The Pros and Cons of Real Estate Closing Gifts For Buyers

Aside from the pros and cons of holding open houses, giving closing gifts to buyers at the end of a transaction is one of the most hotly debated topics in the industry.

To be clear, both sides in the closing gift arguement make compelling points, so the answer isn’t obvious.

Whatever side of the argument you fall on in the great closing gift debate, you’ll want a professional online presence from the start of your relationship with your leads until the very end. Be sure to check out LeadSites for more info.

To give, or not to give? Let’s dive into the arguments, and give you some closing gift ideas you can use to get started.

 

“The right closing gift makes me memorable”

Agents who use the closing gift tell us that they do so for a number of reasons, most common among them, though, is that they hope to remain “memorable” to their clients. A respectable goal, to be sure.

But, those opposed to using a closing gift will tell these agents that for a gift to be truly memorable, 7, 8 or 9 years down the road, it would need to be spectacular (meaning “expensive).

Take Beverly Hills agent Christophe Choo, for instance. After closing a $15 million home purchase, he made reservations for four at the Encore Resort in Las Vegas, booked a special seating at Tryst nightclub and chartered a private jet.

Then, he whisked himself, his wife and his clients to Vegas for a first-class weekend

Total cost? $30,000. How’s that for a closing gift?

And, you can bet these clients will remember him. In fact, he tells the Wall Street Journal that, because of his extravagant gifts, “my business is 70 percent repeat clients.”

You may not work in B’Hills, sell multi-million dollar homes and you may not have an extra 30 grand lying around.

The bottom line, however, is that a bottle of wine, a gift basket and even a set of knives have a short life expectancy and, when the closing gift is gone, so is the memory of who gave it. So if you’re going to stand by the closing gift, try to make it memorable.

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A more effective use of your closing gift money would be to make a small annual gift, even a card, marking the anniversary of their home sale/purchase.

Done consistently this assures that, once a year, you ascend right back to the most coveted spot an agent can find herself in: top-of-mind.

Or, incorporate the pop-by into your schedule. They’re fun not only for the recipient, but the giver as well. They’re number 4 on Tyler’s list, here.

A closing gift can show gratitude

People are buying homes in record numbers – Showing your clients how much you appreciate their business is going to be more important than ever.

“ … we try to recognize our appreciation for them allowing us the opportunity to serve them,” claims a Florida agent in a discussion at Trulia.com.

“If it were not for my clients entrusting me with the sale or purchase of a home, I would not be in business,” claims a Texas agent. Yet another suggests that gifts for clients are “about building relationships.”

Ready for the flip side (as if you haven’t heard it before, right?) – Let’s take the last point first.

Gifting is personal. You are a business person and, in business, regardless that you’re selling a very personal item (a home), your relationship with your client is a business relationship.

As well, gifts don’t “build relationships,” either personal or professional. People do. Focusing on clear communication, sharing your professional knowledge, not letting anything fall through the cracks and ensuring your client gets your utmost best will go a lot further in building a relationship than a gift card or a monogrammed cutting board.

Do dentists feel that “If it were not for my clients entrusting me with their teeth, I would not be in business?”  Do attorneys gift their clients for “allowing” them the “opportunity” to “serve” them in court?

And, since I’m asking questions, because my insurance guy, my doctor, hair stylist and plumber don’t give me presents, does that mean that they don’t appreciate my business?

In fact, don’t you return to the same doc, the same accountant or the same hair stylist because of the service you receive? I, personally, have referred my mortgage guy to three other people and wouldn’t dream of using anyone else in my next home purchase and he didn’t give me a closing gift.

He did give excellent, professional service that went above and beyond any other I’ve experienced.

 

Still believe in the power of the closing gift?

Realtor.org commissioned a poll a couple of years ago and found that clients enjoyed receiving these as a closing gift (in this order):

• Flowers
• Plants
• Gift baskets
• Personalized home accessories
• Alcoholic beverages
• Food

Interestingly, their list completely mirrors the list of the most common gifts agents give to clients (and most likely all of them fall within the IRS’ allowable deductible amount for gifts).

How anyone hopes to become memorable by proffering a bouquet of flowers or a bottle of wine as a closing gift is curious, but there you have it.

And you do know that anything with your branding on it will most likely end up in the trash, right?

“That’s not a gift. It’s a marketing piece. Don’t gift it,” claims Ian Altman at Forbes.com.

 

How Much Should I Spend on a Closing Gift for the Buyers?

Realtors may wonder how much to spend on closing gifts. We suggest spending between 1-5% of the commission earned as a general guide. For example, at 3%, a realtor selling a home for $400,000 would purchase a gift for $360.  

Let’s get creative with that closing gift

After a bit of quick internet research, we’ve come up with a brilliant list of closing gift ideas that are sure to please any client.

Meal delivery service – It takes the dropped-off-pizza-on-moving-day idea light years further. Especially during the pandemic, meal delivery has exploded in popularity. You’ll find services geared to different tastes and dietary requirements as well, from vegan to organic, weight loss and more.

Unpacking, cleaning and organizing help – One agent we read about provides her clients with the gift of three hours of service from a professional organizer, house cleaner, handyman or a personal assistant to help with unpacking.

Subscription box – These are fun gifts for people who love trying new things. For new homeowners you’ll find home decor subscription boxes (check out Decorated or Sundae Home), gardening boxes (Bloomin Bin offers seeds by subscription or check out Urban Organic Gardener) and more.

Tech stuff – We love technology and we’re not alone. Anything that will make your clients’ home “smarter” is sure to be appreciated. Consider an Alexa-controlled Echo speaker, smart home hub, learning thermostat or a smart lock for their new front door. Speaking of front door, Skybell is a very cool gift. A video doorbell, it allows one to see who is at the door from their smartphone. Or, give them their new house keys on a key ring that includes the tile app, a Bluetooth tracker. They’ll never lose their keys again.

Gift cards – Busy agents love giving gift cards and clients on a budget (such as first-time homeowners) appreciate receiving them. Especially if the card allows them to purchase what might be on their new-home to-do list, such as one from Lowe’s or Home Depot.

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So you’re ready to ditch the closing – Here’s How To Make Former Real Estate Clients Remember You

Somewhere along the line, real estate agents missed the point: client loyalty depends almost entirely on the service consumers receive, not cheesy real estate gifts.

Keep wooing that client long after the closing and you’ll not only earn even more loyalty than you will with a gift, but save money as well, at least according to the old business rule that says it costs five times as much to attract a new customer than to keep an existing one.

If real estate clients crave customer service, isn’t that (backed up with consistent follow-up) the best real estate gifts you can give? It’s certainly more memorable than a set of knives with your real estate brand etched into them.

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Why do you want to stay top-of-mind?

The main reason most agents give when asked why they give real estate gifts is that they want to remain in the forefront of the clients’ memories. This way, whenever the topic of real estate comes up, the client will refer.

At first glance, that seems logical, right?

The amount of time the giver remains memorable is typically in direct proportion to the extravagance or pertinence of the gift. Consistently keeping your name in front of them over the long haul, however, is guaranteed to make them remember you.

The “Pot Roast Principle”

There’s an old parable about a young girl who watched her mother, for what seemed like the hundredth time, cut off the ends of a pot roast before condemning it to the oven. Finally, she asked Mom why she did this.

Mom said she didn’t really know, but she’d seen her mother do it every time she cooked a roast.

So, the girl called her grandmother and posed the same question. She got the same answer.

Luckily, great-gramma was still among the living. The girl finally got the answer. Now, remember, this is an old parable.

“When I was a young housewife my oven was very small. Cutting the ends off it was the only way it would fit.”

So, for three generations, women were cutting the ends off their roasts not because it made them juicier or more flavorful, but because they watched someone else do it and assumed that was how it was done.

Sound like anyone you know? Like. . .a bunch of someones with real estate licenses?

It’s the same thing with real estate gifts. Most new agents don’t understand why they’re “supposed” to gift their clients and, in reality, the practice flies in the face of what’s done in most other industries.

But, they do it because someone in the office did it or talked about the practice

What if you took that gift money and spent it on something that will truly make your former clients remember you when the topic of real estate comes up?

Like a supercharged, kick-butt client retention strategy

Building a referral-based real estate practice is the holy grail among smart agents. Because you won’t be chasing after new business to make ends meet, your days will be less chaotic and more structured, your marketing becomes better-targeted and more efficient and commission checks more consistent.

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To get there, you’ll need a client retention strategy. As you create it, remember that real estate client retention begins the moment a consumer becomes a client. From start to finish, every aspect of every transaction should ooze customer service.

Few real estate closing gifts will cement you into a client’s memory more than truly impressive customer service

Let’s make 2021 the year you implement new strategies to ensure that your clients have an amazing real estate experience.

Start with customer service before the lead morphs into a client. As most agents know (but few actually consider), prompt, clear communication, excellent listening skills and responsiveness are important to real estate leads.

If you don’t let them know not to, they’ll go jack up their credit card balances buying new furniture or appliances before they close. If you don’t listen to them you’ll most likely alienate them by showing them houses they don’t want.

If you don’t call real estate leads back within 30 minutes, the odds are that you won’t reach them. By then, they may also have found another, more responsive agent.

“The odds of contacting a lead if called in 5 minutes versus 30 minutes drop 100 times”

according to a study of website lead response times by insidesales.com and James Oldroyd, PhD, who was, at the time, an international faculty fellow at MIT.

We hear you: you’re a busy agent. What if a lead calls while you’re in a listing presentation or showing property to a buyer?

If you can’t respond to leads within 30 minutes, hire someone who can. Whether that’s an assistant, a virtual admin, an inside sales rep or a company that provides them.

It’s is tax deductible. You need deductions, right?

Ok, once you’ve converted the leads to clients, it’s time to double-down on your client retention strategy.

• Help customers avoid the common pitfalls of the mortgage process
• Help them avoid the common blunders of the typical buying/selling process
• Be absolutely available and responsive (again, is it time to hire or delegate?)

Read consumers’ horror stories online and vow to do the opposite as part of your strategy. Here’s a couple to get you motivated:

• Realtors … Why don’t they Answer their Phones?
• My realtor has stopped communicating with me.
• Mello – Roos CFD WTF? (a good reminder that telling your client EVERYTHING is the backbone of customer service).
• My Real Estate Agent didn’t tell me about covenants when I bought my house.

If you need more, type “my real estate agent is” into Google and see what comes up in the dropdown menu. My search returned the following:

• Lazy
• Slow
• Not helpful
• Too busy
• Doing nothing
• Ignoring me
• Unresponsive
• Rude
• Pushy

The most extravagant real estate closing gifts on earth won’t make a client for life if any of the above apply to you.

Post-Closing customer service

This is where the “retention” part of client retention comes in. Start with a handwritten thank-you letter immediately after the home closes. Put some thought into it and describe your experience working with them. 

After that, put the former real estate client on a drip system that delivers pertinent content on a regular basis. This might include a newsletter aimed solely at new homeowners (at least for the first year).

You’ll find tons of ideas online on ways to reach out to former clients, but here are a few of our favorites:

• Annual client appreciation event
• Birthday cards (we all love getting them)
• Provide bi-annual mini CMAs to help them keep tabs on their home’s value
• Comment on their Facebook posts (No, not all of them at once. Choose five or 10 former clients per week).

We also like referral rewards programs, which aren’t common in real estate, but should be.

“Consumers are up to 5 times more likely to refer if there is a reward offered,”

according to Rewards Genius.

You can go big, with a dollar amount for a closed transaction from a referred client, or small, with a gift card. Sievers Real Estate Team offers a $10 Starbucks card that is automatically reloaded with $10 on the first of the month, for the next three months.

Although it’s a cool idea, I can’t stand Starbucks coffee and I’m not alone. An alternative would be to allow the former real estate client to choose his or her own card from a variety of them. Rewardsgenius.com has an entire program set up that is ideal for real estate agents. They offer a ton of different gift cards, from airbnb to Applebee’s, Bed, Bath and Beyond and others (follow the rewardsgenius.com link and scroll down the page to see all the cards they can offer your clients).

Denver’s Urban Living has a reward I wish my agent offered: up to $1,000 when a client’s referral turns into a closing. We aren’t lawyers so we can’t tell you if this is legal where you practice real estate but it’s an amazing incentive.

If only client retention was as easy as giving away real estate closing gifts. If you’ve ever learned that a former client listed their home with another agent, you know that a real estate closing gifts aren’t really a strategy. Yet, many agents rely solely on it. If you’re among them, quit it. That’s not to say that a good closing gift can’t help seal the deal – Just make sure it isn’t all you’re doing.

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