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WHY WOULD YOU FIRE A CLIENT?

Why would you fire a client?

I just read Dean Moss's post about pricing in today's market. It was featured here on Active Rain and is worth a read.

While I agree with Dean that proper pricing is key to a successful home sale, I was confused when he wrote about firing a client.

Dean writes:

Real Estate Professionals: Got a stubborn client who will not lower his price, despite your advice and counsel? FIRE THEM! RIGHT AWAY! WITHOUT REGRET!

I like Dean. He is a fellow Keller Williams agent and a Chicago guy.

But Dean, I don't agree with you on this one.

Why fire a client who won't lower his home price? It is their home after all.

Isn't the customer always right?

Look, pricing is key. I explain this to my clients when we first meet. Then, I let them make an educated decision regarding price.

If they want to sit on the market? Honestly, fine with me.

I can always buy more signs...

Ken

A Realtor you can trust.

Erin and my signs

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www.KensFeaturedHomes.com

Posted by Ken Tracy Realtor Naperville Illinois Real Estate on 07/20/2009 06:37 PM

Comments (54)

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Originally posted at: Ken's Naperville Real Estate Blog : WHY WOULD YOU FIRE A CLIENT?

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54 Comments on WHY WOULD YOU FIRE A CLIENT?

JUL

Well...I say fire them, if they won't lower their price..and they are harassing you about why it is not selling at that higher price... :)

Ken,

I am thinking that there is a cost analysis that would need to be done to see when you will stop doing the advertising and other cost items if they are not willing motived to do what it takes to sell their home. There is a cost involved to the listing agent. Yes it it their choice to not reduce the price but how long is the agent going to spend money that they can't recoup?

Just saying.................

One of my fellow agents was flying out of the office today for a listing appointment. Another agent said "good luck" as she rushed out. Her reply, "I'll decide if I'll take the listing. I'll take it if I want it." She doesn't work for people who won't take her expert advice. She expects to get paid for her work.

I personally think you have to be choosy in this type of market, and give your energy to those listings in which the seller is motivated enough to listen to reason regarding price. Another reason to fire them: It doesn't look good to have your sign in someone's yard for up to a year, LOL. Bad PR!

Cute pic by the way, that should be one of your postcards to your sphere!

Ken,

I think it falls under the same category of taking an overpriced listing to begin with. You end up wasting time trying to address their concerns, while they ignore your advice onone of the most important points. It also costs money to market a property, and you've just throwing it away on a listing that is not likely to sell. Another thing is that you did not want to be known as the guy whose listings are overpriced, or take forever to sell, it can effect both your reputation among the community & other agents and your statistics [days on market, % sold, etc], if you use those in your marketing presentations.

I have to make good business decisions and if their expectations are not realistic - it is not a good business decision on my part. I think I would be doing them an injustice as well.... I will say I have hung in there with a client before who has been overpriced but I set everything out there on the table about what I can't do for them at the price they are at. I don't like not being able to help someone and have found in the long run even if I agree to "hang in there" with them ultimately it doesn't do any good for either party. and someone usually ends up upset. And as Raine said - I have a good solid reputation for listings at a fair market value and the other agents in the area know me for that as well. If I am marketing myself to sellers and they see me carrying listings that are unrealistic having been on the market for a billion years.... well that doesn't do much for me. I would rather have 5 listings that are going to sell than 20 that are going to sit there. Good discussion. I'd like to see what other comments you get too.... I'll check back.

Hi Valerie, Raine, Markelle, Liz, Don, and Connie. Thanks so much for stopping in.

100% disagreement with me. That must be my record!

Awesome.

I am not talking about overpricing listings.

But it is your clients decision. Yes you can fire them...

But when you do, SEND THEM TO ME!

I will explain to them pricing, and they will sell when they are truly ready.

As far as the cost of marketing, when we spend money marketing a home, we are also marketing ourselves...

Thanks again everyone,

Ken

Hi Ken,

Late getting here I see. Love your signs by the way. Sometimes I will take an overpriced listing to get my sign on the lawn. Pick up some buyers and take them elsewhere lol. But seriously, if they insist on trying at their price, I tell them that we will sit down in two weeks to reassess.

It also depends on how motivated the sellers are. If they HAVE to sell, then they will usually come to their senses at some point. Usually it's when they start to stay awake at night with the thoughts of owning two homes dancing in their little pea brains.

Wow! I have to say I am willing to work with a client about price. If they understand I will not push their house and advertise as much as long as they dont agree with the my advice on the market.

I always tell them it is their home. They can do with price what they want. But.....I will determine how much I put into their home by the price they choose. I will keep the lisitngs to keep my sign up. So I make it so they understand that I will be patient as long as they are.

JUL

Hi Nannette and Jenny. Thanks for commenting.

Hmmm. Seems like a momentum shift.

The motivation of a seller is the key!!! I believe many agents are more motivated to sell the house than the sellers. That is not right.

Do your job, stay in touch, and the sellers will lower their price. If your sellers are patient, you better be too!

Thanks again,

Ken

Hi Ken... this one is a bit of a dilemma. I understand your sentiment, but I also do not want to be the REALTOR with the reputation of having overpriced listings that linger on the market running up high DOM statistics. I am not suggesting that sellers underprice their homes, but they at least need to be realistic given the market conditions.

I agree that eventually you need to do a cost benefit analysis. If they never get the price down, it won't sell. And doesn't it cost you money to list?

Ken, I mostly agree with you. I would never fire a seller over the price. Unless, perhaps, they wanted to RAISE the price after we've started. But if I have taken a listing, as long as they are following the terms of our agreement, I will see it through to the end, to the best of my ability. I think that is my obligation. Hopefully, it would have been priced correctly to begin with or I wouldn't have taken the listing. Except, as you say, sometimes there is value to taking certain listings because of the leverage they can give you, even if they don't sell.

I have to admit, I mostly want to work with the seller on the price. Yes, and I also want to go the distance with the agreement that we sign. thank you for sharing.

Ken, thanks for taking the time to present the other side of this. From the agent side yes you can still have your sign in the yard for your exposrue and leverage. But from the time and continued marketing dollars spent on the cause, is it worth it? To Dean, no. To Ken, yes. It is not a right or wrong but how you choose to run your business. I believe in selling houses not listing them.

Listings decisions are a fairly easy decision about whether to separate from a client. It's the buyers that are a little tough right now IMO.

Taking overpriced listings in my opinion leads to a lot of headaches for both the listing agent and the clients. Once you've taken the listing the sellers feel you have validated their idea of price because "you did it, you listed it with their price". Ken I know you said you weren't talking about overpriced listings... so I'm scratching my head thinking if the home is priced too high... um it's overpriced!

Recently I have begun taking price reductions with me to the listing appointments in case they want to start higher so that we can plan price reductions in two week intervals until we have it down to where it should be. That works well. This way the seller gets to start somewhere higher than you have suggested and shown that they should start and yet you have a concrete plan to get them down, sold and everyone's happy!

Ken, You have sparked a lively discussion. I, however, believe there are a lot of reasons to fire a client, not just price. To back up, though, an agent should get picky in the begeinning about who they are willing to work with- a client who is unreasonable or unmotivated is a waste of time, money and energy.

I don't believe an agent wants or needs each and every one. That comes from scarcity thinking that can lock one into spending time with things that are not profitable for their business instead of working on what will sell. We are all in BUSINESS and yes, it is the seller's house and their choice, but as an agent, I get to choose if their property is the highest and best use of MY time!

I would say an overpriced listing is a liability and not an asset.

Until recently, I never turned down a listing. I made a presentation that included price, sold my point of view, and then accepted any price within 10%, with the agreement that if we don't have 7 showings in the first 30 days, we're reducing the price. I nearly always get them reduced, if needed, and sold.

During 2009, prices have dropped in my area. Listings that were priced right when I took them in January were overpriced by April. Plenty of showings, low offers. I pushed for reductions on several of these and did not get them. Just this month, prices have returned, all but one of those I pushed on are under contract near original list, and my sellers are happy with having been patient.

In January (or anytime in the previous 8 years), I'd have agreed that if sellers won't take my advice they need to find an agent they trust. Now, I'll be a little more flexible...

I never want my sign in a yard forever.....bad impression to everyone in the neighborhood. A for sale sign isn't worth nearly as much as a sold sign.

My last listing sold in two weeks and it wasn't under or overpriced. The sold sign went up as soon as we finalized all the paperwork. One of the neighbors called me to come list their home since it was the only one in the neighborhood that had sold in a reasonable length of time. There were several other homes with signs in the yard and some had been there a long time....as well as some foreclosures. We sold it and got business from it. The other Realtors may have had an overpriced listing lingering out there trolling for buyers, but we get paid and get another listing. Plus I get to send out letters to the neighbors asking for their business and can back up the request with a listing that has a sold sign on it and did it quickly. My seller preped the home just as he was asked to do and priced it according to the market, and it is gone..... Thank you Mr. Seller. You have been a great business partner.

Larry Mennetti Five Star Real Estate...Grand Rapids, Mi

I really think each situation is different. As the process evolves continue to explain the market shift and try to get a price reduction/change in house condition if needed. If they are uncooperative or unmotivated then you need to assess if you are picking up buyer leads to sell other homes.

If you fire them and they are just going to list for the same price with another agent, you are losing out on other business that may come from that sign.

I do agree that having a sign up on a property for a LONG time can have a negative impact especially in a geographic farm.

I would never fire a Seller Client. My philososhy has always been-give them the tools to make an educated decision. if they do not want to price properly have a discussion about reducing within a certain time frame. Review the listing at the decided upon time frame. If they still do not reduce, that is their decison. Keep notes about how you are handling the listing with the client. If any conversations come up that they say you did not suggest or ask me to do this or that, you can refer to your notes and dates.

Another great thing about having listings-You can promote them on your website, blog, local papers, the sign on the lawn and MLS.com or whatever it is in your region. Ad calls, sign calls , flyer calls are all to the LA advantage. Run with success.

The Buyer client however is different. Some buyers can become quite difficult and keep changing their mind about many things. Running around with hopeless buyers is a drain on the finances and emotions.

Funny you posted this. I just had to deal with a buyer this morning who I had to let go. They wouldn't work with me to give me the information I need to make an offer ahead of time, instead insisting that we meet before I do my research. I asked them to follow me to my office, less than a mile away so we can draw everything up and sign, and they opted to not follow me after agreeing to. I called and was told they didn't have time to wait and why didn't I have things drawn ahead of time (even though I tried to to that last night and they were unwilling to give me even the address for the property) and called me a name. I simply replied that they could find another agent.

Listings I agree can be beneficial even if they won't sell. However, it does hurt your statistics to have an overpriced listing sitting on the market, especially if it is not a desirable school district.

I tell prospective clients "I want to sell your house, not just list it" If they are willing to price it right and keep it clean and attractive, then we sign an agreement. My time with my family and the things that I enjoy are important to me. It is not just the money!

Ken,

The answer is yes and no! For example a few years ago I had a gentleman (he lived out of the area) that wanted to list his family farm with me. He wanted too much but I listed it anyway. After several months (and me in his ear regularly) he split the property and lowered the price. For two years I worked with him (getting several good leads) and selling pieces of the property every year. Later on his uncle passed and I listed that house. That home was too high also and a year later (after several good leads generated) I sold that property myself. I now consider him a friend and the farmers living around his old place have given me leads over the years.

I would fire a seller and have in the past if they do not listen or demand more from me when I have clearly defined what it would take to sell the property and they do not listen.

Several questions to ask before firing

1. Am I getting good leads from the listing

2. Would firing the client generate negative talk (is the seller someone respected in the community)

3. Is the property unusual enough for the average person/Realtor not to notice that the price is too high

4. Did I list the home originally just to get a FSBO (I do not do this EVER)

I will not list a home for a too high a price if it a "cookie cutter" home.

Good Blog

Bill Lumpp

Century 21 The Combs Company

Property management is the same way....clients/property owners who equate the rent they need to receive with their carrying costs on their property are often the last to rent their homes and actually loose more money.

Property owners need to ask questions and be told the truth, even if they can't handle the truth....

It really depends on what you as an agent can afford. Does it make you look bad to have an over priced home setting for a long time. If not let it set. I have canceled contracts before and have the owner turn around and do with another agent what they would not do with me to get it sold. Kinda pisses me off.

Interesting post. I have competitors that take a listing at a price that the Seller wants, only to later after the listing has been in place for awhile come back to the Seller and reduce the price to what it should have been in the first place. Because they are under contract (1yr)

I don't have time to waste, I'll only take a listing at what the market price is (listing agreement is for only 90 days). I'll show the Seller how I arrived at the pricing that I want to list at and ask the Seller why should the listing be for more. Sellers always want a higher price but more so than anything else it is because their emotions are involved. And if a Seller wants to list for more than I suggest, I do not take the listing and advise them to find someone else.

So I avoid having to fire a client because I do not take on clients that will not take my advise in the first place.

I disagree...If a listing isn't priced right the house is never going to sell & it is just going to be a time-waster & a money pit.

You still have to:

Market it
Answer the seller's calls asking why it hasn't sold yet
Manage showings (that aren't going to materialize into a sale)
Etc, etc

That's my .02

Best,
Dan

Hi Ken,

I've found that taking a listing I know is priced much too high to sell with no plan in place with the sellers to do price reductions over a period of time only leads to angry and disappointed sellers in the long run. They tend to blame US for the lack of activity on their home, thinking if we were only good enough, we'd find someone to buy their overpriced property. I always tell them that even if that happened, they STILL have to find a bank appraiser who will go along with the contract price in today's market.

If they are going to listen to my advice & have unreasonable exceptions, then yes.

Part of our effectiveness in the marketplace is our reputation with other agents. Other agents want to work on our listings when they can rely on us having Sellers who want to Sell. I don't care to do another agent's work for them, i.e. spend my time writing an offer hoping that eventually the Seller will grasp market reality. Don't we do a better job of representing our Sellers when the real estate community trusts that the homes we have on the market are really "for sale?"

Sure i'd try it at their price, but with the stipulation that there is a 3 week reeval and a month extral on the listing agreement.

Hi Ken - Great discussion! You raise some good points. Also some good reasons in the comments on why NOT to take an overpriced listing. Here's mine:

I won't take a listing that I can't sell. Time & money spent marketing an unsaleable listing really eats into marketing my other listings.

I want to have a reputation as a Realtor who prices correctly. I think that overpriced listings would hurt my reputation.

We kind of know who overprices and who doesn't. So.... When I see a new listing by an agent known to overprice, I always wonder if that listing is overpriced, too. I think an overpriced listing, or worse, a bunch of them, hurts my fairly priced listings. Kind of guilty by association.

But this issue really varies by agent. What works for some, does not work for others. I understand that other agents can get value out of overpriced listings, but I don't.

Also, once I have a Seller as a client, I would not dump them if the market moves down but they don't reprice. I need to give them time to see the same market changes that I'm seeing.

It sounds easy to fire a client. Much harder to do once you have spent advertising dollars.

I disagree with firing a client whose home is not selling due to overpricing.

I don't believe in taking the listing in the first thing.

An overpriced listing will just eat you alive.

Ken, I have to add the 100% disagreement side. And No the customer is not always right. The customer always knows what they want, but they are not always right. We are professionals, who (in theory) have studied enough to be more knowledgeable than the public we are dealing with. Do you go to your doctor, lawyer, or accountant and tell them that they don't know what they are talking about? Everyone would love to believe, that the home they have, is worth more than the identical one 3 blocks over, but we know better and it's our job to help them understand this. I've always said that listings are like kids...you have to support them. You have to buy lock-boxes, sign riders, advertising and virtual tours (if you don't do your own). You have to invest time in photography, open houses and occasionally staging. Why would you waste your valuable resources on someone who refuses to see logic. This is assuming that you've complied enough comps and facts to back up what your telling them. I say don't take an overpriced listing to start with, but if you do and they are still unwilling to see the writing on the wall, cut them lose and wish them well.

Great topic and arguements on both sides of the fence. I personally don't think a blanket answer will work here for me. Factors relevant to that particluar client would dictate my decision but I tend toward to pre-listing discussion regarding a time limit at 'their' price and what are their expectations and true motivations.

(sorry about the duplication, I realized I was not signed in to Active Rain)

Jennifer St.Clair - Windermere Pacific Coast Properties, San Dieio, CA

my pic

And how about wasting TIME the only commodity we all have a limited amount of?

peterwjust.com

A few years ago I almost overpriced home listings myself right out of the business. I was an idiot for taking high priced listings...not anymore...and I will not refer to someone out of town that also is not selective. SOme people want to market...I prefer to sell.

If it is a Pinto...it can't be sold for Cadillac prices evenif the neighbors did.

I agree with you Ken, Diane and a couple others. I have had to let a couple buyers go because they just were not serious about buying and it is very time-consuming to be taking people all around town just to look at the pretty houses. I have not had to fire a seller client. The only times we have had withdrawn listings is when the seller was overpriced and they decided that they did not want to lower the price anymore. I will absolutely not demand that the seller price at a certain point because it is their house. I will however be very direct about price and tell them where I think the house will sell and most of the time we are right on the money or within a couple thousand dollars. The past couple years have been very difficult as far as pricing, even for 20 year veterans. I have been very patient with my sellers and when they are within a certain amount of money from market, we will get offers and then they can move. Once we have all of our advertising in place, do the open houses for them, they do the staging we need done, they normally do realize that the last piece of the puzzle is to be close enough to market to where we are getting a good number of showings and then we'll get an offer. To just flat out fire a client or not take a listing based on price doesn't make a lot of sense to me because every situation is different. Motivation is important and we are relationship building, it's not just about what we get out of it.

WOW!

Thanks David, Lisa, Mike, Peter, Jennifer, Chuck, Glenn, Cathy, Margaret, Amy, Chris, John, Kate, Dan, Ken, Jean, Wallace, Bill, Sue, Jamie, Diane, Brian, Larry, Heather, Richard, JoeAnne, Brenda, Stewart, Gary, Ginger, Janna, Banell, John, and Steve. Thanks all for reading and caring enough to comment.

I understand this issue is divisive. But I am right for me.

Demanding things from clients is not my way to build relationships. My clients are usually smart people that understand my explanation of pricing...

I feel I am developing a reputation as a Realtor that sells homes. I get them priced right.

But I guide the clients. I steer there thinking. Once again, I believe I am very good at explaining pricing.

Someone mentioned being blamed. I won't work for a jerk. I don't get blamed for a home not selling. I bust my butt. I let my clients know it...

Finally, for those that would rather fight with there clients over price, please send them my way.

I will explain pricing. And then let the client make the final decisions.

They will eventually make the right one.

Thanks again,

Ken

Well, as long as your clients know what's going to happen ... as you said, it's their decision and they can walk into a "high priced" listing with their eyes wide open. Just watch out that you won't get a reputation for only having "over priced" listings ...

THough I sometimes feel like firing some seller clients, I don't and won't. I do spend alot of time talking myself blue in the face trying to educate them about the market and the value of their home, Eventually they get it and when they do, they see results. What I have a hard time dealing with are seller clients who don't take your advice, but still have lofty and often unreasonable expectations and demands of your time and advertising dollars.

When I work with buyers I write it into the contract that I can fire them or they can fire me at any time. Keeps both of us on our toes.

Hi Ken, The only comment I have is: What a cute picture of Erin!

JUL

Well sometimes I have taken a listing without truly evaluating the comps, shame on me, then I will have to ask to reduce the price at some point after 30 days. If you have a seller that is overpriced it is easier to lower the price once you have the home listed for a while.

You're smart to say, if you fire them send them to me. Often, when clients won't lower their price and the listing expires they re-list with someone else at the price I recommended, and - amazing - the house sells! I need someone I can refer these sellers to, who have greater powers of persuasion.

Hi Joetta, Ralph, Shirley, Mike, Leah and Suzanne. Thanks for stopping in.

I don't believe in overpricing listings. I don't believe in fighting with my clients either.

I tell them if they want to fish for awhile, I understand. But I also explain the reality of the situation, and they come to the proper conclusion pretty quickly.

It is a cute picture of Erin!

Thanks again,

Ken

In my 3 years as an agent I have only ever taken 1 listing that was at a price higher than I advised. That 1 listing is the only one I haven't sold and the seller never did believe the home was overpriced in the 4 months it was on the market even though I was the only agent who showed it. I won't fire a client, I just won't take the listing to begin with. I just tell them I would rather turn them down than let them down. I have seen far too many agents with expired listings that get listed and sold by someone else at a cheaper price. I think reputation is more important than my sign in the yard (especially if it's there for too long making me look bad to all the neighbors) and seller's always blame you even if you told them the house was overpriced.

JUL

I think you have to be very careful about overpriced listings. I've got one right now and its making me crazy. The reason is that it is a repeat client who has given me a lot of buisnes. But there is NO WAY this place is going to sell unless they take a weed whacker to the listing price. I've told them this until I'm blue in the face. Now they want a new marketing campaign and to revamp the photos. In other words - its going to cost more money. I am willing to hold the listing - however, I can't sink one more dime into it. So the price of doing these things is going to have to be a big price drop. Otherwise, I will have to pull out.

AUG

I agree Ken. Half of the time it will expire and never sell. The other half of the time they get realistic, lower thieir price and SELL! I am honest with them though. I tell them that it is high and it may not sell. If they still want to List, who am I to stop them?

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