How the Human Memory Process Affects Referral Business

Buying or selling a house can be a long and arduous adventure. After several months you finally go through the closing process and get paid. You gave the couple a beautiful, personalized welcome mat as a housewarming gift. How will the clients remember you and your services? The answer to this question may shock you because human memory does not work as most people think. Two main factors come into play when it comes to memory, and understanding these factors can help you improve your referral rate.

How Memories are Formed

In the book "Thinking Fast and Slow," former Nobel Prize winner, psychologist Daniel Kahneman, described what he called the "peak-end rule," which includes the two factors that determine memories. They are as follows:

    1. The peak moment of the experience.
    2. The ending.

More about Peak Moments

To say that home buying is stressful would be a significant understatement. Purchasing a house is one of the biggest decisions you can make, and it rates up there with divorce and childbirth. According to the "peak-end rule," the most intense moment of the transaction will be a determining factor in the kind of memories you form. This moment is often the most stressful time of the home buying process.

Much of the stress in buying a home cannot be prevented. However, you have some control over the reaction to each stressful event. The way you handle problems can have a significant impact on your clients' memories of the experience.

An agent's job includes more than helping clients buy or sell homes. He or she needs to be there to comfort clients and offer all the support they need.

Examples of Stressful Peak Moments

Getting a house ready to stage, prior to listing, can be a lot of work and bring on a great deal of stress. Your client may not have enough storage space, so you offer practical storage ideas that help lower your client's stress levels and create positive memories.

First time home buyers may face several stress-filled events. The entire process may be new and unfamiliar. Couples buying their first homes often need guidance every step of the way. If you only offer limited information and assistance (and only interested in making a commission), this will likely leave a lasting negative impression on your client, which is not the way to get real estate referrals.


Peak moments are critical to forming positive memories, but they are only one factor to consider. You must also provide a positive ending to your clients, so they create happy memories of you and your services. You need to be there long after the sale is complete to ensure the positive ending does not turn sour. Here is an example.

Your clients closed on their home and moved in with few problems. Everything was fine until they had a plumbing issue with the house. Your client called you looking for help, and you referred them to a plumber that you knew. The plumbing service that you recommended did not live up to your clients' expectations. Your client called you and left a message explaining their disappointment. Unfortunately, you were busy at the time, and you forgot to return their call.

In reality, your client only wanted to let you know about the poor service, so you would not refer to other clients in the future. Because their call was not returned, your client was put off, and this event is what they will remember about you. This is a perfect example of how to leave a negative impression at the end.

Leaving a good lasting impression is one of the most important things to remember. Had you returned your client's call, things could have ended much differently.

This is the reason why giving your clients a closing gift at the end is so effective! It leaves a positive impression in their mind about you, which leads to future referrals.

More on the Peak-End Rule

In one of his videos, Daniel Kahneman gave a perfect example of why endings are so important. He mentioned a man who attended the symphony and was enthralled by a particularly beautiful piece of music. However, right at the end, there was a terrible screeching noise that came from backstage, it had nothing to do with the music, but it ruined the whole experience. 99% of his experience was positive, but because of the bad ending, he remembered it in a negative light.

Things to Remember

An agent's job includes more than helping clients buy or sell homes. He or she needs to be there to comfort clients and offer all the support they need. Help them through the stressful times and give them a positive experience at the end, maybe buy them a closing gift, and you are likely to be fondly remembered and recommended to others.


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