"I Don't Take Referrals!" - Good or Bad?

Real Estate Agent with ShowMeOKC Real Estate Pros of KW Elite 148333

I just read Peggy Chirico's post "I Don't Take Referrals!" and I must say, I'm amazed at how quickly many of the commenters there have jumped on an agent who chose not to accept a referral, calling him names without knowing his circumstances, all while claiming "I never turn down a referral!"

Is it possible that the agent in question has a business plan that he's committed to, that works for him, that doesn't include paying out referral fees?

Maybe he's got enough business that he's happy, and he's not interested in growing anymore?

I can tell you that personally I do take referrals, but I'm choosy. I only take the ones that actually stand to compensate me for my time and experience. I will not take referrals that end up draining my resources (time & money). I've had agents call me to refer an $80,000 listing, expecting a 40% referral fee. If I were to take such a referral, I'd spend more money to market that property than I would gross after the referral, broker split, and taxes. That's not even taking into account the time I'd have invested in getting it sold.

In the time I would've spent on that resource-drainer, I would instead work my client base and generat 2-3 other full-commission transactions.

I also recently had a local agent try to refer me a referral, if that makes any sense. By the time all was said and done, I would've ended up paying 2 referral fees, totaling 50% of the commission. Again, not worth my time.

Many facctors have to be considered when deciding whether or not to accept a referral; referral fee, sales price, how needy the client is, current market conditions, your hourly rate, etc.

When I was a new agent, without much already going on, I was much more willing to take on referrals, and when the market slows, I become more open to them as well. But when the market's cruising along well, and I have a pipeline full of full-commission clients, why would I take time away from them to make less working with someone else?

Any agent who's not taking these things into account, but instead just jumping up and yelling "YES" when they're asked if they'd like a referral, may need to re-think their business plan. Not ALL business is profitable business.

Many times, the referring agent may be well-intentioned, but actually harm the client by restricting the receiving agent with hefty referral fees. Personally, if it comes down to it, I'd rather not receive a fee and know that my client is getting a top-notch experience, than to take a referral fee and know that the receiving agent may not put forth as much effort, due to a minimized commission.

So, what say you? Are all referrals to be taken? 

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Comments (4)

Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Like I stated on the original blog. The simple solution is to take the referral and use a buyer broker agreement to adequately compensate yourself and be able to pay out the referral.

Feb 09, 2012 05:46 AM
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

From what Peggy said, his only reason for not taking referrals was that he couldn't afford to give a referral fee. Now if he had said he was too busy, or he doesn't work with buyers, or he doesn't work in the client's preferred price range or any of a dozen other reasons, I could understand it. But to say your only reason is the fee? Fees are negotiable. You don't like 30%? Offer 20%, or 15% or whatever you feel you can afford. If the referring agent doesn't like it, they"ll decline and find another agent. Now having said that, we agree that not all referrals need to be accepted. We've turned down some ourselves, usually for being too far outside our primary service area. As you said, it depends on many factors. 

Feb 09, 2012 06:50 AM
Peggy Chirico
Prudential CT Realty - Manchester, CT
REALTOR® 860-748-8900, Hartford & Tolland County Real Estate

Hi Ryan - Thanks for taking the time to write this. I agree that not all referrals should be taken and not all referrals need to be compensated. I personally wouldn't want someone to get so little for their efforts that the referral doesn't make sense to them. I have given referrals with no fee because the situation warranted it. Each situation is different, and there may be some that you want to turn down. I was questioning turning down all referrals. Again, thanks for your comments.

Feb 10, 2012 01:14 AM
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Just like other buyers and sellers, not all of them are the ones we want to work with.  But if the shoe fits, by all means, wear it!

Mar 07, 2012 06:20 AM