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/RealEstate is a bi-weekly podcast where we chat with agents and experts in the real estate space to find out what strategies are working for them, what tools are powering their business, and how they are maneuvering shifts in the industry. Join host and marketing aficionado Chris Whitling as he uncovers the tips, tricks, and tech ambitious agents can use to take their businesses to the next level.
During the Great Recession, a lot of really good realtors in my office started to take other jobs, retire, move, and I figured out how to what I call adopt their clients. So I bought their books of business. They endorsed me to their clients. And all of a sudden, you know, I spent four years busting my butt to get to 200 clients. And over the next couple of years, I went from 200 to 2,000 clients working way less because instead of getting every client one at a time, I was getting two, three, four hundred clients at a time from my from my deals with these realtors who were retiring, moving, changing careers.
Nick Krautter:And it really opened my eyes to how you could grow way faster and still by referral. And I ended up writing a book about it called The Golden Handoff.
Chris Whitling:So I maybe wanna, like, switch tracks here because I think we've we've kinda set this up, like, okay, you know, you've you've figured out, you know, who you wanna talk to. You figured out the actual transaction, the the the marketing plan. You're making the calls. You're having those conversations. But now I I wanna go back and talk about the contract because that's really where, you know, it's like, okay.
Chris Whitling:Yeah. We negotiated the contract upfront, but now we've got this, like, income that's coming from it. And you've hinted at it a couple times that this is essentially a referral, like like transaction split, type situation that's happening.
Nick Krautter:Yeah. The way that I structured it was because the first time we didn't know if it would work or not. We didn't know what the value of the business was. We were kind of in a depressed market at the time. I was like, hey.
Nick Krautter:I'll just pay a referral fee every time someone in this database does something. Now so the big difference that's important to note is, like, in real estate, when you get a one off referral so, Chris, you're like, hey. I'm moving to Florida. Do you know anyone over in Fort Lauderdale? And I go, oh, I I've got a great person.
Nick Krautter:Let me refer you. They help you buy a house. I get a referral fee. But if you go, like, three years later and go, you know what? I I'm moving from Fort Lauderdale to Miami.
Nick Krautter:Like, they sell your house. I don't get a second referral fee. In a golden handoff where you are managing this database, if you if I help you buy and sell and invest every year, I'm paying a referral fee on every time I work with you. And that's happened. We had a client that sold two condos and bought a home in it was over two years, and we paid a referral fee on each one of those transactions.
Chris Whitling:So the referring agents got their got their stamp on it for life.
Nick Krautter:So not for life. So
Chris Whitling:for life. Okay.
Nick Krautter:So if you are getting out of the business and retiring completely and you're like, here's the keys, I'm going to send this letter and do a couple videos and good luck. It's a three year deal. And that's because you have to keep a license somewhere. It doesn't have to be in the same state. Like, if you're licensed somewhere else, you can just keep the If you're going to move and work somewhere else, you can just get the new license.
Nick Krautter:If you're gonna just retire, you just keep the one you have. It's the easiest thing to do. Yep. So it's a three year deal. And then it starts at 30% referral, then 20, then 10.
Nick Krautter:You also get referrals for any new people you add, obviously, because you want to encourage the return agent to send more people to you. And they will have more people. They're they're gonna meet people or get calls from people, hey, you sold my neighbor's house two years ago. We want to sell. Can you come look at it?
Nick Krautter:And you go, hey, I'm retired, but let me introduce you to Nick. Now the partial handoff's different. Right? So that's where you're staying engaged in some way. Right?
Nick Krautter:You're still in the game doing part of it, but you're just not doing all of it. And the way that typically works is you just pay a 25% referral fee for as long as they're in the game.
Chris Whitling:Right. Okay. So yeah. And this is something that, you know, I think people will have picked up on earlier in the in the conversation. It's like, there's essentially, like, two sources of the referrals.
Chris Whitling:There's the people in the database, which you're mining, and then there's just the relationship. So even if you're if you're retired, you know, you might still get text messages or or calls from people exactly like you just said. You said, you know, hey. You know, I'm a friend of a friend. Who do I talk to?
Nick Krautter:Totally. Yeah. You're you know, the return agent goes to their neighbor's barbecue and they're like, oh, my daughter and just got married and they need to buy a house, you know, can you help them out? And you're like, not really, but let me introduce you to Nick. Like, they'll take care of you.
Nick Krautter:So, yeah, you want them to be an advocate, right? You want them to be part of your Salesforce out there still connecting with people and and referring you. And if people in the database are calling the retiring agent, you know, let me know right away so that I can follow-up. You you don't wanna just not commune you wanna communicate that so that I know, you know, who do I need to be engaged with. Kind of it starts with that initial push where you go over the database and go, hey, everyone in here is good.
Nick Krautter:These 20 people, I think, are gonna do something. Like, you should Yeah. Definitely, You know, even if you're going to call everyone twice a year, maybe you you really stay on top of these 20 people because the retiring agent, you know, believes that they are ready to go and they're going to need you soon.
Chris Whitling:So as the as the person who's taken over the database, how much information are you feeding back to the agent that has retired or moved to Florida? Are you saying, like, you know, hey. We we got in contact with someone from your database, and they're seeing a house. Or are you saying only when you enter contract or only when it closes? Like, what's that level of, like, communication that's going back and forth between sort of the original owner and you?
Nick Krautter:Yeah. So we would put the agent in their own database so that they would get the same marketing stuff that their clients got.
Chris Whitling:Yep.
Nick Krautter:So that's an easy thing to do. I would say once a month you want to give someone an update. So whether that's you give them a log in to the database or you'd export a report and say, okay. Here's your 300 clients. You know, we set five appointments.
Nick Krautter:We have two pendings, and we're gonna get, you know, two closings next month from these pendings. And also too, I would say it's up to the retiring agent. Like, if they Right. If they want updates every week, do it. I mean, there's that's not hard to do.
Nick Krautter:And if you've got someone else that just referred you 300 people, I think you probably will roll it through a carpet for them too. Right? You should. But I think most people once a month is plenty. They just want to see that you're staying on top of it and see that you're having success.
Nick Krautter:We have, the team I work with and and I have a spreadsheet that just shows, hey, here's the people we're talking to. Basically, like, you're you're doing consultations. You're setting appointments. Here's the people we have listed or touring properties or in contract. And then, you know, then here's our our pendings.
Nick Krautter:So, basically, it's here's the people that are talking to us about doing something. Here's the people we're actually working with, like showing homes or have their property listed. And then here's pending.
Chris Whitling:Does that communication cadence slow down as you get closer to that three year mark? Do people usually kind of like fade out or are people pretty engaged for that entire period?
Nick Krautter:I think it just depends a lot on the market. I think if you stay consistent with the calls and the work, I think you'll get consistent results. The truth is, most people are going to put in like a a lot of effort at the beginning. They'll get a bunch of reward at the beginning, and then, you know, your effort, just like with your own clients, can start to taper off. But if you stay consistent, I think you'll get consistent results.
Nick Krautter:We've definitely replicated the entire production of someone who retired with their data base. So they did 7 or 8,000,000 in sales. We did 7 or 8,000,000 in sales. So And the thing that's crazy So, like, Renee sold us her business in '20 The bottom of the market was 2012.
Chris Whitling:Yep.
Nick Krautter:A couple years later, twenty thirteen, fourteen, fifteen, the market was going up like a rocket ship. And all of a sudden, every listing was selling for more. Our commissions were higher so the value of that business actually went up and people got more active so we started doing more business and the homes were worth more and so we were getting paid more years ago. Most of my clients aren't doing anything right now. You know, there's a lot of people they got their house, they've got their 3% mortgage, and they're good.
Nick Krautter:Yep. And, hey, they'd love to invest, but the numbers aren't penciling for them right now because they don't pencil right now. And so that's less productive than it could be.
Chris Whitling:Did that affect how you negotiated the the transaction? Or because you, you know, I mean, we probably were all aware of the state of the market, you know, and what interest rates are doing. You know? So would you have negotiated, like, a sort of, like, a longer fade out period saying like yeah you know this thing's probably gonna hibernate for a year or two and then you know hopefully come back so instead of a three year fade out it's gonna be a five year fade out
Nick Krautter:if I was gonna do it today I think that's fair yeah it's really hard to say where things are going I will say this in my experience the
Chris Whitling:real estate you know, being excellent. Yeah.
Nick Krautter:Yeah. The the real estate market is rarely stable. It's usually going up or down. It's really rare that it's just kind of flat. And I feel like right now, it's one of those rare moments where things are kind of flat.
Nick Krautter:Right. I feel like in 2019, things were kind of just flat. It just the transaction volume was like good. Pricing was not really going up or down. Pullback, but then COVID hit, and then everyone decided to move to the suburbs, and everyone got money, and and the market went nuts.
Nick Krautter:You know, everyone in Portland had to get a place in, you know, Palm Springs or Texas or Florida. People moved to Montana. You know, everyone everyone had a plan. And, everyone, you know, all the realtors got real busy. So Absolutely.
Nick Krautter:You could accurately predict a slowdown and then be wrong. So or vice versa.
Chris Whitling:Yep.
Nick Krautter:I'm surprised at how resilient the market has been with interest rates, honestly. That's
Chris Whitling:a good perspective.
Nick Krautter:I feel like people are still doing stuff despite that being a headwind.
Chris Whitling:So bouncing around here a little bit, you know, obviously, the referral model makes a lot of sense. Would you ever consider doing, like, a flat fee? Like or is that a warning sign if someone's like, I just want, like, a one time payout?
Nick Krautter:Yeah. It's so hard to predict the value of the business because until you start calling people and and engaging with them, you don't really know if they love their agent as much as the agent thinks they love them or not. I've had that happen. I'm sure that would happen to me too. I'm sure there's people, like, my agents have called and they go, that guy doesn't even remember who Nick is.
Nick Krautter:You know, I had a huge team. Not everyone worked with me. They worked with my team. So I I think the flat fee thing is it's difficult to predict the value. And I think, honestly, it's a bad deal for both parties because the referral model is it just works really well.
Nick Krautter:And if you end up with, like, a clunker, no one's upset. And if it ends up being a just a blockbuster success, everyone makes more. So I've I I did a bunch of interviews for the new book, and one of them was a gentleman who is a team lead that helped sell a top brokers business to another team. And he wanted I think the number was like he wanted half a million dollars for it. And and it was worth that.
Nick Krautter:Like, they were I don't think there was a question that there was that the value. But the way they did it was they still did it on referral fees. And basically, instead of it being, like, x number of years, it's like, you'll pay me referral fees on everything until I get to this number. And I think that the the punchline is they actually got to that number quicker than they expected. So it might have been a better deal to say, just pay me for the three years or four years or whatever.
Nick Krautter:I don't know all the details on that. I wasn't involved, but it just an anecdote for you can still have a number or a timeline. So that's another way you could do it is, you know, pay me 25% until I get $200. And if it happens in one year or six years, it kind of that way it doesn't matter. It's that that might be a way to address the market today.
Chris Whitling:Yeah, that's that's interesting. There's sort of like infinite variability there. And there's a lot of a lot of guessing.
Nick Krautter:I still think that the the best example I have is there's a guy I helped for, like, a year and a half, David. He's in the book. He's a real guy. He's got a huge team now. He's done incredibly well.
Nick Krautter:This is, you know, fifteen years ago. And he left town for, like, a year and a half to work on a movie. And I took over his business and and took care of his clients for about a year and a half. And in today's dollars, I paid him in about a year and a half a hundred and $50,000 in referral fees. There's no way I would have agreed to pay him a hundred and $50 to manage his business for a year or two knowing that he was gonna come back and and take over.
Chris Whitling:Yeah.
Nick Krautter:And I don't think there's any way he would have dreamed of asking me for that much money. I mean, he ended up buying a house with the referral fees that I paid him on his business while he was gone. Now, the flip side of that, that equation, right, is like I also made an extra $300,000 net. Right. And so it was like home run for me too.
Nick Krautter:And it got us into some really good neighborhoods, some great listings, some really good purchases. And then just plenty of just normal stuff. But I share that example is just he wouldn't have asked for it. I wouldn't have paid it. And that's what it ended up being worth for both of us.
Nick Krautter:And and I think it's just the it's just this it is so simple and easy to do it that way. And so incredibly hard to try to do it the other way. I just don't think there's an advantage for either party, really.
Chris Whitling:It seems like, you know, a lot of the stories that you have, it's where it almost sounds like people undervalue the the asset that they've created.
Nick Krautter:Well, yeah. And the crazy thing too, right, is like when you're growing when you're in the rocket ship going up burning fuel, right, you're spending money. Right. Right. You've got systems, tools, you've got you're paying for real gigs, you're paying for an office, you've got an assistant, you've got buyer's agent, you've got you're building this infrastructure, you've got MLS and dues and local dues and desk fees.
Nick Krautter:But once you're the retiring agent, all you have to do is keep it licensed. It's a couple hundred bucks a year in most states. You don't have any expenses.
Chris Whitling:Yeah. So Yeah. Yeah.
Nick Krautter:Your income might not actually go down on a net basis depending on how much you were spending to run your business. That's the crazy thing, is that not only could you be undervaluing it, you might make more money not working.
Chris Whitling:You might make more money not working. Okay. So that's hilarious. Yeah. Exactly.
Chris Whitling:And the profit on that, you know, and maybe that's what you're saying. Like, you're you're saying the take home on that money is is much higher. Right? Because I think the other element that you're talking about here is, like, the time horizon on, you know, on ROI. Right?
Chris Whitling:So, like, you might think that, you know, so most of the people that sign up for Real Geeks, essentially have, like, a one year, ROI period. After that, they built up enough, enough leads and they're seeing enough transactions come through that they're so fully in the advocate camp that, you know, they're they're just super happy campers.
Nick Krautter:Yeah.
Chris Whitling:But, you know, you apply what you're saying and it's, like, actually, that database is just gonna keep paying you, you know, not just the referral fees over the course of your, like, sort of prime earning, period of your of your career. But actually, once you decide to, like, transition out, you know, then all of a sudden you're in the pure profit phase of, like, monetizing that database.
Nick Krautter:Well, yeah. Because, like, so when I sent David that $150, he wasn't paying an assistant. He wasn't paying desk fees. He wasn't advertising or marketing. I think he kept a couple of websites up, that had been doing good for lead gen for him.
Nick Krautter:We, we, I think we we took those leads that year. He he just we kept those leads that came from the website. He kept all his referral clients, when he came back. But, you know, I made 300,000, but I was probably spending 20,000 a on overhead and staff and people and and all of that. So I still made money, but, you know, I had expenses.
Nick Krautter:He made really good money and had no expenses. We might have netted the same amount of money.
Chris Whitling:Yeah.
Nick Krautter:He might have netted more than me, to be totally honest. Yeah. I I don't I don't remember the exact numbers that year, but it's not out of question that he might have actually netted more than I did.
Chris Whitling:This sounds like an interesting component, you know, when you're in the negotiation phase of one of these things or even if you're thinking about it, because I can see someone getting really wrapped around the axle of, like, the the commission split. Yeah. But the the profit portion of it is actually super critical.
Nick Krautter:It's huge. And I think another hang up a lot of people have when they're thinking about, am I really ready to hand this off or should I hang on to everything?
Chris Whitling:Right.
Nick Krautter:Is they're thinking, I need to make $300,000 a year. But what they're forgetting is they need to make $300,000 a year because they're spending $150,000 a year year on expenses. Right. And so if you can, like, shift your mind over, okay, if I don't have to spend $150,000 a year to run a business that makes me 300,000, You only need to make $1.50 to maintain your lifestyle.
Chris Whitling:Yeah. Yeah. It's a career transition. Right? And your expenses follow that transition.
Nick Krautter:Yes. And and so, you know, with these agents we were helping, you know, when we managed David's business, he was at a different brokerage. We just brought him over to my brokerage and put him on my team so he had no expenses. We basically wiped out all of his expenses. So he didn't even have to pay transaction fees.
Nick Krautter:Like, he literally got every dollar of every referral 100% except for $400 to renew his license and do continuing that. Something like 4 or $500. That's it.
Chris Whitling:Deal of the century.
Nick Krautter:That was literally the only expense he had to have in order to do this deal. And, that if you can help people acknowledge that, you can help a lot of people choose to work with you earlier Because if they can realize, oh, I don't. If I can send you $100,000 a year, Chris, and you have no expenses, that might be just as good as making two or three hundred thousand a year.
Chris Whitling:Exactly. And if you talk to, you know, I mean, that's that's just maybe good retirement, philosophy as well. You know, if you talk talk to financial planners, a lot of times they will point out, you know, that hopefully by the time you're to retirement age, there's just less expenses from that you would experience it in your younger years, you know, less like, rent and stuff like that.
Nick Krautter:Well, yeah. Totally. And also, like, right, as you're accumulating, right, and growing Exactly. And investing, a lot of your money goes into investments. Right?
Nick Krautter:But, like, once you're retired, you're not, like, putting more money in your IRA, and you're not buying more rent rentals. Now, if you are, great. But you don't, the point is you get to that point where you don't need to keep putting money into investments for the future because now it's the future. Now you get to start taking the money back out, which is a really weird feeling. I think a lot of people it it is kind of like a kind of a a a weird mental thing to, like, switch gears if you've been really good about doing that for, like, twenty years.
Nick Krautter:But, yeah, at some point, you get to hopefully take the money back out and use it and go do whatever you wanna do. That's kind of the point. So
Chris Whitling:Yeah. Yeah. Exactly. Even right now, picturing this, I'm having a hard time, like, not thinking about, you know, putting money away. But, you know, that's the face of my life.
Chris Whitling:Alright. Nick, I you know, I think we've covered a lot of this stuff. Is there anything that we've missed that is great information for the audience?
Nick Krautter:Every effort you can make to keep your database updated and stay engaged with people is worth so it's worth every minute you spend on it. Because it's gonna return a better client relationship. It's gonna return more people working with you now. And then when you're ready to do a handoff, whether that's partial or you do the whole thing and and hang it up, it will be so much more successful and worth so much more in the future as well. And so if there's if there's one thing I could go back in time and and and do better, it would be make sure you put everyone in your database.
Nick Krautter:Make sure you have a plan for everyone. You know? And, obviously, you can automate a lot of that. But make sure there's a plan for, like, how am I gonna stay engaged with these people and be a resource and be top of mind, so that when you are ready to retire, it's it's really they're all your team's all there for you.
Chris Whitling:That's such a good point. I I'm thinking right now, I'm like, I might have to, like, revisit the CRM portion of our website and, you know, feel like it's it's the maintenance. Like, that automated, you know, follow-up, the automated cadence, the home valuation reports, all that stuff is adding value to your database so that when you're ready to retire, you know, it's it's there for you as well. That is such a good point that, like, on I have I had never thought about this. I've dealt with so so many databases and CRMs in many industries, and I had never quite thought about it like that.
Chris Whitling:That is that is absolutely amazing.
Nick Krautter:Awesome.
Chris Whitling:Alright. Nick, where can people find you?
Nick Krautter:Goldenhandoff.com. That's the best place to go. There's some great resources there. Make sure you sign up. You'll get access to the contracts and letters and scripts and dialogues that we talked about today, and put them in action right now.
Nick Krautter:And, you can find it on Amazon or just directly through the through the website. And thanks so much for having me on, Chris. Great talking to you.
Chris Whitling:Yeah. No. Seriously, our pleasure. This was this was really good. You know, we might have to have you back on, in the future.
Chris Whitling:I'm definitely thinking about, you know, a lot of the other people that we've talked to in terms of, like, you know, sort of really like monetization strategies is kinda like the way that that I think about it. And, you know, your perspective is just so different that, you know, I'm I have a couple other people in mind that I'm like, okay, what happens if you get, like, these three guys in the room? Like, what what are we gonna get out of it?
Nick Krautter:Yeah. Yeah. I'd love that.
Chris Whitling:You know, stay tuned. Hit subscribe down down there below, and see what we do with this. Alright, Nick. So if people are thinking about getting out, should they give you a call? Give me a call.
Chris Whitling:Alright, everyone. Thanks for watching this episode of Forward Slash Real Estate. Hopefully, this got you thinking about the value that is there in your database and ways of monetizing it, whether it is working that day in and day out as real estate agent in that launch phase of your career or as you're transitioning out. You can leave comments down below. We read every one of them.
Chris Whitling:Give us a thumbs up and subscribe.