I see what has happened over the years, actually, the decades that I have been a Realtor. When I began my career I was given "leads" from other brokers, referrals as we call them, and often times it was for 20%. Over the years that percentage held until I came upon a broker directory where Realtors marketed themselves to brokers throughout the country, and sometimes I saw referral fees as high as 35%. Maybe even 40%. And I thought...that's crazy!
These days my brokers are happily taking 35% leads everyday, and I even hear of 50% referrals in the market. Granted that some of these are for buyers and listings over $1 Million, however they are sometimes for $200,000 condos as well. Those fees really eat into a commission check...or do they?
Yes, that percentage does take a chunk out for both the broker and the office...but when you consider the alternative it is well worth it. Afterall those leads/ referrals would eventually be listed/ sold by some broker...and wouldn't you prefer that it be you receiving that check?
After tracking most of the referrals coming to me and my team over the past few years I have determined that not all referrals cost what it seems they do in the first place. That 35% referral sometimes is really half that...or even less even if 35% appears to have been paid. How is that you ask?
A referral is an introduction. You get to meet and network with someone with whom you would not ordinarily meet. That opens the door for future sales, listings and referals to that customer's friends, family and business associates if you handle their business correctly.
I have agents that work almost exclusively on referrals and I have seen that over the years their business always increases. I have also seen agents who don't take referrals, or some that believe it or not take them and then refuse to honor them once their transaction is concluded...and all of their business seems to be stagnant or worse...they eventually leave the business totally (let's call that "bad referral karma").
So I have carefully constructed by quote of the day: "Treat your referrals and referrors as well as you would treat yourself and you will live happily ever after in the real estate biz".
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