We’ve all had that one problem client. You know the one. The transaction that was nothing but frustration and took up WAY too much of your time, leaving you thinking… “they couldn’t pay me enough to do that again!”

Along with the annoyance, something you might not have even considered is how much a challenging client can cost your business both in the short and long term. Take stock of the time they take away from your other existing clients and the amount they disrupt your business and your general quality of life. Sometimes you have to realize some clients just aren’t worth it.

Have You Done This Before?

So let me ask – have you ever fired a problem client? And if you have, do you wish you had a plan in place to avoid that uncomfortable situation in the future?

The vast majority of real estate professionals that I’ve discussed this topic with over the last 10 years have never fired a client. Many haven’t even considered it.

I know, I know… bringing on new business is tough, and no client is perfect. Every transaction could mean a nice bump to your bottom line.

However, the top Real Estate Agents in the World know that it’s not just about bringing in new business, but the right new business. Most of them even have the same 3 strategies in place – and I’m going to teach you their 3-step method:

1. Avoiding A Problem Client
2. Effectively Recognizing A Problem Client
3. Firing A Problem Client

A System for Avoiding the Problem Client

The first step to avoiding problem clients is to define them for yourself. The Real Estate Industry has a huge number of niches and an incredibly varied clientele. Acceptable client behavior for some agents may be unacceptable for others.

For example: People spending 3-4 hours on each showing when they’re viewing $100,000 homes on 0.3 acres is very different from that same amount of time when they’re viewing 400 acre plots for $5,000,000. Your standards may vary!

While every agent will have slightly different standards, I have seen 5 core things you can look out for that seem somewhat universal. You’ll want to avoid clients with the following traits or who tend toward these actions:

• #1 Abusive/Unacceptable Language
  Whether it’s someone berating you or your staff or consistent derogatory quips, abusive language can take a huge toll on you and everyone around you. Beyond the immediate anger and embarrassment, accepting this kind of behavior can set a tone for years to come. Avoid this at all costs!!
• #2 Time vs. Value
  No matter what niche you’re in, it comes down to the amount of time you spend with a client versus how much value you get back. At one level your job is as a concierge so there’s a time investment. But you have to ensure that client doesn’t also become a time suck. Be on the lookout for prospects who may end up taking way too much of your time. For example, if you’re on the way to the third listing appointment, it might be time to think about how valuable this client is. Keep in mind that value doesn’t just mean money. This client might also open up a new network or neighborhood for you. Just be realistic about how much time you can put in compared to the true value you’re getting back.
• #3 Micromanaging (or the Problem Parents)
  We often see this with buyer clients and particularly first time buyers, but it can happen with anyone. Sometimes this is an extension of the time problem, but it usually manifests as nitpicking or totally unrealistic expectations. Be on the lookout for things like: overly detailed lists of home requirements or worse yet, having to run even minor decisions by their parents. If they want their parents to buy their house, maybe the parents should be the ones out shopping. 
• #4 Excessive Bad Mouthing and Horror Stories
  Pay close attention to the stories your clients are telling the first few times you talk. If they tend to bad mouth the people they’ve worked with, or have a plethora of horror stories: BAD SIGN. First, if they speak ill of others it’s not a far stretch to do so of you. Second, keep in mind that THEY are the common strand in all the horror stories. I know it’s October and horror stories abound, but do yourself a favor and avoid becoming one of those stories.
• #5 They Won’t Get Pre-Qualified or Sign a Contract
  As a real estate agent you often provide a serious amount of value before your clients sign a contract or get pre-qualified. However, you need to set specific boundaries for when it’s time to put things in writing. Most successful agents will tell you that you need to have every buyer client get pre-qualified before you show them homes. So, while it’s usually not best practice to ask for a contract the very first time you communicate with someone, you also need to set very specific lines in the sand. This looks like – “I will not continue and do X work without having a contract.” Outline what you see as reasonable and unreasonable work pre-contract, and stick to it.

If you spot one or multiple signs we’ve included above, maybe you should pass on this client altogether. However, just because you’re passing on this client or even firing them, doesn’t mean you can’t make money. When passing on certain clients it makes sense to get a referral for setting them up with someone else. You certainly don’t want to drop a huge problem in a friends lap, but there are plenty of situations where it makes sense to pass them off as a warm lead.

Normally, this is best done by having a conversation with the prospect about how you might not be the best fit for them and some recommendations about what they can do next. (And NO – “Go pound sand” is not a good recommendation for their next steps.)

Funny enough though, one Agent even told me that when he recognized someone might be a problem, he’d give them the number of his biggest competitor as a next option. Of course it’s best to take the high road – but it made me laugh!

Effectively Recognizing Problem Clients

Even with a great plan in place to avoid problem clients, some still slip through the cracks and you end up halfway into a transaction before things start to go off the rails. 

Always keep in mind, the earlier you can spot it, the easier it will be to handle.

Understand that just because you’ve invested time and started working with a client, that doesn’t mean you necessarily need to finish the deal. Ultimately, you control who you work with every step of the way. Once you believe this deep down, the rest is pretty easy.

If you start to notice some of the things we’ve listed above, or you generally feel like things are out of control, you need to take action.

Take Action!

Depending on the scenario, this could range from having a conversation with your client all the way through firing them altogether.

Let’s say a client gets angry and yells at you or a staff member over a valid frustration. Depending on what was said, the situation may warrant firing them altogether. However, at a minimum it’s time to have a conversation with the client outlining how you don’t work that way and that if it happens again you might not be the best fit for them. In the past, if a problem client yelled at staff members I’ve also requested they apologize. No one deserves to get yelled at while at work.

Sometimes a conversation isn’t enough and you need to fire a client while making sure to minimize any fallout.

A Plan for Firing A Problem Client

Hopefully with all of the steps above this is an incredibly rare situation.

But sometimes, for whatever reason, you just can’t work with someone and need to fire a client. When you’ve made the decision that a client just isn’t worth the aggravation, you need to make sure to let them down easily. In an ideal scenario your client might even thank you for recommending another agent who is a better fit for them.

• First, figure out why you need to let this client go. Maybe a buyer started out looking at homes in a suburban neighborhood, but changed his/her requirements and now wants farmland. If farmland isn’t your niche, it’s totally acceptable to tell the buyers they’d be better served by someone who focuses on that. Or if your personalities just don’t jive, you can recommend an agent who might fit their communication style a little better. In both of these cases, it probably makes sense to get a referral and send them over to a friend or colleague.

• Alternatively, if this is the rare case where you happen to just get a miserable client, have a conversation with them about how you’re not the best fit for them, release them from the contract and give them a few options where they can find another reputable agent. 

Talk to Your Broker

Make sure you speak with your Broker about your specific procedures for this as well. Every office is set up slightly differently when releasing people from contracts.

If worse comes to worst, and your former client starts badmouthing you or telling negative stories online, read this previous article for tips on managing the fallout.

If you’re gentle, but firm and honest with people, they will usually respond well even if what you’re telling them is hard to hear. And if they don’t, try not to take it too personally and keep on being an excellent agent. All of your positive client relationships will outweigh the few bad apples, and you’ll get better each time at identifying problems before they start.

Read this article next about attracting the kinds of clients you DO want into your practice.