Can you buy clients?

Can you buy clients?

I don't know. I mean, I don't think so. Certainly, you can buy leads. I know many agents who buy leads. Many of those leads do not result in much - if any - sales. So buying leads may not be such a good idea.

But can you buy clients? Isn't that what agents are thinking when they buy leads? But leads and clients are not the same (as I have discussed before).

Still - can you buy clients? Maybe. I think you can definitely "buy" business. Consider what many venture-backed startups do to get market share: they give their business away at a loss. If you are taking listings at a discount, aren't you attempting to buy market share? Except market share for real estate agents doesn't happen at scale. It happens one client at a time. So I don't think this strategy works long-term for most agents (probably all, but we'll discuss this in a moment). 

Back to buying clients. If you are discounting your fee or rebating commission to get people to work with you - I am going to assert that you are attempting to buy business. Are you building a client/professional relationship built on trust? I am going to go with "No, you are not building a trusted client/professional relationship." Instead, you are basically saying, "I want this business at any cost, and I will make sure fee isn't the reason they say no. I will make it a "no-brainer" offer - they get me, and they get me at a discount."

Consider the following situation...

Susie is referred a potential seller by one of her past clients. Susie has been in business for over a decade and has done pretty well the past few years. However, like many agents this year, business is a little slower. But her bills have not slowed. She gets on the phone with this potential new seller. The seller says they are looking to sell their $900,000 home, and they received two names of people to interview, Susie being one of them. 

Susie could really use this listing. She prepares extra hard. She gets all her listing materials together. She goes over the comparable sales in excruciating detail. She is not going to lose this listing - rather, she is going to win this listing!

She drives to the appointment. She tours the home, she asks questions. She connects with the sellers. They sit and talk - about the marketing, the market, and the home value. Things are going great! After two hours, at the very end, the sellers ask her, "What is your fee?" 

Uh oh. What should she do? She really wants this listing. She needs this listing. She offers a discount. A big one. 

Then the sellers say what sellers always say in this situation: "Thank you so much for your time. We really appreciated all that you discussed with us. We will be meeting with the other agent tomorrow and we will get back to you next week."

Susie stresses out all weekend. Monday comes, then Tuesday - no word. She calls them on Wednesday, they answer, and they say, "we are really sorry, we really enjoyed meeting with you but we've decided to go in a different direction."

Ouch.

Now, this could have also gone the other way. Susie could have made the call and they said, "After reviewing everything, we are going to go with you." I am asserting that in most of these situations, the fee was mostly irrelevant!

Maybe the sellers really liked Susie and were going to go with her anyway. They simply asked, "What is your fee" because they wanted to know! They weren't implying that they wanted or needed a discount - but she discounted her fee anyway.

In neither case was she actually buying business, because in this case, the fee was not the deciding factor. But she discounted her fee - and therefore from her side of the relationship she was essentially buying business. This is a bad practice!!! Discounting your fee for people who were most likely going to use you anyway - not a good business strategy!

So back to the agents that specifically "buy business." There are a handful of agents that resemble venture-backed companies: they have big budgets for marketing and advertising, and often what they advertise is the low fee they charge. They want volume. They need the volume to keep things running! 

What I am pointing to is that that strategy doesn't really work. It might work for them, but how hard are they working, and what return are they making (i.e. their $/hr, plus capital and overhead expended)? For you, this strategy most certainly won't work over the long run. You are never going to build a successful, profitable, and fulfilling real estate practice being the cheapest. You just won't, because that's not how a trusted advisory business works.

What are you going to do? Buying clients isn't really "a thing." You know buying leads often doesn't work either. 

You must build a database of clients. Clients who know, like, and trust you. Clients who are happy to pay your fee. Clients who are happy to refer you to people like themselves.

Looking for leads or developing clients - which one?