Your Wrong About Building Your Business Thru Referrals & Your Sphere

Real Estate Broker/Owner with See TIM Sell @ Keller Williams

For years Real Estate Coaches have told their agents that the best way to build their business is through their sphere.  These coaches have preached that the only effective way to build a monster business is by consistently calling and contacting your past clients and sphere of influence.  My first full year in business I had an agent tell me that when I became a “MEGA AGENT” like her that I would not advertise or market as aggressively.  She informed me that all of my business would come from my sphere like her.  That year the “MEGA AGENT” sold 38 houses (I checked) and I sold 72.


Relying solely on Real Estate Referrals does not work even in a hot market like Katy Texas.

I work in a large market center with over 200 agents.  One of the best agents in this market center is not on our team.  He consistently does between $20 and $30 Million.  He almost exclusively works off referrals and he is a fantastic agent.  Last year in 2013 his business shot to $40 million because of his referrals.  This year has been different and his business is trending back toward $20 million.  I love this agent, but his business plan and mine are very different.


I am not saying that referrals are not a valuable component for your business.  My team will do over $23 million in referral business this year alone.  Note however, that our total sales will be closer to $60 million.  Our business was up over 50% in 2013 and will be up 25% this year.  Part of our growth is absolutely referral based.  Referrals are the cheapest way to obtain business possible.  Everyone should have an active referral program.  Our team does pies on holidays and cupcakes on birthdays for our clients.


So I am not saying referrals are not important.  I am simply saying you cannot base your entire business model off of one strategy.   Agents who rely solely on referrals will have a very cost effective business, however, their growth is limited by focusing on one channel.

Aggressive marketing strategies are the key to growth.

You cannot count on referrals as the only growth avenue because referring clients move, they die, their sister in law can get her real estate license, and many more reasons.  A consistent marketing campaign with rock solid offers is the best way to gain new business.  I will be honest, it is not as cost effective as referrals, but if managed properly it can be affordable and a relatively predictable source of business for growth.  I only recommend two sources of marketing: aggressive farming and creating leads through your own website.  Focus on these two and  spend money perfecting them.  These two systems and a solid referral program will form the basis of a $100 million dollar business.  Feel free to visit my Katy Real Estate website to see a website that is built to capture real estate leads.

Find real estate growth partners

There are services that will act as a partner in your business and invest in your real estate success.  They will give you leads in return for part of your commission.  I have never had luck paying for leads upfront.  However, leads that you pay for upon close can benefit you and your growth partner.  Look for these type of partners.  These leads are expensive, however, once you close them you now have another future referral source.

In conclusion, referrals are important.  Still, you cannot rely simply on old referral sources, but if you are consistently and aggressively working your referral base and creating new clients (and therefore future referrals) through marketing you will have multiple healthy streams of business.  This is the basis of a healthy business.

Comments (3)

Ted Glover
Alderman Classic Realty, LLC - Moultrie, GA
ABR in Moultrie, Georgia 229-854-5422

Hi Timothy, very impressive website. Very clean and informative even on the lower end homes.

Sep 10, 2014 01:08 PM
Jason Boone
Duke Warner Realty - Bend, OR
Principal Broker, CRIS, RENE, SRS, PSA

Nice post.  I do rely a lot on referrals and past clients, nevertheless a well balanced marketing and prospecting plan is really good input.  Cheers!

Sep 10, 2014 01:11 PM
Timothy Sojka
See TIM Sell @ Keller Williams - Katy, TX

Thanks for your comments.  I'll be posting regularly again so follow me if you'd like.  It's been a few years but I'm looking forward to staying more connected to the Activerain community again!

Sep 24, 2014 03:56 PM