In a recent blog many in our industry commented on and even suggested that the Real Estate agent is at the top of the food chain when it comes to referral business. 
If this is true, and I believe it very well may be...... Are large segments of the industry in danger of extinction?
I have talked with thousands of real estate agents, lenders, pest company owners, roofers, carpet companies, title companies, real estate broker/owners, home warranty companies etc. over the past 7 years and they here is what I discovered;
With few exceptions, real estate agents referrals were the main source of new business (Up to 90%) for lenders, title companies and industry service providers. The major exception being the refinance business for lenders and title companies.
- The overwhelming majority of real estate agents felt that great service for their clients was all that they were expecting for their client referral.
- Lenders, title companies and industry related service providers felt that simply providing great service to real estate agents referrals was adequate reciprocation to earn the agents business.
- Lenders, title companies and service providers overall lacked confidence in their abilities at acquiring new clients to refer to real estate agents. Most if not all responded that " we just don't get that many people asking us if we know of a good real estate agent"
So let's run the clock ahead a couple of years and see how this landscape might look given the above to be true.
Should the housing market continue to decline, there will be less homes sold.
Less homes sold = fewer transactions
Fewer transactions = fewer referrals
Fewer referrals = less business for lenders, title companies, service providers
Fewer transactions = fewer real estate agents
Fewer real estate agents = larger market share for those that survive
Larger mar
ket share for survivors = less sales for those not in the survivors referral pool
Well, I think you get the idea! Where and when will this end? Who knows!
One thing is for sure. With advertising costs on the rise, transactions and commissions on the decline for real estate agents, the food chain at the top is getting very thin.
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