MIKE IN TUSCON inspires me to write about TRUST.
Trust is the basis for my business. In any given year, year after year, I refer about 1,000 home buyers a year to agents in my market area. I am always, always seeking experienced real estate brokers and agents I can trust to:
- (1) do a good job for the buyers and sellers I refer, and
- (2) pay me the agreed referral fee.
The number 1 criteria for including an agent or broker in my referral network is TRUST.
WHY REFER? Referrals have been a recognized and respected component of real estate brokerage for as long as there have been real estate brokers. We are not and can never be all things to all people. In fact, the REALTORS® Code of Ethics specifically advises:
- REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/95) (Emphasis added)
REFERRALS ARE AN INTEGRAL PART OF MANY BROKERAGE MODELS. Many large real estate companies have entire divisions devoted to referrals: incoming referrals, outgoing referrals, buyer referrals and seller referrals. These "RELO" divisions generate an income stream that can be an important percentage of the company's overall profits. I was inspired by my very first real estate broker who generated about 50% of her annual income from outgoing referrals. Since she was a productive listing broker, she communicated with many home owners who were selling through the company's relocation services. This smart broker also offered her experience and services to assist her seller clients in finding a good agent to help them find a home in their new location.
IDENTIFYING REFERRAL CANDIDATES
Field of competence. I routinely receive contacts through my web sites from consumers seeking brokerage services that are: outside my "field of competence", which in my case would be commercial, land, multiple-family real estate.
Outside your market area. I also routinely receive contacts through my web sites from consumers seeking brokerage services that are outside my market area. Due to a comprehensive Internet presence, consumers from across the country contact me for information about or help with purchasing or selling real estate. My #1 resource for locating and referring consumers for real estate services outside my market area is ActiveRain.
Do you have more business than you can handle? Since about 1995, my answer to this question has been an unqualified YES. I advertise real estate brokerage services on the Internet and do, indeed, generate more business than I can handle. In past years, I have employed real estate agents to share in the benefits of this flow of business. When I referred buyers to agents in my company, all settlement checks were processed by my office and my broker split was retained as a bookkeeping transfer. However, for referrals to agents/brokers not in my brokerage, I rely on the referral agents to make sure that my referral fee is paid fully and timely. This is where trust becomes important.
WHY DO SOME AGENTS NOT PAY? Beats me! Many agents or brokers appear to believe that trust means that they pay if and when they get caught. However, when I find an agent or broker whom I can trust, I not only refer good business to them, I work hard to generate good business for them. I have the on-line platform and the ability to focus advertising in specific market areas and fields of expertise. Since my focus has been buyer brokerage since 1994, I generate more buyer referrals than seller referrals. So, I rely on the wonderful agents and brokers in my network to help these buyers succeed in finding a home.
Experience is a great teacher. Over the years, I've had to track sales and confront agents who didn't process my referral fee when they sold my referrals. It's not fun. The agents become very defensive and, of course, I've lost a referral resource. Sometimes, the agents process payment to me on several sales and then fail to do so. Sometimes they fail to pay the referral fee from the very first referral. One of the reasons I prefer to refer to brokers is because I know that they have a policy of paying referrals. Some brokers are clearly better than others. One local broker has made me chase and wait for referral fees to a point where I believe it's a company policy to delay payment of referral fees. I found out that one broker in Florida doesn't pay referral fees to out of state brokers. Fat chance of collecting a fee from him if I referred to one of his agents. Fee are broker to broker. While agents can assist the payment, they don't write the checks.
MY REFERRAL NETWORK includes:
- Brokers who were once agents in my company,
- Brokers and agents I've known over the years as experienced practitioners who communicate timely with telephone and e-mail,
- Agents and brokers I've met through years of participation on on-line networks, most recently ActiveRain, and
- Partnerships with brokers outside my market area to generate business for their company.
Why Bryant Tutas, Broker Bryant, Tutas Towne Realty?
About a year ago, I contacted Bryant Tutas about referring home buyers (or sellers). My thought was, with prices of homes falling so dramatically, that retirees in the Maryland and Northern Virginia area would respond to the web site and contact me and I, in turn, would refer the consumers to Bryant.
The idea was for me to create a few web pages for his market area, Central Florida and refer any contacts from the web site to him for a referral fee. We agreed and a week or so later (we speak Google), the web site was prominent in Google SERP for important keywords. This web site was a cooperative effort. Since Florida is outside my area of expertise, content and expertise was provided by the Florida Real Estate Broker. My contribution was technical and creative. Yes, I created a Florida Map.
Over the next year, these web pages generated a few referrals, but nothing substantial. Of course, real estate sales in Florida were not setting any records either. However, we did generate a wonderful buyer couple recently who purchased a home that closed just a couple of weeks ago.
WHY BROKER BRYANT? All of the above comes down to one word - TRUST.