In the world of real estate, it’s all about leads—obtaining them, nurturing them, and, ultimately, converting them into clients. There’s one type of lead, however, that may be the most profitable because it takes noticeably less effort, leading to business that makes your phone ring instead of business that requires having to run out and find it: the referral lead. According to the National Association of REALTOR®’s Profile of Home Buyers and Sellers, 41 percent of sellers who used a real estate agent found their agents through a referral by friends or family.
Keep in mind, there are several sides to a successful referral business. Whether agents focus on outbound referrals—in which they provide a lead to another agent in exchange for an agreed-upon commission fee (contingent upon closing)—or inbound referrals—in which past clients recommend the agent to friends or family, or an agent uses their own sphere of personal contacts to obtain referral business—it all comes down to one thing: implementing a high-touch strategy.
Outbound Referrals
One of the simplest ways to get a commission is by obtaining leads and sending them to another agent. This can happen for a number of reasons: You don’t have the time to take on any more clients yourself, the consumer is looking to buy or sell outside your local market or the individual is looking to relocate out of state. Whatever the reason, in order to give out leads, you must first put together a network of agents you can refer to—after all, you want someone who is reputable and who you know can get that buyer or seller to the closing table.
For some, such as Ben Larson, owner and advisor of Engel and Völkers LA – South Bay, this networking strategy is an intrinsic part of the brokerage. His goal is for at least 10 percent of his business to be strictly referral-based.
“Our company is incredibly collaborative and has a great referral network,” says Larson. “We make a point to have a plan to stay in touch with agents we know from other offices by phone, email and text on a consistent basis.”
How can agents build this network? Larson suggests becoming highly involved in the REALTOR® community and, of course, staying in touch.
“Go to as many real estate events as possible—coaching conferences, events for the National Association of REALTORS® and state associations, and anywhere else you can make contacts,” says Larson. “Then, organize these contacts in a CRM and stay in touch. That last part is where most people drop the ball—the money is in the follow-up!”
Part of that high-touch strategy is keeping these fellow agents informed.
“Remind them of the markets you service and the types of properties being sold in your area, as well as provide them with a market update so they get a sense of what things cost in your area and how active the market is,” says Larson. This way you’re not only contributing your market knowledge and building a strong business relationship, but you’re also sharing insights they might find valuable should they ever need to refer you a consumer who is looking to buy or sell in your marketplace.
Inbound Referrals
Accepting inbound referrals can be fruitful, although it requires more effort than merely keeping a lead warm and sending them on their way to another agent—you now have a transaction to close. The key to ensuring a steady stream of inbound referral leads? Constant communication with past clients, your sphere and other agents.
Jacqueline Balza, a broker/salesperson with United Real Estate, implements a powerful referral system, and it shows—about 50 percent of her business comes from past client referrals.
“To build my referral business, I stay in communication with all past clients,” says Balza. “I call them every couple of months to remind them that I’m here for them as their local real estate expert. Keeping in touch always puts me in front of the client. Out of sight, out of mind—you have to make sure they don’t forget you as the years go by.”
How can agents stay top of mind? For Balza, it’s simple: Be direct and be consistent.
“Stay in touch with past clients and reach out after each transaction—it’s a must. This reminds them you’re still there for all their real estate needs,” says Balza. “Don’t be shy—ask past clients if they know of anyone who is thinking of selling or buying. If they were happy with your service, you’ll definitely get referrals. And you’ll never get the chance unless you ask for it!”
Referrals are the No. 1 source of business for Balza and a continued goal toward career longevity, but they also work as a tool for measuring client satisfaction.
“Referrals to me are the biggest compliment I receive from the clients I’ve serviced—it’s the future of my business,” Balza emphasizes.
Working as a Referral Agent
Many licensed agents don’t work full-time or won’t take on clients at all. For these industry practitioners, referral business can be an excellent source of supplementary income. For example, salaried employees in the field, such as Jennifer D’Elia, who is an office manager and REALTOR® associate with Samsel & Associates Real Estate Services in New Jersey, can benefit from referrals—they are the perfect opportunity to take advantage of agent networks and personal spheres.
“As the office manager for Samsel & Associates, I’m charged with handing out our office leads to agents and maintaining part of our company’s social media pages,” D’Elia tells RISMedia. “Being a paid employee, I’m not in the lead rotation. All of my personal business is from referrals or social media, since I don’t have the daytime hours to canvas.”
How can part-time or referral professionals leverage their contacts in order to make a profit? For D’Elia, it’s all about extending her reach, involving herself in the community and being vocal about her expertise.
“Without being pushy, I try to remind people during the course of a conversation that I’m in real estate. I go out of my way to participate in local functions—school fundraisers, youth sports, etc.—and use my professional contacts and title to make donations or offer free giveaways,” says D’Elia.
An essential piece of the pie? Her personal sphere of contacts.
“I naturally use my friends and family. They promote me on Facebook, give my cards out and remind people that they have a family member in real estate,” says D’Elia. “I’ve also found it easy and effective to include my business card when providing my contact information to people in general—for example, to other parents when arranging a time for our kids to hang out.”
The key? Dial back the aggressive sales pitch and just have a conversation, or occasionally (but on a consistent basis) reach out. Sending out mailers or calling can create a subconscious association between your name and real estate. Take it too far, however, and your name will take on a negative connotation, which will hurt your business instead of help drive referrals.
“I keep a list of past clients or cold clients and send out personal notes about twice a year. If sent too frequently, the notes become stale and are seen as an overt marketing strategy rather than a friendly hello,” D’Elia says.
There’s a clear line in the sand that shouldn’t be crossed. It’s crucial that referral agents remember they should be a counselor and not a salesperson, D’Elia reminds agents.
“Tell everyone and anyone that you’re in real estate, but don’t be a salesperson; be a friend who is there to help counsel them into buying or selling their home,” says D’Elia. “This is especially true for strangers—everyone needs friends! Free advice goes a long way, and everything you do is planting the seeds for future business. Go out of your way to be kind to everyone.”
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.
