Referral Rewards – They’re Yours For the Advice!

Referral Rewards - They're Yours For the Advice!

By:  Robert J. Pliska, CRE, CPA, Birmingham (Detroit), Michigan

In these more difficult times in investment, residential and commercial real estate, we continually try to find ways to obtain additional income.  This income can be received differently than our typical core business.  One approach being used is to refer business to others and get actual cash referral fees or at minimum a pat on the back where the referring beneficiary will feel obligated to pay you back in some way. 

In investment, residential and commercial real estate, we are continually working with clients who have needs that we are aware but we may not have the expertise within our own capabilities.  Yet, we are our client's trusted advisors.  You can obtain a referral fee from vendors who will pay you a percentage of their fee for notifying of your client's need. You help the client.  You get paid on an area where you may not be totally the expert but know about the service.   This can involve little or no extra work for you.

And, this provides more cash in your door.  

There are numerous areas where you can receive cash for a referral - sometimes 10% to 25% of the entire fee.  For an investment and commercial real estate broker, this may include such service areas as property management, financing, loan modification, energy reduction, property tax reduction, cost segregation, auction, brokerage on product types and locations where the commercial real estate broker has little familiarity and numerous other areas.  In addition, there are other areas where it is an issue to provide a cash referral fee such as appraisers. In these cases, you may still refer business to them.  A relationship is developed where you receive business from them and you are not obligated to pay a cash fee in return on referrals from them.  They also can provide helpful information to you for your core business such as comps and market information.  This is still a win win.  Make a list of these areas.   When meeting or talking with a client - explore and advise!  You may also use this on non clients - to create relationships and future opportunities for your core business and non core business referrals.

One caveat is to make sure that the vendor you are referring to your trusted client is of good quality, competitive in the market and someone that can be trusted.  You need to do extensive due diligence on them.  You do not want to lose your relationship with your client by referring an unqualified vendor or one that is not trustworthy. 

In this climate, you might analyze closely all areas in investment, residential and commercial real estate where you can refer business to others and get a fee. Or, at least get a pat on the back and possibly something in return.  Additional cash in the door or referrals to you is always welcome in these trying times.  Referral rewards - they're yours for the advice!