Know When to Refer a Client to another Agent

Bernice Ross, real estate trainer and speaker, talks about knowing when to walk away from a client and potential business.

"Have you ever had a gut feeling that you shouldn't work with a particular client and then, against your better judgment, you decided to work with the client and it turned out to be a disaster?" asks Ross. "Clients who are a poor fit for your business are perhaps the single biggest source of aggravation in our business."

Determining which leads are the best fit for your business and which should be referred out is the most important question to ask when leads come in.

Evaluate your business, what criteria do your most successful transactions have in common? Where is your focus? How can you best help your client?

Ross offers 6 rules to consider before accepting a new client:

1. Listen to your intuition
If it feels wrong, then it probably is.

2. Avoiding Litigation: Ross says that her real estate company in California was a magnet for lawsuits because of their location and they were a large firm. When they researched this issue, they discovered 3 main factors involved: "working with clients who are attorneys, new construction, and hillside properties. If you had all three, the risk for litigation was high."

3. Not your location: If your client is looking outside of your normal selling area, a local realtor would probably do a better job. Is it worth your extra time for travel expenses and trying to learn about the new area?

4. Outside your area of expertise: As exciting as the opportunity might be, if you are not familiar with selling a multi-million dollar home, you could be doing your client a disservice. "You can easily price the property incorrectly. You may also not be prepared for dealing with the attorneys, personal bankers and business managers who generally negotiate these types of deals on their clients' behalf." says Ross.

The same rule applies to short sales, real estate-owned properties (REOs), U.S. Housing and Urban Development REO properties ("HUD Homes"), and clients who need a VA loan (a loan guaranteed by the U.S. Department of Veterans Affairs). If you are not familiar with these, it's best to refer the client to someone who is.

"Furthermore, if your experience is exclusively with residential, you should refer leads for commercial, residential income of five or more units, business opportunities, land and industrial to agents who specialize in these areas." says Ross, "You're better off receiving a referral fee as opposed to getting nothing at all or providing your clients with poor representation."

5. Friends and family: Unfortunately dealing with family and friends is not always the best plan and can ruin relationships. "While it may be difficult to refer a close friend or family member to someone else, it does prevent you from having to explain why you can't give them a commission kickback or do the work for no commission at all." offers Ross.

6. What to say when you make a referral: The best rule is to let them know that you are introducing them to a professional that will represent their needs best.

Read the full story at Inman News.

photo credit: Stuart McKenna