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This article was last updated on May 15, 2023.
While certain transactions may progress seamlessly, others encounter obstacles that can jeopardize the entire process. How you handle these crises when they arise can significantly impact the longevity of your business.
While preparing a multi-million-dollar property for sale, a few days before we were to go live on the market, an inadvertent plumbing issue on the second floor caused a flood that damaged the ceiling, walls and a significant amount of hardwood flooring on the main floor. The result was a significant delay in getting the home to the market as we waited for the insurance company to respond and then had to make extensive repairs including repairing and/or replacing all the wood flooring on the main floor.
The owners were obviously concerned about the long-term impact of the water damage and whether the delay would cause us to miss their optimum marketing window. While they were understanding of the issues at hand, knew it was beyond our control and were aware we were doing everything to get the project back on track, it did not remove the ongoing tension and frustration.
Sell any number of homes and you will eventually end up with a crisis. How you handle the situation will be critical: Depending on the circumstances, your response could actually determine whether or not you remain in business.
Handled incorrectly, you could quickly lose the client’s trust, which in turn could have dire consequences. Respond correctly and, while no one will be happy in the short term, the final outcome could result in a 5-star review, as it did in the situation above.
Here is our recommended eight-step process for dealing with a crisis.
1. Respond immediately
In our situation, we were blessed by having a contractor who also understood this process. He called me the moment he arrived on scene and discovered the flood. At that point, he was not certain whether some action of his had caused the issue or it was the fault of others.
Regardless of who was at fault, he determined to let us know immediately. After doing a quick assessment, he had me on the phone within 10 minutes of arrival. As soon as the call ended, I was on the phone to the seller, who lived out-of-state. While we were not able to provide immediate answers, we were able to let the seller know that we were on top of the situation and would follow up as soon as we had more information.
Looking back on some of the major natural disasters that have affected our nation, there is nothing worse than a delayed response. We have all seen the negativity generated when U.S. presidents have not responded in a timely or adequate manner; allowing time to lapse between the incident and the response makes it appear that there is a lack of concern or, even worse, an inability to effectively manage the situation.
In the worst case, it can give the impression that those responsible are trying to conceal important facts, deflect responsibility or are lacking in integrity.
2. Respond with the truth
Over the years I have seen agents spin disasters by misrepresenting the situation. I have seen blame shifting, incomplete information, limited assessments and even avoidance – anything but the whole truth.
At the end of the day, there is a very real chance the client will learn the complete truth anyway and will have a less than favorable response once they do. The best course of action is to state the complete truth up front, regardless of who is at fault accompanied by a commitment to resolve the situation to the best of your ability.
3. Respond with a plan
You may not know the full extent of the situation at hand, but you should be able to respond with a plan of action. Do not speculate – deliver the information you have along with a commitment to provide more as soon as it is available.
In our case, we knew we had a flood, so the plan involved the contractor locating the source of the leak, getting the area dried out, contacting their insurance company and so on. Since the furniture for staging was already in the home, we also had to contact the staging company to get everything on the main floor temporarily moved into the garage.
I had this plan in hand when I called the seller to let him know that we not only had a situation on our hands, we also had a clearly defined path forwards. We also assured him that we would provide a more detailed plan as more information became available.
He was obviously unhappy, but the fact that we responded as we did went a long way towards providing the assurances he needed that things, no matter how bad they might be, were under control.
4. Respond with follow up
We ended the first call to the seller with a commitment to follow up within four hours with additional information, and then set regular daily check-in times after that.
5. Respond with ownership
Regardless of whose fault any given situation may turn out to be, someone needs to own the problem and see it through with the client. Since they have hired you to be their agent, that responsibility should fall on you.
Even if others are responsible, you should be the first point of contact and the stabilizing voice that helps the client navigate the situation.
You should also be the person who keeps all parties involved accountable and committed to a successful resolution.
6. Respond with compassion
You are dealing with real humans in a crisis – this is not the time to start pinning blame or making yourself look good at other’s expense. You also need to realize that your client may be going through a full range of emotions and will need compassion as well.
7. Respond with direction
Once the mitigation plan is up and running, the client needs to know how this will affect the big picture. In our case, the seller needed assurances that, even with the delays, we would still meet a viable market timeline.
They also needed to know whether there would be any long-term fallout, complications of any kind and how this disaster would affect their ability to get top dollar for their home.
Since the flood opened up the need for comprehensive disclosures to ensure there would be no future liability, we had to walk them through the extensive process to make sure they were protected.
8. Respond with responsibility
While in our case the fault was not ours, the results most certainly were.
The insurance company dragged its feet in getting someone out to do an assessment, and then took ages to respond with approval. We made the decision to go ahead and fund the work so repairs could get completed without relying on the insurance company, and then replenished our funds once the settlement arrived. This shaved weeks off the projected timeline. We also had to pay the staging company extra for additional trips.
Not only did we get the situation resolved, but when the home finally hit the market, we had multiple offers and sold well over asking price. Ironically, once we were in escrow, we had additional issues as the buyers had delays getting their loan funded, complicating a 1031 exchange the seller had in process.
We used the same process again, and, when we finally closed, the seller stated, “We certainly had a number of issues, but you handled everything – we are thrilled with the price and the close – you and your team get 5 stars!”
I am aware that not every crisis will end this well. There may be situations which, when disclosed to a client, will effectively end the relationship. Issues may result in mediation, you may tangle with a client who handles a situation in a very ungraceful way, and things might get very ugly.
In spite of these things, we recommend you stay the course and follow these steps to the end, successful or otherwise. At the end of the day, integrity is paramount, and full transparency is always the best way to go.
I’m reminded of the Nat King Cole lyrics: “There may be trouble ahead … Let’s face the music and dance.”
Carl Medford is the CEO of The Medford Team.
