How Real Estate Agents Can Buy Client Lists & Grow by Referral | Nick Krautter

Nick Krautter – Golden Handoff (00:00)
after working 14 hour days, two years in a row, seven days a week to go from zero to 200 clients.

The day after Renee and I came to an agreement and I started talking to her clients, I woke up and I all of a sudden had 500 clients because in her career, she had built a client list of 300 people. And in the simplest terms, I just started taking care of them and treating them like they were my own clients. And it worked incredibly well.

Michelle Kesil (01:54)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil Today I’m joined by someone I’m looking forward to chatting with, Nick Krautter who is the author of the book, The Golden Handoff, helping agents to buy and sell real estate businesses. So excited to have you here today, Nick.

Nick Krautter – Golden Handoff (02:15)
Thanks so much, Michelle. Excited to be here too.

Michelle Kesil (02:16)
Great, so let’s dive in. First off, for those new to your work, can you share what your main focus is?

Nick Krautter – Golden Handoff (02:23)
Yeah. So the main focus of the Golden Handoff is basically succession planning and strategy for realtors. So the subtitles, how to buy and sell a real estate agent’s business. the book, the original book came out about 10 years ago and I did a new second edition about a year ago. So if you’re on Amazon, get the one with the blue and white cover, that’s the new version. And I was really shocked to learn that when realtors retire, they typically don’t do anything with their business. just.

kind of walk away, slow down, and that’s it. And then all their clients have to go find a new realtor. And it just seemed really crazy to me. So in 2010, I got the opportunity to buy a business from one of my good friends. There’s three characters in the book. They’re all real people I worked with. So Renee was the first business I bought.

And after working 14 hour days, two years in a row, seven days a week to go from zero to 200 clients.

The day after Renee and I came to an agreement and I started talking to her clients, I woke up and I all of a sudden had 500 clients because in her career, she had built a client list of 300 people. And in the simplest terms, I just started taking care of them and treating them like they were my own clients. And it worked incredibly well.

And part of why I wrote the book is because I was actually looking for a book or a model to follow. I didn’t want to try to reinvent the wheel. And I was shocked to learn that there was no resource for realtors at the time.

And so I set off to write the book. It took about three years to actually finish it because I was also running the business and trying to have a life. And, ⁓ yeah, it’s been a best seller. It’s usually in the top 10 on Amazon and real estate for 10 years in a row, which is amazing. And, ⁓ yeah, that’s the, basic idea. The, the second edition, we built a new strategy for agents who wanted to retire, but not yet. They wanted to stay a little involved and so kind of created a new pathway for.

what I call adopting agents and retiring agents to work together, but to start even sooner, which I think is a huge, huge win. It’s going to help a lot more people.

Michelle Kesil (04:19)
Amazing. And so how did you come up with this framework?

Nick Krautter – Golden Handoff (04:23)
So one of the things that people ask is how do you value a real estate agent’s business? And the honest answer, if you talk to a business broker is it’s virtually impossible because once you take that person out of the business, it’s very difficult to say, what’s going to happen next. And so the framework for the Golden Handoff is very, very familiar for realtors because it’s basically a referral agreement. But instead of getting referred one client, you’re getting referred

in some cases, a thousand clients, but oftentimes two or 300 people all at once. And so that’s why I talk about the, this is a way to grow exponentially and by referral. And that is really unique because usually if you want to grow exponentially, means more prospecting, more advertising dollars, those types of things. But those are all cold leads. And when an agent refers you their whole client list and they tell everyone,

hey, I’m retiring or I’m moving across the country and Nick’s gonna take over and he’s gonna be here to help you. Those are very warm calls. People are very happy that they don’t have to go find a new person, that there’s someone they can trust and a resource they can call. ⁓ And oftentimes it isn’t to buy or sell a house, it’s they need a roofer or a plumber and we can be a good resource for those people. And so because it’s virtually impossible to say what a real estate business is worth upfront.

It’s all based on performance and on results. And I personally believe that that’s much more fair for both parties. And I can give you a couple of examples of situations I was in where, that happened, where, ⁓ you know, the retiring agent ended up getting quite a bit more than they expected. And I wouldn’t have bought the business if they had asked for that much money, but it ended up being a really big win for my team too. So.

Michelle Kesil (05:51)
Thank

Nick Krautter – Golden Handoff (06:09)
I love that model because it takes that risk and the back and forth of what is it really worth out of the equation and lets you just focus on doing the job, engaging with clients. if it works really well, everyone makes more. And if it doesn’t work as well as you hope, everyone makes a little bit less.

Michelle Kesil (06:25)
Right. And so is the model, like you said, it’s based off performance, but like, what does that look like for the ⁓ agent that’s buying the business?

Nick Krautter – Golden Handoff (07:22)
Yeah. So for the agent that’s buying the business, there is a investment, but the investment is mostly your time because you need to obviously talk to these people. I do believe that meeting with people or having phone calls and asking questions and truly trying to get to know people and to, become a known person, not just a marketing company that takes extra work. Now you’re not doing it with 20,000 people. You’re doing it with a couple of hundreds. So that’s still manageable, but there, is a limit.

to how many people any one agent can engage with. And so I built a pretty big team in order to do that. I went from me and an assistant to 14 people because I ended up buying six businesses. We went from 200 clients to 2000 clients. And again, not leads, these are people that had bought and sold and trusted their agent. ⁓ so that’s really the cost for the adopting agent plus some marketing costs to do, you ⁓

mailers and maybe a couple of events and things like that. ⁓ and then the other cost is you’re paying a referral fee on every deal you close from that client list. Depending on your arrangement, could be three years. It could be longer, but the difference between the database handoff referral agreement is that if someone in the database buys a house in year one, and then they decide to sell that house and buy a different house in year two or three,

then you pay a referral on all three of those transactions. Whereas a one-off referral is just for the first transaction. And so that’s the big difference between this agreement and just a typical referral agreement. And it also lasts longer because you don’t know when people are going to move.

Michelle Kesil (08:49)
Mm-hmm.

Right, awesome. And what do you think have been some of the most successful keys to make this process work?

Nick Krautter – Golden Handoff (09:06)
So there’s really, there’s two pieces that can, you know, make the difference between an okay arrangement and one that works incredibly well. The, the handoffs I’ve been involved with and the people I’ve interviewed, the ones that work incredibly well, the retiring agent is highly engaged with their clients and is still doing their marketing and is still doing all of the work to stay in front of their people. ⁓ they don’t.

phase out and slow down and stop marketing and stop calling before they decide to sell it. Because when you do that, you lose people. ⁓ Now on the other side, the adopting side, the adopting agent has to execute the marketing plan, right? They have to show up and make the calls, send the newsletters on time, host the events, do all those things that make them successful and keep them engaged with their clients because now they’ve got more people. The process isn’t complicated. just that it takes time and dedication and consistency.

And I think, you know, if you’re going to work by referral, to me, that’s the best way to do it. You have to have a long-term perspective though. If your goal is just to get a listing today, the referral business isn’t as sexy as prospecting or marketing or buying leads. ⁓ But it’s less expensive. It’s way more fun. Your clients kind of show up at the beginning already with a higher level of trust. So you spend less time selling yourself.

or your services, and you spend most of your time trying to understand the client need and then just doing your job, which I think most realtors would rather do that than be constantly trying to sell themselves and reading pitch decks and, you know, handing out listing packets. And here’s why you should hire me. You need to do some of that, right? They still need to hear a little bit about you before they make a decision, but it’s less salesy and it’s much more service oriented.

Michelle Kesil (10:52)
Yeah, absolutely. And is this usually with agents that you already have a relationship with that you’re doing this or does this work if you don’t have one as well?

Nick Krautter – Golden Handoff (11:03)
Yeah, so there’s a whole chapter in the book on how to find retiring agents. And it’s difficult because no one in real estate wants to raise their hand and say, I’m retiring this year or next year. They’re all paranoid that all their clients will leave or all the agents will come and try to take their people. And I think that that’s a valid concern. It’s probably overblown, but it’s a very common concern.

The, the, the adopting agent, if they have a relationship with a retired agent, it’s much easier. A lot of times people want to work with a friend or family member where that can be tricky is if that adopting agent. Isn’t really going to execute on that marketing plan and isn’t going to treat it seriously because it’s a friend or family member. they kind of are casual. That to me is, is not, is risky. You’re better off working with someone who’s going to treat it like a professional. And so.

When I started, the person I worked with, knew very well, but pretty quickly once, once we started working together and people started hearing about the success we were having basically that Renee was getting checks from me every month, other agents started coming to me and saying, Hey, I want to retire or I want to slow down, or I’m going to spend half the year on the East coast, you know, not the West coast. So will you watch my business while I’m gone? And it created a lot of opportunities. ⁓

I know that there are definitely people that are using data analytics, like broker metrics and corded to identify agents whose production is dropping as a signal that they might be slowing down or what I call kind of phasing out, which is what most agents do. They stop marketing and they kind of keep working with the people that they know really, really well, or the people that call them. But the problem is that they’re losing everything else and they might’ve spent 10, 20, 30 years building that business. And then all of sudden.

All those people just kind of evaporate if you don’t, if you don’t stay engaged. So that’s where the partial handoff is really key. That if you’re not actively growing your business, you need to think about partnering with someone. And the retiring agent can still work with who they want, when they want on the properties they want, but then don’t lose everything else. Don’t lose all those other people that maybe you don’t talk to all the time or aren’t a member of your golf club or your church or your social network. And.

and find a way to serve both those groups for those agents. So most of the time they know each other, the retiring and adopting agent, but that certainly isn’t the most important thing. I think that someone can do a good job serving the clients, can run a successful business, and can execute the marketing plan as you’ve agreed so that you have the best odds of success.

Michelle Kesil (14:05)
make sense?

What are you most focused on solving or scaling next? it another book or what’s your process now?

Nick Krautter – Golden Handoff (14:13)
Yeah, that’s a great question. I have become really interested in how connection and communication is changing, ⁓ both with technology and also just generationally, the way that people have done business in the past and the way people are doing it now. There’s a lot of it that’s the same, but a lot of it is changing. Expectations are changing. And certainly generationally, I think younger generations

tend to be more transactional. want things really quickly. They want to use an app to get something done. ⁓ They want really clear transparency, which I think is great. ⁓ But I know talking to a lot of agents that it can be difficult sometimes to make those connections and build relationships. And I think that if you look at a spectrum of super relational and super transactional, I think the younger generations right now tend to be more on the transactional side where as if you look at

Like my parents’ generation, you know, they only want to work with someone that they’ve known forever and that they, all their friends know, and that they’ve met with in person multiple times for anything really high level. ⁓ So there’s much more of a relationship aspect, I think, there. So that, I’m really obsessed with that because I think that the kind of historical way of communicating and connecting is still valid, but you have to…

do more than that. I mean, look at how many times you get a phone call and it says spam, are you, it automatically filters it or I mean, you can, I mean, I imagine you’d have your phone set up to not even get calls from anyone that isn’t in your, you know, your contact list. And so then all of a sudden trying to connect with people in that way becomes really difficult. And I get it. I get a ton of spam calls too. I don’t want to get spam calls and you get spam texts now, which is super annoying. So there’s a,

I think where people can be authentic and respectful, but still maintain communication and build relationship over time. And honestly, I say that as the, I think that is the single hardest thing in real estate because people move on average every 10 years, but then for nine and a half years, you have to stay in touch with people and be relevant, but not bug them too much. So that when they’re ready or when a friend of theirs says, I’m thinking of moving.

that they think of you and introduce you or call you to hire you to actually help them. And that’s really unique to real estate. It’s a very high ticket thing. It’s a very high level emotional financial decision. And it’s one that people don’t make every day. It’s like, again, on average, it’s every 10 years. And for some people, it’s much longer. You know, I meet people that have been in their homes for 30 years and the level of emotion and concern and fear in that situation is just…

sky-high because they they haven’t done it since they were You know in college or like in their 30s and now all of a sudden they’re retiring and it’s this whole thing. So ⁓ I’m really fascinated by that. So I’m I just started working with a marketing company ⁓ to to kind of like update what I’m doing do a lot more with video and ⁓ Do a lot more with social media not to try to meet people but to try to Reconnect and to like have another touch point with people that already know me

So to me, those are really fascinating things. And I think there’s people out there trying to kind of solve that Rubik’s cube, but I do think it’s a mix of old school and new school. And so that’s something I spend a lot of time thinking about and working on.

Michelle Kesil (18:12)
Definitely that makes sense. And is that like a framework that you’re looking to create on that as well?

Nick Krautter – Golden Handoff (18:19)
Yeah, I think that the way that this fits is in with the basically the recommended marketing plan. And so in the book, we talk about letters, emails, phone calls. ⁓ I think that adding video and text and retargeting on social media is a really easy thing to add to that, that will make your communication and your connection much more dynamic. Because at the end of the day, it doesn’t really matter what I want to do. It matters what the clients want to do and where they want to meet.

you know, do they want to meet on text? So they want to be on phone? Do they want to meet in person? You know, I have friends that are super close friends that won’t return a text. But if I mentioned something on Facebook at 2 a.m., they’ll respond immediately. And so I don’t get that because I wouldn’t I like it nervous if I don’t reply to text messages or calls. ⁓ But I know lots of people that are totally fine with it. So, ⁓ yeah, I would recommend that in a handoff that you do the original framework, but then adding

basically video and social media retargeting. And ⁓ the other thing I’m kind of changing my mind on a little bit is, doing co-marketing for longer. I used to recommend doing the original announcement and then maybe referencing the retiring agent a couple of times and, when you’re making your communication. But I think that doing co-marketing for a longer period of time is a really good idea. And that’s based on feedback from

people I’m working with and what they see work and kind of what they feel is opening the door and giving them opportunities. And that’s name recognition and familiarity. So doing the co-marketing longer, doing a video just like you and I are doing right now, but like a retiring agent, adopting agent, having a quick chat about the market, having a quick chat about just what’s going on in their lives. think people are, you know, clients are honestly interested in that. They, if you’re an agent who’s retiring and you want to

I’m helping someone right now they want to go sail around the world on a sailboat. And what a fascinating story. I mean, what a dream. It would be super fun to follow along and see someone I know like as they go around the world on their sailboat, would be I would totally tune into that show. So I think sometimes people try to kind of hide it. And I think the clients are really just like the only business where people are weird about retiring everything else. It’s like a big it’s like the victory lap, right? It’s like

That’s the goal is that you don’t have to work until you’re 90. And I just met a group here in the West Coast where one of the agents is 92 years old and still doing open houses and everything. And I’m like, God bless them. I must love it. But I know there’s some people in that situation because they have to be financially. And I love that this Golden Handoff has created a way for people to retire earlier with more money and to not have to walk away from everything they’ve built.

over their whole career.

Michelle Kesil (21:00)
Yeah, amazing. Thank you so much for sharing all of that.

Well, before we begin to wrap up here, someone wants to reach out, connect and learn more, where can people find you?

Nick Krautter – Golden Handoff (21:10)
There’s a bunch of free resources there. So there’s a calculator that will give you an estimate of what your business might make over the time of your ⁓ handoff. there’s a calculator. just need to know how many repeat and referral clients you work with in a given year and your average commission. And it does that for both the adopting and retiring agent, which is really cool. And then if you sign up there, there’s a resource kit that is free that I’ll send you.

and I, if you sign up there, I only send Golden Handoff related stuff so that you, you’re not on any other list. It’s just simply information about that. And then all the resources from the book in editable format. So you can look at the announcement letter, the contracts, the scripts, ⁓ all of that. And I’ll continue to add to that resource kit as well. So that becomes that’s it. That’s always getting updated. So, ⁓ that’s the best place for people to learn more and to find me.

Michelle Kesil (22:03)
Perfect. Well, appreciate your time and your story. Thank you for being here.

Nick Krautter – Golden Handoff (22:07)
Thanks for having me. It was really good talking to you.

Michelle Kesil (22:08)
Likewise, and for those tuning into the show, if you got value, make sure you’ve subscribed. We have more conversations with operators like Nick who are building real businesses and we’ll see you on our next episode.