template that I found online.
Top 6 Reasons Why a Real Estate Agent would Fire a Client
1) Dishonesty
When a client is not upfront with you about their circumstances, this could make your job a lot harder than it should be. To give you a better idea, a Realtor once told me that he was working with a client to sell their home. Even though the house was well-staged, there was a water leakage problem.
So whenever there was a house showing, they would try to cover up by turning off the valve in the problem area. Of course, it didn’t go well when a home inspector found out the defect during the offer negotiation phase.
The Realtor confronted their clients and found out that they knew about this problem along, but they just do not want to spend the budget on repairing for it. The worse is that the clients still insist it’s okay to cover up. To maintain his reputation in the business, the selling agent decided to terminate the client relationship.
2) Unqualified clients
In an ideal world, it would be nice to work with everybody. But realistically speaking, some clients may not be ready in being a homeowner.
A key reason is that they are lack of finance. Although you should always confirm with your clients about their financing situation before you start working with them, there could be unforeseeable changes to their circumstances. For instance, your client may get laid off, and there could be a tightening of the mortgage underwriting rules.
Even if your clients already have a mortgage pre-approval letter, if their financial situation changes dramatically, this could deter their chance of obtaining the loan.
It’s better to keep up-to-date with all these changes. If your client is no longer a qualified buyer, then you’ll just be wasting your time in showing them properties. Well, unless you could offer them something within their budgets. (i.e., less expensive property or rentals.)
3) Time wasting
I know a number of people who like to call a salesperson for a properties tour but never end up giving any business. They are merely treating this as a hobby and have no intention of buying.
According to the National Association of Realtors, a typical buyer would take 4 to 10 weeks to find a suitable home. They would visit around 4 to 10 homes. If your clients are taking way longer than that, then you need to re-evaluate whether they are serious buyers.
On the other hand, some indecisive clients always change minds in a snap. I was talking to a sales agent the other day. She told me that she once dealt with a seller. The property owner just cannot settle his mind.
During the offer negotiating period, despite the potential buyer already agreed to all seller’s terms, he suddenly altered his bottom line. This made it extremely difficult for the sales associate to negotiate.
As you could guess, the offer turned south. Not only that, for every few weeks, the seller became doubtful of the decision whether to sell the property or continue living in it. This fellow Realtor just cannot take his indecisiveness anymore, so she terminates the working relationship.
4) Expectations misalignment
If we were just talking about the expectation toward the property price, that problem might not be the hardest to tackle. After all, you could show them the comparables in the same neighborhood to justify your point.
However, the deal-breaker could be the expectations discrepancy in the toward your services. For instance, an agent friend told me that he once had an extremely demanding client. They expected him to return their calls within 10 minutes. Else, they would keep calling him non-stop. This is regardless of the time of the day, or whether the discussion topic is significant or not.
Furthermore, some clients would expect their agents to cover all the expenses related to this transaction. (i.e., Fees for a lawyer, home staging, appraisal, home inspection). Obviously, this would eat up your profit margin.
5) Inappropriate interaction
Even though you are in a sales profession, there is no reason you need to tolerate disrespectful or abusive language. I have also heard cases where unreasonable clients use offensive language, which contains racism or sexism. If that is happening to you, then now is the time you should leave.
In some extreme situations, this abusive behavior could be physical. Here is another article I wrote: “Safety Tips for Real Estate Agents -Don’t be the next victim!” Be sure to check it out.
6) No commitment
It indeed takes lots of time and effort to work on a buying deal – from knowing the needs of clients, bringing them to properties tours, to negotiating offers. Not to mention that there could be a tremendous amount of paperwork involved during the process.
However, some clients would choose to work with multiple buying agents at the same time. This inevitably would lower your chance of not closing the deal. So you could be working for nothing. Therefore, some agents would stop working with clients who are still shopping around.
6 Tips to Let Go of a Real Estate Client Peacefully
1) Check with your real estate broker
The first step is to get help from your broker. It’s better to get them involved as early as possible. The truth is you are not the first agent who dealt with a difficult client and will certainly not be the last one. The broker’s intervention may help remedy the problem.
An experienced broker could provide you with guidance on what to do, and show you the proper procedure to let go of a client.
2) Break up in person
When you need to end a relationship, it’s never a good idea to do so just with an email or text messages. The most respectful way is to have a meeting in person. If it’s difficult to arrange, then have a thorough discussion over the phone could be the next alternative.
During the meeting, explain why it’s better to part ways and what are the next steps. If your clients have legit questions, then you should try your best to answer them. After all, your goal is to end this relationship gracefully. But if your clients are emotional and aggressive, then you may consider the following script.
Thank you for the feedback, but this decision is final.
Quote from Nicholas Reese.
As mentioned before here is a list of what to expect between now and [date].
3) Be professional, and not judgemental
Terminating a business relationship is not easy. The best way you could handle is to act professionally. Explain why it’s in the best interest of the clients to part ways.
Avoid pointing fingers and putting the blame on clients. This would only turn up the heat and would not lead to anything good.
Also, your experience with the client is confidential. Even if they were terrible, you should still hold a high standard of professionalism and never bad mouth them.
4) Don’t leave a client hanging
If your client completely depends on you, then before you quit working with them, you should have a backup plan for them.
You may refer them to another colleague in your brokerage. Remember, although you and the client do not work well together, it is not necessarily the same with another sales agent. After all, every relationship is just a matchmaker.
Not only this arrangement could soften the blow, but you may also receive a referral fee from your colleague.
5) Put everything in writing
To avoid any confusion or misunderstanding in the future, you should prepare a letter that lays out the reasons for the termination, the communication you had with your clients, and the actions to be taken.
Here’s a termination letter template I found online. You may use it for your reference and customize it according to your situation.
Hello [Name],
I’m writing today with a bit of bad news. Unfortunately, I won’t be able to continue working with [company] after [date].
This is never an easy conversation to have. But, I’ve noticed that [reason you’re ending things].
Because of that, I think it’d be better for both of us if you took your business to another company. I highly recommend [recommendation] to help you with [work or project].
Before we go our separate ways, I will:
[Expectation you identified in step #3]
[Expectation you identified in step #3]
[Expectation you identified in step #3]
Thanks in advance for your understanding, [Name]. Please know that I’m wishing you all the best in your future endeavors!
Best,
[Your Name]
Quote from toggl.com
Get your real estate broker to review it. If they approve it, then have it signed and dated by all parties. Then provide a copy to each of them.
However, some Regulatory Boards may prohibit an real estate agent from drafting their own documents. So clients may only sign standard documents prepared by the broker. Make sure you consult with your broker about the compliance rule.
6) Beware of liability
Make sure that you won’t be in a situation where your client cannot close a transaction because of you. The last thing you want is to receive a client complaint or get sued for the damage.
A good way is to check with your E & O insurance provider. Some of them have a claim prevention department, where their specialist could give you tips in reducing the potential liability.
The Cres Insurance Services has a Real estate E&O and ClaimPrevent® policy. Before you inform your clients about the termination, you may want to check with your E&O provider to see if they have any advice about it.
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The Bottom Line to Quit on a Real Estate Client
I’m not suggesting you to immediately fire your client whenever there are issues. It’s better to have an open discussion with them first. If there’s really no way to resolve the problem, then you could consider letting go of the working relationship.
Many Realtors are unwilling to do so because they do not want their effort and time to put into waste. But when you think about it, what you have already done in servicing the clients are foregone cost. It will help if you don’t make a business decision merely based on what you have done in the past. Rather you need to re-evaluate whether the client is still worth your time to service them.
It’s challenging to work with someone who always challenges your professionalism, and have a tendency to file a complaint. Also, there are those who do not value your advice and would not corporate during the entire process.
Such a misalignment would only drain out your energy, both physically and mentally. And this would do more harm than good to both parties.
So sometimes there is no easy way to end the relationship. You just need to act firm and do what is necessary for your real estate business.
Disclaimer: The information in this post is for general information only, and not intend to provide any advice. They are subjected to change without any notice, and not guaranteed to be error-free. Some of the posts on this site may contain views and opinions from individual not related to JCHQ Publishing. They do not necessarily reflect our view or position.
(**) Affiliate Disclosure: Please note that some of the links above are affiliate links, and at no additional cost to you. Our company, JCHQ Publishing will earn a commission if you decide to make a purchase after clicking on the link. Please understand that we include them based on our experience or the research on these companies or products, and we recommend them because they are helpful and useful, not because of the small commissions we make if you decide to buy something through the links. Please do not spend any money on these products unless you feel you need them or that they will help you achieve your goals.
Reference:
- toggl.com – How to Fire a Client (Nicely!) (Source)
- nicholasreese.com- 3 PAINLESS SCRIPTS TO FREE YOURSELF OF PROBLEM CLIENTS (Source)
- NAR- Highlights From the Profile of Home Buyers and Sellers (Source)
- CRES Insurance – What’s included with a CRES Real Estate E&O + ClaimPrevent® Policy (Source)
