Take Three of These Cards and Call Me In the Morning: Pitfalls of the Non-Referral

Real Estate Agent with Homesmart

Classic risk aversion for the liability-phobic mandates that an agent make no actual referral to an auxiliary service provider in the course of a Real Estate transaction.  Need a lender?  Here are the names of three professionals.  Need a home inspector?  Sift through this stack of business cards and let me know who you choose to hire.  The very thought of shimmying out on a limb to recommend a capable practitioner sends shivers up the clenched backside of some in our ranks.  Cold anticipation of the potential commissionectomy that attends a referral gone bad trumps the tug of responsibility.

No businessman walks around looking for a financial colonic, but the very real potential for having his inner sanctum legally hollowed out exists in each and every transaction he undertakes.  As such, it has become customary for many to simply ward off as much exposure as possible by abstaining from any form of guidance that can later be labeled  malfeasance or conflict of interest.  Heaven knows, if the contractor you recommend for repairs screws the electrical pooch, any rabid attorney worth his salt will gleefully encourage the client to pursue the deep pocketed brokerage (and agent by proxy) as well as the contractor for damages.  Why put yourself on the line by recommending a home inspector when the potential for blow-back on a balky A/C unit can put you directly in the cross hairs?  For that matter, why even bother to attend the inspection if the due diligence can be misconstrued for interference?  Why attend closings if your review of the documents places increased responsibility upon your shoulders for their accuracy?

Because risk deflection is not my job. 

My job is to fulfill my fiduciary obligations to my clients to the very best of my ability.  That means recommending pros who have proven their worth to me countless times in the past, rather than crossing my fingers and hoping my clients receive competent service.  That means attending inspections to physically see any defects, so as to better advise my clients and argue their cases.  That means attending the closing to ensure that the settlement statement jives with the negotiated terms of the contract.

Doing the eeny-meeny-miney-mo thing with a referral does not serve the client, and neither does calling in “neutral” to the appointments that demand an ally.  Such laissez faire Real Estating is designed only to mitigate the agent‘s risk.  While it is understandable, given the litigious nature of our culture, it’s just not how I roll.  You need a lender, I give you the name of the best lender I know.  You need a home inspector, I give you the name of the most thorough one in the rolodex. 

I would argue that recusing oneself from the crucial junctures and decisions of a transaction is not only negligent, but self-defeating.   As the surest invitation for catastrophe is to stand aside and watch the transaction happen, the best defense is, and always will be, a good offense.  Fixing potential problems, rather than hiding from them, has kept my clients happy, and me out of legal hot water to date.  Active involvement serves the interests of all parties.

I wear my big boy pants to work every day.  I put them on with the knowledge that certain forces will always be beyond my control.  Secure in that understanding, I’d much rather stand behind the repercussions of my actions than my inactions.  Standing on the sideline, not attending inspections & closings, carefully avoiding opinions … seems to me that ascribing to the Caspar Milquetoast model of risk avoidance is, ironically, the surest route to the ruin that one would desparately scramble to avoid.  Decreasing the standard of care for the client is akin to an RSVP for trouble. 

And trouble never sends its regrets.


Need a Referral to a Local Professional?  Give me a ring.


Comments (49)

Barb Szabo, CRS
RE/MAX Above & Beyond - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes

Last summer I attended a 7 hour inspection on a huge house with one of the best inspectors I know, and although we had our work cut out for us after that, it was well worth it. Knowledge is power,especially when it is your knowledge of which vendors are the best of the best. I don't, however, give just one name. Guess some "training" is hard to let go of:)

Mar 05, 2010 12:23 PM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Evening Paul,   Interesting topic.  Our office policay is that we must provide a minimum of two sources or none at all.

Mar 05, 2010 12:24 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I constantly refer to people both to assist my clients with the purchase and sale of their home as well as in other aspects of their lives.  I think it's part of the service.

Mar 05, 2010 12:47 PM
Aaron Vaughn 830-358-0455
Conifer Builders LLC - Canyon Lake, TX

I agree that many agents are like this, but I am not. I recommend people I trust -- sometimes more than one for a particular area. I always tell them they have the right to choose whoever they want, but I trust these people ...

Mar 05, 2010 12:48 PM
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Hear!  Hear!  I have the same philosophy and it has served me well for over 13 years now.  I am not afraid to openly recommend someone that I know will do a good job, and I've never had a mediation or threat of a lawsuit.  It's part of our job to guide our clients in an appropriate way, and to provide real service.  Period. 

Mar 05, 2010 03:15 PM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

You have a great game plan Paul.  You are so right about the football analogy having coached defenses for 17 years in high school.  The best defense IS A GOOD OFFENSE.  It is hard for the other team to score when your offense is eating up the clock with seven or eight minute drives every possession!  I would rather be PROACTIVE than REACTIVE!

Mar 05, 2010 10:23 PM
Richard Weeks
Dallas, TX

I say "be the source of the source, don't be the source".

Mar 06, 2010 01:21 AM
Mike Gillingham
Eastern Iowa Inspection Services LLC - Walker, IA

Good Post!

I would respecfully argue that you can have your cake and eat it too by handing two or three of the best that you know of and stating so. "Here are a couple of the best that I am aware of in our area."

You didn't steer, you helped.

Mar 06, 2010 01:28 AM
Stephen Garner
Hub Media Company - Tempe, AZ
Hub Media Company

Fantastic post Paul. I agree with you 100%. If you are in any position to need the help of someone else to come through to produce a result, in this case a closing-you should definitely do everything you can to get "the ball" into that persons hands.  Thanks for your comment about "preferred vendors as well", I absolutely agree.

This market has provided the best opportunity to upgrade all of your vendors to those that provide real value-not just do their jobs.  Sounds like you have a great team, congratulations. Anything changes, I'm right down the road.  By the way....I see you are in Phoenix, like me-Check out www.Smurcle.com I think you will find it to be unique and a true value add for your business. Good Luck.

Mar 06, 2010 01:42 AM
Jenna Dixon
Momentum Real Estate Group LLC - Marietta, GA
55 & Over | New Constructions | Horse Farms

I am with you.  I put on MY BIG GIRL PANTIES AND GO TO WORK everyday.  I know what I know, and when I don't I say so.

RE: Home Inspectors...I have never had anything come back to bite me, but the only bad experience I am aware of a client having happened when they selected their own without any input from me.  And I must say for the record, that incident probably had nothing to do with the inspection itself.  It was a problem that likely would not have been caught by any home inspector.  But, I will say that I breathed a sigh of relief.  You never know!

Mar 06, 2010 01:48 AM
John Smith
"The MORTGAGE SMITH" - New American Mortgage - Charlotte, NC
Certified Mortgage Planner

AMEN!!!  So many Realtors are such wimps and wouldn't know a pair of BIG BOY PANTS, if it bit them on the tail!!  This is an awesome blog!  Unfortuantley MOST Realotrs are BIG WIMPS and hide behind their "in house" lenders or "3 cards" excuse!  I appreciate you deciding to take control of your business, by using the best resources you know!! That is how I judge a real PRO that wants to do the best for their customers!  99% of the Activerain post are such LIES... it is nice to hear an HONEST, DIRECT post!  Stop with the kickbacks and the in-house folks, just because you get some money, Realtors!  Don't compromise, take control of your business, use the best you know, and make MORE MONEY!  Keep posting Paul!!

Mar 06, 2010 02:35 AM
Rene Fabre
ARFCO Media - Renton, WA
Practicing Philosophical Eclectic of the Arts

When you've been in the business for a while, you get to know a lot of people. I know several in different real estate related fields and never hesitate to refer them. We're in the relationship business. I'm not going to send you to anyone I haven't worked with, respect, and/or know... Nice post Paul... thanks.

Mar 06, 2010 04:29 AM
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX

Wait a minute...I thought I clicked on the Vegas Dudes pictures of New York...

Oh well, as long as I am here!

Our company maintains a large "vendor list" that all of the agents keep updated including any note of poor service (which usually means immediately being dropped) and we have never had a problem. I also have lists of my own with names of folks I've worked with for years but I also make the effort to answer each request with a LIST so that the person needing service can call and interview several and hopefully find someone who can do a good job.

I am particularly involved in the lists of construction trades. Texas does not really have enough licensing and no longer has the extensive Union apprenticeship programs that provided so much quality trade education in the past. Having spent 16 years in the construction business, I've seen more damage done by morons who just "beat it to fit & paint it to match" than you can imagine so in our state it is always a good idea to get references from the start! I've got my Big-Boy pants on but since it's Saturday I am going commando ;-P

Mar 06, 2010 06:19 AM
Howard and Susan Meyers
The Hudson Company Winnetka and North Shore - Winnetka, IL

Excellent post Paul.  Having a team of trusted experts is just another area that allows you to add value to your service in any transaction.  This helps to make each of us stand out so that our current clients become repeat clients and reliable referral sources.  In regard to risk analysis..."you can't make an omelet unless you break a few eggs".

Mar 06, 2010 09:43 AM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

I should clarify that providing more than one name does not necessarily constitute a shirking of duties by any means.  Many commenters here have mentioned that they provide more than one option, but I think the critical component to such referral to multiple sources is the commentary that attends it.  Nothing wrong with providing two names and saying one is your go-to guy and the other is a capable contingency plan.  In cases where you have no trusted resource, gathering more than one name from associates to pass along is not a bad idea.  The central lament is the practice of simply providing names with no guidance, or stepping back from the critical junctures of the transaction all together.

Unfortunately, I am not going to be able to respond to everyone individually, but thanks to all who took the time to read and comment.

Mar 07, 2010 02:21 AM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate

And Russell, I thought I clinked on that post, too. ;)

Mar 07, 2010 02:30 AM
David Rider

As a former REALTOR for 25 years and as a lender for 7 years and a State Certified RE Instructor, I couldn't agree more with the farce of 3. Courts have held that the agent is not liable for recommendations if no kickbacks are involved. Furthermore, the 3 cards remind me of when my wife went to a Doctor at a large national clinic, (think of the opposite of mustard) and the doctor said, "There are Six types of Pills I can prescribe, here they are, tell me which one you want me to prescribe"  We went to the doctor to get her BEST recommendation based on our situation, not to have her reduce her "potential" liability.

Same with RE agents. When someone asks for a recommendation they are looking for that expert opinion based on thier situation, personalnatilties etc. While I believe in having more than one relationship, I only recommend one at a time!

Mar 09, 2010 06:17 AM
David Krushinsky
Reasy Financial LLC - Peoria, AZ
AZ MB-1044208 MLO NMLS #202115

Dude, I love your posts.  They are filled with so many metaphors and it creates so many images in my head as I am reading.

Passing out three cards is the sign of someone who doesn't trust their referral.  Building relationships takes time and most don't want to do it.  The easiest thing, pass out three cards for someone who seems good.  The professionals make it look easy.... nothing more to say! 

Mar 09, 2010 06:27 AM
Scottsdale Real Estate

The information you have provided here is really great i likt ....great job ...

Mar 18, 2010 11:48 PM
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

I just stumbled onto this blog and may reblog it at this late date... EXCELLENT post and comments and I concur 1000%. Real estate is NOT for the liability-phobic!

Dec 29, 2011 12:04 PM