By Catherine Willems

Not every prospect makes a good client. You’ve likely heard of the 80/20 rule, also known as the Pareto principle. In business applications, it suggests that 80 per cent of sales come from 20 per cent of clients. Alternatively, it may mean that 20 per cent of your clients take up 80 per cent of your time, and then never amount to a transaction.

How can this rule help you? It can be applied in many different ways, but the value for your business is knowing where it is impacting your profitability.



In my business, I’ve learned this value the hard way – spending too much time on clients that demand all your attention but who are unwilling to pay for all the extra time you spend with them. Identifying and paying attention to the red flags has saved me hours of heartache and allowed me to spend more time with clients I love working with.

Should you really turn away business? In a competitive industry like real estate, this may seem like a bad thing to do.

I used to feel the same way, but the first time I let go of a client, a tremendous weight lifted from my shoulders and I found I had more energy to give my other clients. And soon enough, new and better clients quickly took their place and my profits started to increase.

Clients that aren’t a good fit for you can drain your energy and take away valuable time better spent with other clients or prospecting for new ones. When you free yourself from the bad, you make more room for the good.

Determining if a prospect will be a good client is a bit like dating. You may need several interactions before you know if you’re going to like working with this person. Pay attention to your gut and look for early warning signs:

  • Do they have big expectations but a small budget?
  • Do they question everything you do?
  • Do they take days to return calls or emails?
  • They haven’t spoken to a lender and say they will have no problem getting approved for a mortgage.
  • They are unwilling to sign a buyer representation agreement.

A good relationship involves trust. If you’re constantly being questioned, second-guessed or challenged it may mean your prospect has trust issues – a sure sign of problems to come. Conversely, if you feel they are not being completely honest with you or are holding information back, it could mean they are not serious about doing business with you.

Take a look at your existing clients and make note of the qualities you like about them. What made the transaction an enjoyable experience? Is there a common thread or personality type among your good clients?

Do the same for the bad ones and take note of any red flags that you might have ignored at the time you started working with them.

Use this information as a way to better qualify your prospects. Ask questions that will help you uncover the traits you like and identify the red flags early.

Being selective about who you work with is not only good for your state of mind, it’s good for your bottom line.

10 COMMENTS

  1. Here is some Fairy Dust to start your day….the Revolution in the real estate brokerage community will be recorded when articles like this stop appearing.

    The Median REALTOR in Canada will sell one home this year earning under $19,000 before expenses.
    In TREB where members equaled homes sold in 2018 the average earnings were $26,545 as more Mere Postings were included in their sales stats than any other board in Ontario.

    The cheapest anyone can run a sales rep business in Ontario is around $12,000 leaving TREB with an average $14,545 in earnings. This is far lower than the Walmart employee earns in the year or McDonalds retiree working part time flipping burgers.

    There are maybe 300 REALTORS in Canada who can pick and choose who to deal with from a business standpoint. Of those who are not sub-brokerages maybe 100 exist whose sales staff cant pick and choose.

    This is sort like the Robbins or Proctors of the world who sell a Koolaid that is frozen before it is ever delivered and in a package 99% of their followers never can open.

    Think of the Franchises that have hired the most profitable Sales Trainers in the business. Why after decades of hiring these folks and getting their brand users to pay out of pocket or on Brokerage Credit, not producing huge numbers for their brands. I mean have you checked market share numbers folks???

    You can drink the Koolaid from this author and magical marketing maven or you can head down to Costco apply for a job and get a pop and dog for $1.50.

    BTW Costco pays benefits !!

  2. Love this. How would you turn away the prospect? What wording would you use to politely tell them you won’t be working with them?

    • Hi Katherine, how you turn them away depends on the situation. Always be polite and don’t make it about them. I typically say something like, “I don’t think we’re a good fit to work together.” or “I don’t think my style or services are the best fit for your needs.”

  3. Excellent article! You nailed it! You dont want to be busy and end up with nothing to show for it. Often less is more. Well done.

  4. Great article…this is something I think we all learn the hard way! I have “fired” clients in the past for their good and mine!!

    • Perhaps think about other professions and how they perhaps handle such situations;: our industry truly is not about buying and selling houses; it’s about negotiations and contract representation, and people.

      But first comes that age old expression: a meeting of the minds, as it relates to real estate and the definition of “trade.” (Our industry is classified as “retail” for a reason.)

      Ever wonder why the internal record keeping is referred to a “trade” record sheet?

      The “vibes” we get when meeting for the first time should often be listened to, and sometimes we don’t heed our own advice when our brain is trying to tell us that this about to be a business paperwork marriage is doomed from day one. We are not in the business of arguing.

      If the personalities don’t meld, no amount of advice will be considered. After signing contracts, clients often then consult with family and friends, comparing war-stories. Woulda-coulda-shoulda. And if you recognize a forthcoming obstacle course, cut loose and leave graciously. Put your energy where it is not just needed, but abundantly appreciated. No one-deal is worth the nightmare stress that can occasionally be had.

      Don’t make a long drawn out deal about it. Simply prepare releases. Keep copies, and send by registered mail or courier, requiring received signatures.

      Require simply that the documents be signed by all parties represented, and include a short memo saying to be signed and returned immediately in the self-addressed postage paid envelope. No explanation needed.

      Next.

      I only had to do this once in 35 years. The papers were not returned. But in a few days a nice flower arrangement was received along with a personal apology note, alluding to temper tantrums were related to a pending marriage break up.

      Within just days, an MLS offer appeared, was presented and accepted and closed. Sometimes the public has to be reminded that we are humans, too,

      Carolyne L 🍁

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