March 5, 2025 • 23 mins
In Part One of our conversation with Nick Krautter, author of The Golden Handoff, we discussed how to identify agents who are winding down their businesses and how to approach them about adopting their database.
Throughout Part Two of our discussion we explore:
- The difference between a one-off referral and a golden handoff referral
- How long the retiring agent will receive referral fees for
- The actionable steps to take when handing off a database
- How much communication there should be between the retiring and adopting agents
- Referral fees vs a flat fee for a database
- How you could possibly make more money not working
If you missed Part One you can catch up here: The Golden Handoff with Nick Krautter - Part One
To learn more from Nick check out https://goldenhandoff.com/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Nick Krautter (00:01):
During the Great Recession, a lot of really good
realtors in my office started totake other jobs, retire, move,
and I figured out how to what Icall 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
(00:23):
busting my butt to get to 200clients. And over the next
couple of years, I went from 200to 2,000 clients working way
less because instead of gettingevery client one at a time, I
was getting two, three, fourhundred clients at a time from
my from my deals with theserealtors who were retiring,
moving, changing careers.
(00:43):
And it really opened my eyes tohow you could grow way faster
and still by referral. And Iended up writing a book about it
called The Golden Handoff.
Chris Whitling (01:06):
So I maybe wanna, like, switch tracks here
because I think we've we'vekinda set this up, like, okay,
you know, you've you've figuredout, you know, who you wanna
talk to. You figured out theactual transaction, the the the
marketing plan. You're makingthe calls. You're having those
conversations. But now I I wannago back and talk about the
contract because that's reallywhere, you know, it's like,
(01:27):
okay.
Yeah. We negotiated the contractupfront, but now we've got this,
like, income that's coming fromit. And you've hinted at it a
couple times that this isessentially a referral, like
like transaction split, typesituation that's happening.
Nick Krautter (01:42):
Yeah. The way that I structured it was because
the first time we didn't know ifit would work or not. We didn't
know what the value of thebusiness was. We were kind of in
a depressed market at the time.I was like, hey.
I'll just pay a referral feeevery time someone in this
database does something. Now sothe big difference that's
important to note is, like, inreal estate, when you get a one
(02:02):
off referral so, Chris, you'relike, hey. I'm moving to
Florida. Do you know anyone overin Fort Lauderdale? And I go,
oh, I I've got a great person.
Let me refer you. They help youbuy a house. I get a referral
fee. But if you go, like, threeyears later and go, you know
what? I I'm moving from FortLauderdale to Miami.
Like, they sell your house. Idon't get a second referral fee.
(02:23):
In a golden handoff where youare managing this database, if
you if I help you buy and selland invest every year, I'm
paying a referral fee on everytime I work with you. And that's
happened. We had a client thatsold two condos and bought a
home in it was over two years,and we paid a referral fee on
(02:45):
each one of those transactions.
Chris Whitling (02:48):
So the referring agents got their got their stamp
on it for life.
Nick Krautter (02:53):
So not for life. So
Chris Whitling (02:55):
for life. Okay.
Nick Krautter (02:56):
So if you are getting out of the business and
retiring completely and you'relike, here's the keys, I'm going
to send this letter and do acouple videos and good luck.
It's a three year deal. Andthat's because you have to keep
a license somewhere. It doesn'thave to be in the same state.
Like, if you're licensedsomewhere else, you can just
keep the If you're going to moveand work somewhere else, you can
just get the new license.
(03:17):
If you're gonna just retire, youjust keep the one you have. It's
the easiest thing to do. Yep. Soit's a three year deal. And then
it starts at 30% referral, then20, then 10.
You also get referrals for anynew people you add, obviously,
because you want to encouragethe return agent to send more
people to you. And they willhave more people. They're
they're gonna meet people or getcalls from people, hey, you sold
(03:40):
my neighbor's house two yearsago. We want to sell. Can you
come look at it?
And you go, hey, I'm retired,but let me introduce you to
Nick. Now the partial handoff'sdifferent. Right? So that's
where you're staying engaged insome way. Right?
You're still in the game doingpart of it, but you're just not
doing all of it. And the waythat typically works is you just
pay a 25% referral fee for aslong as they're in the game.
Chris Whitling (04:01):
Right. Okay. So yeah. And this is something
that, you know, I think peoplewill have picked up on earlier
in the in the conversation. It'slike, there's essentially, like,
two sources of the referrals.
There's the people in thedatabase, which you're mining,
and then there's just therelationship. So even if you're
if you're retired, you know, youmight still get text messages or
or calls from people exactlylike you just said. You said,
(04:22):
you know, hey. You know, I'm afriend of a friend. Who do I
talk to?
Nick Krautter (04:27):
Totally. Yeah. You're you know, the return
agent goes to their neighbor'sbarbecue and they're like, oh,
my daughter and just got marriedand 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.
So, yeah, you want them to be anadvocate, right? You want them
to be part of your Salesforceout there still connecting with
people and and referring you.And if people in the database
(04:47):
are calling the retiring agent,you know, let me know right away
so that I can follow-up. You youdon't wanna just not commune you
wanna communicate that so that Iknow, you know, who do I need to
be engaged with. Kind of itstarts with that initial push
where you go over the databaseand go, hey, everyone in here is
good.
These 20 people, I think, aregonna do something. Like, you
(05:09):
should Yeah. Definitely, Youknow, even if you're going to
call everyone twice a year,maybe you you really stay on top
of these 20 people because theretiring agent, you know,
believes that they are ready togo and they're going to need you
soon.
Chris Whitling (05:23):
So as the as the person who's taken over the
database, how much informationare you feeding back to the
agent that has retired or movedto Florida? Are you saying,
like, you know, hey. We we gotin contact with someone from
your database, and they'reseeing a house. Or are you
saying only when you entercontract or only when it closes?
Like, what's that level of,like, communication that's going
(05:46):
back and forth between sort ofthe original owner and you?
Nick Krautter (05:50):
Yeah. So we would put the agent in their own
database so that they would getthe same marketing stuff that
their clients got.
Chris Whitling (05:57):
Yep.
Nick Krautter (05:58):
So that's an easy thing to do. I would say once a
month you want to give someonean update. So whether that's you
give them a log in to thedatabase or you'd export a
report and say, okay. Here'syour 300 clients. You know, we
set five appointments.
We have two pendings, and we'regonna get, you know, two
(06:18):
closings next month from thesependings. And also too, I would
say it's up to the retiringagent. Like, if they Right. If
they want updates every week, doit. I mean, there's that's not
hard to do.
And if you've got someone elsethat just referred you 300
people, I think you probablywill roll it through a carpet
for them too. Right? You should.But I think most people once a
month is plenty. They just wantto see that you're staying on
(06:40):
top of it and see that you'rehaving success.
We have, the team I work withand and I have a spreadsheet
that just shows, hey, here's thepeople we're talking to.
Basically, like, you're you'redoing consultations. You're
setting appointments. Here's thepeople we have listed or touring
properties or in contract. Andthen, you know, then here's our
(07:02):
our pendings.
So, basically, it's here's thepeople that are talking to us
about doing something. Here'sthe people we're actually
working with, like showing homesor have their property listed.
And then here's pending.
Chris Whitling (07:12):
Does that communication cadence slow down
as you get closer to that threeyear mark? Do people usually
kind of like fade out or arepeople pretty engaged for that
entire period?
Nick Krautter (07:21):
I think it just depends a lot on the market. I
think if you stay consistentwith the calls and the work, I
think you'll get consistentresults. The truth is, most
people are going to put in likea a lot of effort at the
beginning. They'll get a bunchof reward at the beginning, and
then, you know, your effort,just like with your own clients,
can start to taper off. But ifyou stay consistent, I think
(07:42):
you'll get consistent results.
We've definitely replicated theentire production of someone who
retired with their data base. Sothey did 7 or 8,000,000 in
sales. We did 7 or 8,000,000 insales. So And the thing that's
crazy So, like, Renee sold usher business in '20 The bottom
of the market was 2012.
Chris Whitling (08:02):
Yep.
Nick Krautter (08:04):
A couple years later, twenty thirteen,
fourteen, fifteen, the marketwas going up like a rocket ship.
And all of a sudden, everylisting was selling for more.
Our commissions were higher sothe value of that business
actually went up and people gotmore active so we started doing
more business and the homes wereworth more and so we were
(08:25):
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 their3% mortgage, and they're good.
Yep. And, hey, they'd love toinvest, but the numbers aren't
(08:47):
penciling for them right nowbecause they don't pencil right
now. And so that's lessproductive than it could be.
Chris Whitling (08:55):
Did that affect how you negotiated the the
transaction? Or because you, youknow, I mean, we probably were
all aware of the state of themarket, you know, and what
interest rates are doing. Youknow? So would you have
negotiated, like, a sort of,like, a longer fade out period
saying like yeah you know thisthing's probably gonna hibernate
for a year or two and then youknow hopefully come back so
instead of a three year fade outit's gonna be a five year fade
(09:17):
out
Nick Krautter (09:17):
if I was gonna do it today I think that's fair
yeah it's really hard to saywhere things are going I will
say this in my experience the
Chris Whitling (09:23):
real estate you know, being excellent. Yeah.
Nick Krautter (09:27):
Yeah. The the real estate market is rarely
stable. It's usually going up ordown. It's really rare that it's
just kind of flat. And I feellike right now, it's one of
those rare moments where thingsare kind of flat.
Right. I feel like in 2019,things were kind of just flat.
It just the transaction volumewas like good. Pricing was not
(09:49):
really going up or down.Pullback, but then COVID hit,
and then everyone decided tomove to the suburbs, and
everyone got money, and and themarket went nuts.
You know, everyone in Portlandhad to get a place in, you know,
Palm Springs or Texas orFlorida. People moved to
(10:09):
Montana. You know, everyoneeveryone had a plan. And,
everyone, you know, all therealtors got real busy. So
Absolutely.
You could accurately predict aslowdown and then be wrong. So
or vice versa.
Chris Whitling (10:22):
Yep.
Nick Krautter (10:24):
I'm surprised at how resilient the market has
been with interest rates,honestly. That's
Chris Whitling (10:29):
a good perspective.
Nick Krautter (10:30):
I feel like people are still doing stuff
despite that being a headwind.
Chris Whitling (10:34):
So bouncing around here a little bit, you
know, obviously, the referralmodel makes a lot of sense.
Would you ever consider doing,like, a flat fee? Like or is
that a warning sign if someone'slike, I just want, like, a one
time payout?
Nick Krautter (10:46):
Yeah. It's so hard to predict the value of the
business because until you startcalling people and and engaging
with them, you don't really knowif they love their agent as much
as the agent thinks they lovethem or not. I've had that
happen. I'm sure that wouldhappen to me too. I'm sure
there's people, like, my agentshave called and they go, that
guy doesn't even remember whoNick is.
You know, I had a huge team. Noteveryone worked with me. They
(11:08):
worked with my team. So I Ithink the flat fee thing is it's
difficult to predict the value.And I think, honestly, it's a
bad deal for both partiesbecause the referral model is it
just works really well.
And if you end up with, like, aclunker, no one's upset. And if
it ends up being a just ablockbuster success, everyone
(11:31):
makes more. So I've I I did abunch of interviews for the new
book, and one of them was agentleman who is a team lead
that helped sell a top brokersbusiness to another team. And he
wanted I think the number waslike he wanted half a million
dollars for it. And and it wasworth that.
(11:51):
Like, they were I don't thinkthere was a question that there
was that the value. But the waythey did it was they still did
it on referral fees. Andbasically, instead of it being,
like, x number of years, it'slike, you'll pay me referral
fees on everything until I getto this number. And I think that
the the punchline is theyactually got to that number
quicker than they expected. Soit might have been a better deal
(12:16):
to say, just pay me for thethree years or four years or
whatever.
I don't know all the details onthat. I wasn't involved, but it
just an anecdote for you canstill have a number or a
timeline. So that's another wayyou could do it is, you know,
pay me 25% until I get $200. Andif it happens in one year or six
(12:37):
years, it kind of that way itdoesn't matter. It's that that
might be a way to address themarket today.
Chris Whitling (12:43):
Yeah, that's that's interesting. There's sort
of like infinite variabilitythere. And there's a lot of a
lot of guessing.
Nick Krautter (12:49):
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 realguy. He's got a huge team now.
He's done incredibly well.
This is, you know, fifteen yearsago. And he left town for, like,
a year and a half to work on amovie. And I took over his
(13:09):
business and and took care ofhis 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 inreferral fees. There's no way I
would have agreed to pay him ahundred and $50 to manage his
business for a year or twoknowing that he was gonna come
(13:30):
back and and take over.
Chris Whitling (13:31):
Yeah.
Nick Krautter (13:34):
And I don't think there's any way he would have
dreamed of asking me for thatmuch money. I mean, he ended up
buying a house with the referralfees that I paid him on his
business while he was gone. Now,the flip side of that, that
equation, right, is like I alsomade an extra $300,000 net.
(13:54):
Right. And so it was like homerun for me too.
And it got us into some reallygood neighborhoods, some great
listings, some really goodpurchases. And then just plenty
of just normal stuff. But Ishare that example is just he
wouldn't have asked for it. Iwouldn't have paid it. And
(14:14):
that's what it ended up beingworth for both of us.
And and I think it's just theit's just this it is so simple
and easy to do it that way. Andso incredibly hard to try to do
it the other way. I just don'tthink there's an advantage for
either party, really.
Chris Whitling (14:30):
It seems like, you know, a lot of the stories
that you have, it's where italmost sounds like people
undervalue the the asset thatthey've created.
Nick Krautter (14:40):
Well, yeah. And the crazy thing too, right, is
like when you're growing whenyou're in the rocket ship going
up burning fuel, right, you'respending money. Right. Right.
You've got systems, tools,you've got you're paying for
real gigs, you're paying for anoffice, you've got an assistant,
you've got buyer's agent, you'vegot you're building this
infrastructure, you've got MLSand dues and local dues and desk
fees.
(15:00):
But once you're the retiringagent, all you have to do is
keep it licensed. It's a couplehundred bucks a year in most
states. You don't have anyexpenses.
Chris Whitling (15:09):
Yeah. So Yeah. Yeah.
Nick Krautter (15:11):
Your income might not actually go down on a net
basis depending on how much youwere spending to run your
business. That's the crazything, is that not only could
you be undervaluing it, youmight make more money not
working.
Chris Whitling (15:26):
You might make more money not working. Okay. So
that's hilarious. Yeah. Exactly.
And the profit on that, youknow, and maybe that's what
you're saying. Like, you'reyou're saying the take home on
that money is is much higher.Right? Because I think the other
element that you're talkingabout here is, like, the time
horizon on, you know, on ROI.Right?
So, like, you might think that,you know, so most of the people
(15:49):
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 enoughtransactions come through that
they're so fully in the advocatecamp that, you know, they're
they're just super happycampers.
Nick Krautter (16:04):
Yeah.
Chris Whitling (16:04):
But, you know, you apply what you're saying and
it's, like, actually, thatdatabase is just gonna keep
paying you, you know, not justthe referral fees over the
course of your, like, sort ofprime earning, period of your of
your career. But actually, onceyou decide to, like, transition
out, you know, then all of asudden you're in the pure profit
phase of, like, monetizing thatdatabase.
Nick Krautter (16:25):
Well, yeah. Because, like, so when I sent
David that $150, he wasn'tpaying an assistant. He wasn't
paying desk fees. He wasn'tadvertising or marketing. I
think he kept a couple ofwebsites up, that had been doing
good for lead gen for him.
We, we, I think we we took thoseleads that year. He he just we
kept those leads that came fromthe website. He kept all his
(16:46):
referral clients, when he cameback. But, you know, I made
300,000, but I was probablyspending 20,000 a on overhead
and staff and people and and allof that. So I still made money,
but, you know, I had expenses.
He made really good money andhad no expenses. We might have
netted the same amount of money.
Chris Whitling (17:05):
Yeah.
Nick Krautter (17:05):
He might have netted more than me, to be
totally honest. Yeah. I I don'tI don't remember the exact
numbers that year, but it's notout of question that he might
have actually netted more than Idid.
Chris Whitling (17:18):
This sounds like an interesting component, you
know, when you're in thenegotiation phase of one of
these things or even if you'rethinking about it, because I can
see someone getting reallywrapped around the axle of,
like, the the commission split.Yeah. But the the profit portion
of it is actually supercritical.
Nick Krautter (17:35):
It's huge. And I think another hang up a lot of
people have when they'rethinking about, am I really
ready to hand this off or shouldI hang on to everything?
Chris Whitling (17:45):
Right.
Nick Krautter (17:46):
Is they're thinking, I need to make
$300,000 a year. But whatthey're forgetting is they need
to make $300,000 a year becausethey're spending $150,000 a year
year on expenses. Right. And soif you can, like, shift your
mind over, okay, if I don't haveto spend $150,000 a year to run
(18:08):
a business that makes me300,000, You only need to make
$1.50 to maintain yourlifestyle.
Chris Whitling (18:14):
Yeah. Yeah. It's a career transition. Right? And
your expenses follow thattransition.
Nick Krautter (18:20):
Yes. And and so, you know, with these agents we
were helping, you know, when wemanaged David's business, he was
at a different brokerage. Wejust brought him over to my
brokerage and put him on my teamso he had no expenses. We
basically wiped out all of hisexpenses. So he didn't even have
to pay transaction fees.
Like, he literally got everydollar of every referral 100%
(18:43):
except for $400 to renew hislicense and do continuing that.
Something like 4 or $500. That'sit.
Chris Whitling (18:50):
Deal of the century.
Nick Krautter (18:51):
That was literally the only expense he
had to have in order to do thisdeal. And, that if you can help
people acknowledge that, you canhelp a lot of people choose to
work with you earlier Because ifthey can realize, oh, I don't.
If I can send you $100,000 ayear, Chris, and you have no
(19:12):
expenses, that might be just asgood as making two or three
hundred thousand a year.
Chris Whitling (19:16):
Exactly. And if you talk to, you know, I mean,
that's that's just maybe goodretirement, philosophy as well.
You know, if you talk talk tofinancial planners, a lot of
times they will point out, youknow, that hopefully by the time
you're to retirement age,there's just less expenses from
that you would experience it inyour younger years, you know,
less like, rent and stuff likethat.
Nick Krautter (19:36):
Well, yeah. Totally. And also, like, right,
as you're accumulating, right,and growing Exactly. And
investing, a lot of your moneygoes into investments. Right?
But, like, once you're retired,you're not, like, putting more
money in your IRA, and you'renot buying more rent rentals.
Now, if you are, great. But youdon't, the point is you get to
that point where you don't needto keep putting money into
(19:57):
investments for the futurebecause now it's the future. Now
you get to start taking themoney back out, which is a
really weird feeling. I think alot of people it it is kind of
like a kind of a a a weirdmental thing to, like, switch
gears if you've been really goodabout doing that for, like,
twenty years.
But, yeah, at some point, youget to hopefully take the money
back out and use it and go dowhatever you wanna do. That's
(20:18):
kind of the point. So
Chris Whitling (20:20):
Yeah. Yeah. Exactly. Even right now,
picturing this, I'm having ahard time, like, not thinking
about, you know, putting moneyaway. But, you know, that's the
face of my life.
Alright. Nick, I you know, Ithink we've covered a lot of
this stuff. Is there anythingthat we've missed that is great
information for the audience?
Nick Krautter (20:39):
Every effort you can make to keep your database
updated and stay engaged withpeople is worth so it's worth
every minute you spend on it.Because it's gonna return a
better client relationship. It'sgonna return more people working
with you now. And then whenyou're ready to do a handoff,
(21:01):
whether that's partial or you dothe whole thing and and hang it
up, it will be so much moresuccessful and worth so much
more in the future as well. Andso if there's if there's one
thing I could go back in timeand and and do better, it would
be make sure you put everyone inyour database.
Make sure you have a plan foreveryone. You know? And,
(21:23):
obviously, you can automate alot of that. But make sure
there's a plan for, like, how amI gonna stay engaged with these
people and be a resource and betop of mind, so that when you
are ready to retire, it's it'sreally they're all your team's
all there for you.
Chris Whitling (21:40):
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, feellike it's it's the maintenance.
Like, that automated, you know,follow-up, the automated
cadence, the home valuationreports, all that stuff is
adding value to your database sothat when you're ready to
(22:01):
retire, you know, it's it'sthere for you as well. That is
such a good point that, like, onI have I had never thought about
this. I've dealt with so so manydatabases and CRMs in many
industries, and I had neverquite thought about it like
that.
That is that is absolutelyamazing.
Nick Krautter (22:14):
Awesome.
Chris Whitling (22:15):
Alright. Nick, where can people find you?
Nick Krautter: Goldenhandoff.com. That's the (22:17):
undefined
best place to go. There's somegreat resources there. Make sure
you sign up. You'll get accessto the contracts and letters and
scripts and dialogues that wetalked about today, and put them
in action right now.
And, you can find it on Amazonor just directly through the
through the website. And thanksso much for having me on, Chris.
Great talking to you.
Chris Whitling (22:35):
Yeah. No. Seriously, our pleasure. This
was this was really good. Youknow, we might have to have you
back on, in the future.
I'm definitely thinking about,you know, a lot of the other
people that we've talked to interms of, like, you know, sort
of really like monetizationstrategies is kinda like the way
that that I think about it. And,you know, your perspective is
(22:56):
just so different that, youknow, 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 theroom? Like, what what are we
gonna get out of it?
Nick Krautter (23:05):
Yeah. Yeah. I'd love that.
Chris Whitling (23:06):
You know, stay tuned. Hit subscribe down down
there below, and see what we dowith this. Alright, Nick. So if
people are thinking aboutgetting out, should they give
you a call? Give me a call.
Alright, everyone. Thanks forwatching this episode of Forward
Slash Real Estate. Hopefully,this got you thinking about the
value that is there in yourdatabase and ways of monetizing
(23:26):
it, whether it is working thatday in and day out as real
estate agent in that launchphase of your career or as
you're transitioning out. Youcan leave comments down below.
We read every one of them.
Give us a thumbs up andsubscribe.
During the Great Recession, a lot of really good
realtors in my office started totake other jobs, retire, move,
and I figured out how to what Icall 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
(00:23):
busting my butt to get to 200clients. And over the next
couple of years, I went from 200to 2,000 clients working way
less because instead of gettingevery client one at a time, I
was getting two, three, fourhundred clients at a time from
my from my deals with theserealtors who were retiring,
moving, changing careers.
(00:43):
And it really opened my eyes tohow you could grow way faster
and still by referral. And Iended up writing a book about it
called The Golden Handoff.
Chris Whitling (01:06):
So I maybe wanna, like, switch tracks here
because I think we've we'vekinda set this up, like, okay,
you know, you've you've figuredout, you know, who you wanna
talk to. You figured out theactual transaction, the the the
marketing plan. You're makingthe calls. You're having those
conversations. But now I I wannago back and talk about the
contract because that's reallywhere, you know, it's like,
(01:27):
okay.
Yeah. We negotiated the contractupfront, but now we've got this,
like, income that's coming fromit. And you've hinted at it a
couple times that this isessentially a referral, like
like transaction split, typesituation that's happening.
Nick Krautter (01:42):
Yeah. The way that I structured it was because
the first time we didn't know ifit would work or not. We didn't
know what the value of thebusiness was. We were kind of in
a depressed market at the time.I was like, hey.
I'll just pay a referral feeevery time someone in this
database does something. Now sothe big difference that's
important to note is, like, inreal estate, when you get a one
(02:02):
off referral so, Chris, you'relike, hey. I'm moving to
Florida. Do you know anyone overin Fort Lauderdale? And I go,
oh, I I've got a great person.
Let me refer you. They help youbuy a house. I get a referral
fee. But if you go, like, threeyears later and go, you know
what? I I'm moving from FortLauderdale to Miami.
Like, they sell your house. Idon't get a second referral fee.
(02:23):
In a golden handoff where youare managing this database, if
you if I help you buy and selland invest every year, I'm
paying a referral fee on everytime I work with you. And that's
happened. We had a client thatsold two condos and bought a
home in it was over two years,and we paid a referral fee on
(02:45):
each one of those transactions.
Chris Whitling (02:48):
So the referring agents got their got their stamp
on it for life.
Nick Krautter (02:53):
So not for life. So
Chris Whitling (02:55):
for life. Okay.
Nick Krautter (02:56):
So if you are getting out of the business and
retiring completely and you'relike, here's the keys, I'm going
to send this letter and do acouple videos and good luck.
It's a three year deal. Andthat's because you have to keep
a license somewhere. It doesn'thave to be in the same state.
Like, if you're licensedsomewhere else, you can just
keep the If you're going to moveand work somewhere else, you can
just get the new license.
(03:17):
If you're gonna just retire, youjust keep the one you have. It's
the easiest thing to do. Yep. Soit's a three year deal. And then
it starts at 30% referral, then20, then 10.
You also get referrals for anynew people you add, obviously,
because you want to encouragethe return agent to send more
people to you. And they willhave more people. They're
they're gonna meet people or getcalls from people, hey, you sold
(03:40):
my neighbor's house two yearsago. We want to sell. Can you
come look at it?
And you go, hey, I'm retired,but let me introduce you to
Nick. Now the partial handoff'sdifferent. Right? So that's
where you're staying engaged insome way. Right?
You're still in the game doingpart of it, but you're just not
doing all of it. And the waythat typically works is you just
pay a 25% referral fee for aslong as they're in the game.
Chris Whitling (04:01):
Right. Okay. So yeah. And this is something
that, you know, I think peoplewill have picked up on earlier
in the in the conversation. It'slike, there's essentially, like,
two sources of the referrals.
There's the people in thedatabase, which you're mining,
and then there's just therelationship. So even if you're
if you're retired, you know, youmight still get text messages or
or calls from people exactlylike you just said. You said,
(04:22):
you know, hey. You know, I'm afriend of a friend. Who do I
talk to?
Nick Krautter (04:27):
Totally. Yeah. You're you know, the return
agent goes to their neighbor'sbarbecue and they're like, oh,
my daughter and just got marriedand 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.
So, yeah, you want them to be anadvocate, right? You want them
to be part of your Salesforceout there still connecting with
people and and referring you.And if people in the database
(04:47):
are calling the retiring agent,you know, let me know right away
so that I can follow-up. You youdon't wanna just not commune you
wanna communicate that so that Iknow, you know, who do I need to
be engaged with. Kind of itstarts with that initial push
where you go over the databaseand go, hey, everyone in here is
good.
These 20 people, I think, aregonna do something. Like, you
(05:09):
should Yeah. Definitely, Youknow, even if you're going to
call everyone twice a year,maybe you you really stay on top
of these 20 people because theretiring agent, you know,
believes that they are ready togo and they're going to need you
soon.
Chris Whitling (05:23):
So as the as the person who's taken over the
database, how much informationare you feeding back to the
agent that has retired or movedto Florida? Are you saying,
like, you know, hey. We we gotin contact with someone from
your database, and they'reseeing a house. Or are you
saying only when you entercontract or only when it closes?
Like, what's that level of,like, communication that's going
(05:46):
back and forth between sort ofthe original owner and you?
Nick Krautter (05:50):
Yeah. So we would put the agent in their own
database so that they would getthe same marketing stuff that
their clients got.
Chris Whitling (05:57):
Yep.
Nick Krautter (05:58):
So that's an easy thing to do. I would say once a
month you want to give someonean update. So whether that's you
give them a log in to thedatabase or you'd export a
report and say, okay. Here'syour 300 clients. You know, we
set five appointments.
We have two pendings, and we'regonna get, you know, two
(06:18):
closings next month from thesependings. And also too, I would
say it's up to the retiringagent. Like, if they Right. If
they want updates every week, doit. I mean, there's that's not
hard to do.
And if you've got someone elsethat just referred you 300
people, I think you probablywill roll it through a carpet
for them too. Right? You should.But I think most people once a
month is plenty. They just wantto see that you're staying on
(06:40):
top of it and see that you'rehaving success.
We have, the team I work withand and I have a spreadsheet
that just shows, hey, here's thepeople we're talking to.
Basically, like, you're you'redoing consultations. You're
setting appointments. Here's thepeople we have listed or touring
properties or in contract. Andthen, you know, then here's our
(07:02):
our pendings.
So, basically, it's here's thepeople that are talking to us
about doing something. Here'sthe people we're actually
working with, like showing homesor have their property listed.
And then here's pending.
Chris Whitling (07:12):
Does that communication cadence slow down
as you get closer to that threeyear mark? Do people usually
kind of like fade out or arepeople pretty engaged for that
entire period?
Nick Krautter (07:21):
I think it just depends a lot on the market. I
think if you stay consistentwith the calls and the work, I
think you'll get consistentresults. The truth is, most
people are going to put in likea a lot of effort at the
beginning. They'll get a bunchof reward at the beginning, and
then, you know, your effort,just like with your own clients,
can start to taper off. But ifyou stay consistent, I think
(07:42):
you'll get consistent results.
We've definitely replicated theentire production of someone who
retired with their data base. Sothey did 7 or 8,000,000 in
sales. We did 7 or 8,000,000 insales. So And the thing that's
crazy So, like, Renee sold usher business in '20 The bottom
of the market was 2012.
Chris Whitling (08:02):
Yep.
Nick Krautter (08:04):
A couple years later, twenty thirteen,
fourteen, fifteen, the marketwas going up like a rocket ship.
And all of a sudden, everylisting was selling for more.
Our commissions were higher sothe value of that business
actually went up and people gotmore active so we started doing
more business and the homes wereworth more and so we were
(08:25):
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 their3% mortgage, and they're good.
Yep. And, hey, they'd love toinvest, but the numbers aren't
(08:47):
penciling for them right nowbecause they don't pencil right
now. And so that's lessproductive than it could be.
Chris Whitling (08:55):
Did that affect how you negotiated the the
transaction? Or because you, youknow, I mean, we probably were
all aware of the state of themarket, you know, and what
interest rates are doing. Youknow? So would you have
negotiated, like, a sort of,like, a longer fade out period
saying like yeah you know thisthing's probably gonna hibernate
for a year or two and then youknow hopefully come back so
instead of a three year fade outit's gonna be a five year fade
(09:17):
out
Nick Krautter (09:17):
if I was gonna do it today I think that's fair
yeah it's really hard to saywhere things are going I will
say this in my experience the
Chris Whitling (09:23):
real estate you know, being excellent. Yeah.
Nick Krautter (09:27):
Yeah. The the real estate market is rarely
stable. It's usually going up ordown. It's really rare that it's
just kind of flat. And I feellike right now, it's one of
those rare moments where thingsare kind of flat.
Right. I feel like in 2019,things were kind of just flat.
It just the transaction volumewas like good. Pricing was not
(09:49):
really going up or down.Pullback, but then COVID hit,
and then everyone decided tomove to the suburbs, and
everyone got money, and and themarket went nuts.
You know, everyone in Portlandhad to get a place in, you know,
Palm Springs or Texas orFlorida. People moved to
(10:09):
Montana. You know, everyoneeveryone had a plan. And,
everyone, you know, all therealtors got real busy. So
Absolutely.
You could accurately predict aslowdown and then be wrong. So
or vice versa.
Chris Whitling (10:22):
Yep.
Nick Krautter (10:24):
I'm surprised at how resilient the market has
been with interest rates,honestly. That's
Chris Whitling (10:29):
a good perspective.
Nick Krautter (10:30):
I feel like people are still doing stuff
despite that being a headwind.
Chris Whitling (10:34):
So bouncing around here a little bit, you
know, obviously, the referralmodel makes a lot of sense.
Would you ever consider doing,like, a flat fee? Like or is
that a warning sign if someone'slike, I just want, like, a one
time payout?
Nick Krautter (10:46):
Yeah. It's so hard to predict the value of the
business because until you startcalling people and and engaging
with them, you don't really knowif they love their agent as much
as the agent thinks they lovethem or not. I've had that
happen. I'm sure that wouldhappen to me too. I'm sure
there's people, like, my agentshave called and they go, that
guy doesn't even remember whoNick is.
You know, I had a huge team. Noteveryone worked with me. They
(11:08):
worked with my team. So I Ithink the flat fee thing is it's
difficult to predict the value.And I think, honestly, it's a
bad deal for both partiesbecause the referral model is it
just works really well.
And if you end up with, like, aclunker, no one's upset. And if
it ends up being a just ablockbuster success, everyone
(11:31):
makes more. So I've I I did abunch of interviews for the new
book, and one of them was agentleman who is a team lead
that helped sell a top brokersbusiness to another team. And he
wanted I think the number waslike he wanted half a million
dollars for it. And and it wasworth that.
(11:51):
Like, they were I don't thinkthere was a question that there
was that the value. But the waythey did it was they still did
it on referral fees. Andbasically, instead of it being,
like, x number of years, it'slike, you'll pay me referral
fees on everything until I getto this number. And I think that
the the punchline is theyactually got to that number
quicker than they expected. Soit might have been a better deal
(12:16):
to say, just pay me for thethree years or four years or
whatever.
I don't know all the details onthat. I wasn't involved, but it
just an anecdote for you canstill have a number or a
timeline. So that's another wayyou could do it is, you know,
pay me 25% until I get $200. Andif it happens in one year or six
(12:37):
years, it kind of that way itdoesn't matter. It's that that
might be a way to address themarket today.
Chris Whitling (12:43):
Yeah, that's that's interesting. There's sort
of like infinite variabilitythere. And there's a lot of a
lot of guessing.
Nick Krautter (12:49):
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 realguy. He's got a huge team now.
He's done incredibly well.
This is, you know, fifteen yearsago. And he left town for, like,
a year and a half to work on amovie. And I took over his
(13:09):
business and and took care ofhis 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 inreferral fees. There's no way I
would have agreed to pay him ahundred and $50 to manage his
business for a year or twoknowing that he was gonna come
(13:30):
back and and take over.
Chris Whitling (13:31):
Yeah.
Nick Krautter (13:34):
And I don't think there's any way he would have
dreamed of asking me for thatmuch money. I mean, he ended up
buying a house with the referralfees that I paid him on his
business while he was gone. Now,the flip side of that, that
equation, right, is like I alsomade an extra $300,000 net.
(13:54):
Right. And so it was like homerun for me too.
And it got us into some reallygood neighborhoods, some great
listings, some really goodpurchases. And then just plenty
of just normal stuff. But Ishare that example is just he
wouldn't have asked for it. Iwouldn't have paid it. And
(14:14):
that's what it ended up beingworth for both of us.
And and I think it's just theit's just this it is so simple
and easy to do it that way. Andso incredibly hard to try to do
it the other way. I just don'tthink there's an advantage for
either party, really.
Chris Whitling (14:30):
It seems like, you know, a lot of the stories
that you have, it's where italmost sounds like people
undervalue the the asset thatthey've created.
Nick Krautter (14:40):
Well, yeah. And the crazy thing too, right, is
like when you're growing whenyou're in the rocket ship going
up burning fuel, right, you'respending money. Right. Right.
You've got systems, tools,you've got you're paying for
real gigs, you're paying for anoffice, you've got an assistant,
you've got buyer's agent, you'vegot you're building this
infrastructure, you've got MLSand dues and local dues and desk
fees.
(15:00):
But once you're the retiringagent, all you have to do is
keep it licensed. It's a couplehundred bucks a year in most
states. You don't have anyexpenses.
Chris Whitling (15:09):
Yeah. So Yeah. Yeah.
Nick Krautter (15:11):
Your income might not actually go down on a net
basis depending on how much youwere spending to run your
business. That's the crazything, is that not only could
you be undervaluing it, youmight make more money not
working.
Chris Whitling (15:26):
You might make more money not working. Okay. So
that's hilarious. Yeah. Exactly.
And the profit on that, youknow, and maybe that's what
you're saying. Like, you'reyou're saying the take home on
that money is is much higher.Right? Because I think the other
element that you're talkingabout here is, like, the time
horizon on, you know, on ROI.Right?
So, like, you might think that,you know, so most of the people
(15:49):
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 enoughtransactions come through that
they're so fully in the advocatecamp that, you know, they're
they're just super happycampers.
Nick Krautter (16:04):
Yeah.
Chris Whitling (16:04):
But, you know, you apply what you're saying and
it's, like, actually, thatdatabase is just gonna keep
paying you, you know, not justthe referral fees over the
course of your, like, sort ofprime earning, period of your of
your career. But actually, onceyou decide to, like, transition
out, you know, then all of asudden you're in the pure profit
phase of, like, monetizing thatdatabase.
Nick Krautter (16:25):
Well, yeah. Because, like, so when I sent
David that $150, he wasn'tpaying an assistant. He wasn't
paying desk fees. He wasn'tadvertising or marketing. I
think he kept a couple ofwebsites up, that had been doing
good for lead gen for him.
We, we, I think we we took thoseleads that year. He he just we
kept those leads that came fromthe website. He kept all his
(16:46):
referral clients, when he cameback. But, you know, I made
300,000, but I was probablyspending 20,000 a on overhead
and staff and people and and allof that. So I still made money,
but, you know, I had expenses.
He made really good money andhad no expenses. We might have
netted the same amount of money.
Chris Whitling (17:05):
Yeah.
Nick Krautter (17:05):
He might have netted more than me, to be
totally honest. Yeah. I I don'tI don't remember the exact
numbers that year, but it's notout of question that he might
have actually netted more than Idid.
Chris Whitling (17:18):
This sounds like an interesting component, you
know, when you're in thenegotiation phase of one of
these things or even if you'rethinking about it, because I can
see someone getting reallywrapped around the axle of,
like, the the commission split.Yeah. But the the profit portion
of it is actually supercritical.
Nick Krautter (17:35):
It's huge. And I think another hang up a lot of
people have when they'rethinking about, am I really
ready to hand this off or shouldI hang on to everything?
Chris Whitling (17:45):
Right.
Nick Krautter (17:46):
Is they're thinking, I need to make
$300,000 a year. But whatthey're forgetting is they need
to make $300,000 a year becausethey're spending $150,000 a year
year on expenses. Right. And soif you can, like, shift your
mind over, okay, if I don't haveto spend $150,000 a year to run
(18:08):
a business that makes me300,000, You only need to make
$1.50 to maintain yourlifestyle.
Chris Whitling (18:14):
Yeah. Yeah. It's a career transition. Right? And
your expenses follow thattransition.
Nick Krautter (18:20):
Yes. And and so, you know, with these agents we
were helping, you know, when wemanaged David's business, he was
at a different brokerage. Wejust brought him over to my
brokerage and put him on my teamso he had no expenses. We
basically wiped out all of hisexpenses. So he didn't even have
to pay transaction fees.
Like, he literally got everydollar of every referral 100%
(18:43):
except for $400 to renew hislicense and do continuing that.
Something like 4 or $500. That'sit.
Chris Whitling (18:50):
Deal of the century.
Nick Krautter (18:51):
That was literally the only expense he
had to have in order to do thisdeal. And, that if you can help
people acknowledge that, you canhelp a lot of people choose to
work with you earlier Because ifthey can realize, oh, I don't.
If I can send you $100,000 ayear, Chris, and you have no
(19:12):
expenses, that might be just asgood as making two or three
hundred thousand a year.
Chris Whitling (19:16):
Exactly. And if you talk to, you know, I mean,
that's that's just maybe goodretirement, philosophy as well.
You know, if you talk talk tofinancial planners, a lot of
times they will point out, youknow, that hopefully by the time
you're to retirement age,there's just less expenses from
that you would experience it inyour younger years, you know,
less like, rent and stuff likethat.
Nick Krautter (19:36):
Well, yeah. Totally. And also, like, right,
as you're accumulating, right,and growing Exactly. And
investing, a lot of your moneygoes into investments. Right?
But, like, once you're retired,you're not, like, putting more
money in your IRA, and you'renot buying more rent rentals.
Now, if you are, great. But youdon't, the point is you get to
that point where you don't needto keep putting money into
(19:57):
investments for the futurebecause now it's the future. Now
you get to start taking themoney back out, which is a
really weird feeling. I think alot of people it it is kind of
like a kind of a a a weirdmental thing to, like, switch
gears if you've been really goodabout doing that for, like,
twenty years.
But, yeah, at some point, youget to hopefully take the money
back out and use it and go dowhatever you wanna do. That's
(20:18):
kind of the point. So
Chris Whitling (20:20):
Yeah. Yeah. Exactly. Even right now,
picturing this, I'm having ahard time, like, not thinking
about, you know, putting moneyaway. But, you know, that's the
face of my life.
Alright. Nick, I you know, Ithink we've covered a lot of
this stuff. Is there anythingthat we've missed that is great
information for the audience?
Nick Krautter (20:39):
Every effort you can make to keep your database
updated and stay engaged withpeople is worth so it's worth
every minute you spend on it.Because it's gonna return a
better client relationship. It'sgonna return more people working
with you now. And then whenyou're ready to do a handoff,
(21:01):
whether that's partial or you dothe whole thing and and hang it
up, it will be so much moresuccessful and worth so much
more in the future as well. Andso if there's if there's one
thing I could go back in timeand and and do better, it would
be make sure you put everyone inyour database.
Make sure you have a plan foreveryone. You know? And,
(21:23):
obviously, you can automate alot of that. But make sure
there's a plan for, like, how amI gonna stay engaged with these
people and be a resource and betop of mind, so that when you
are ready to retire, it's it'sreally they're all your team's
all there for you.
Chris Whitling (21:40):
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, feellike it's it's the maintenance.
Like, that automated, you know,follow-up, the automated
cadence, the home valuationreports, all that stuff is
adding value to your database sothat when you're ready to
(22:01):
retire, you know, it's it'sthere for you as well. That is
such a good point that, like, onI have I had never thought about
this. I've dealt with so so manydatabases and CRMs in many
industries, and I had neverquite thought about it like
that.
That is that is absolutelyamazing.
Nick Krautter (22:14):
Awesome.
Chris Whitling (22:15):
Alright. Nick, where can people find you?
Nick Krautter: Goldenhandoff.com. That's the (22:17):
undefined
best place to go. There's somegreat resources there. Make sure
you sign up. You'll get accessto the contracts and letters and
scripts and dialogues that wetalked about today, and put them
in action right now.
And, you can find it on Amazonor just directly through the
through the website. And thanksso much for having me on, Chris.
Great talking to you.
Chris Whitling (22:35):
Yeah. No. Seriously, our pleasure. This
was this was really good. Youknow, we might have to have you
back on, in the future.
I'm definitely thinking about,you know, a lot of the other
people that we've talked to interms of, like, you know, sort
of really like monetizationstrategies is kinda like the way
that that I think about it. And,you know, your perspective is
(22:56):
just so different that, youknow, 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 theroom? Like, what what are we
gonna get out of it?
Nick Krautter (23:05):
Yeah. Yeah. I'd love that.
Chris Whitling (23:06):
You know, stay tuned. Hit subscribe down down
there below, and see what we dowith this. Alright, Nick. So if
people are thinking aboutgetting out, should they give
you a call? Give me a call.
Alright, everyone. Thanks forwatching this episode of Forward
Slash Real Estate. Hopefully,this got you thinking about the
value that is there in yourdatabase and ways of monetizing
(23:26):
it, whether it is working thatday in and day out as real
estate agent in that launchphase of your career or as
you're transitioning out. Youcan leave comments down below.
We read every one of them.
Give us a thumbs up andsubscribe.
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