Closing gifts offer real estate agents a way to give a meaningful thank-you to a client after closing, but they can also be expensive and largely worthless distractions from closing more deals. Here are four arguments against spending significant amounts of time, effort, and money on closing gifts.
1. Other Industries Don’t Give Closing Gifts
“I think I’ll send my new patient a $50 gift card to thank them for allowing me to perform their annual physical,” said no doctor ever. Come to think of it, hairdressers, accountants, plumbers and lawyers don’t give gifts to their clients either.
Yet real estate agents, somewhere along the line, came up with the notion that they should provide closing gifts for their clients. Ask them why they do it and you’ll invariably hear how they hope the gift will allow them to remain top-of-mind with their former clients.
If that were the case, though, wouldn’t more professions take up the practice? I don’t know about you, but I return to my hair stylist every month because I love the way she cuts my hair. My accountant gets repeat business from me because they do an excellent job saving me money on my taxes. So, is it the gift that makes previous clients remember you or is it the superb service you provided?
2. Truly Memorable Closing Gifts Are Very Expensive
Whatever you choose as a closing gift, ask yourself if it truly makes you memorable. Sure, gifting a set of knives, wine glasses, or even a bottle of champagne is a lovely gesture, but unless your name and branding appear somewhere on them, the recipient likely isn’t going to think about you every time those items are used. Then again, if your name and likeness are plastered all over your closing gifts, they will most likely end up in a box in their attic or basement.
If your aim in giving closing gifts is to permanently remain at the top of your former clients’ minds whenever they think about real estate, you’ll need to provide them with something amazing.
Consider Christophe Choo, an agent in Beverly Hills. His closing gift to clients that purchased a $15 million home was a first-class, all-expense paid trip to Las Vegas. It cost him about $30,000, according to Alina Dizik, writing for the Wall Street Journal. This may seem absurd, but Choo’s generosity with clients has paid off; a whopping 70 percent of his business is from repeat clients.
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3. The Benefits Just Aren’t That Great
Aside from making you look like a nice person, there is only one other way you’re guaranteed to benefit from giving closing gifts: the tax deductions they provide. The IRS says agents can deduct up to $25 for each person they give gifts to during the year. This deduction isn’t exactly eyebrow-raising, and we can be pretty sure that the lavish vacation Choo gave to his wealthy former client wasn’t written off on his taxes.
If you feel you must give a gift, consider waiting a year. At closing, you are already top-of-mind with your clients so giving gifts then – short of a giving them a vacation or a new car ― isn’t guaranteed to extend their memory of you. An anniversary gift, given one year after closing, will refresh their memories and remind them of the stellar service you provided.
If you’re giving close gifts for the tax deductions, consider throwing a swanky annual client appreciation event. This will give you a much larger tax deduction, as well as putting you back at the top of all your former clients’ minds.
4. Real Estate Is Just Business
Imagine that you’re a buyer’s agent who has been at a needy client’s beck and call for months, driving them to house after house before they finally found one they wanted. You submitted the offer, then coordinated your client’s end of the transaction and smoothly paved the way to a successful close. All parties are satisfied with the outcome. In return, you are paid a percentage of the sales price of the home.
You did your job and you got paid. Shake hands, as business people do, and move on to provide excellent service for your next client.
Real estate professionals want so badly to be taken seriously and for the industry to gain respect. But think of the professions whose members tend to achieve great respect. If they don’t send gifts to their clients, then you probably shouldn’t either.
The value of closing gifts is a point of contention among agents. Do you give closing gifts? Do they provide value in ways that we missed?