The Pros and Cons of Encouraging Clients to Shop Around for Vendors

Industry Observer with ValuePenguin

Real estate agents often operate alone, but teamwork can make the homebuying process more pleasant for clients and agents alike. That’s why it’s common for real estate agents to have a go-to list of vendors to offer prospective buyers, ranging from contractors to mortgage lenders and home inspectors. 


Those relationships can make purchasing a home a smooth one and can help make a complicated endeavor easier to understand. It’s natural, then, that a real estate agent would offer their clients guidance while shopping around for different vendors. Before rushing to develop that list, it’s important to understand both the benefits and drawbacks of offering to help clients shop around.



The homebuying process can be overwhelming for clients — by providing buyers with resources that go beyond showings and helping them sort through listings, agents can create a one-stop client experience that consumers will appreciate. 


Help buyers save time and money: When considering a mortgage, 58% of homebuyers said price is the most important factor. It’s no secret shopping for a home is a costly endeavor, which means buyers want to keep the process and related expenditures as expedient and affordable as possible. 


A referral acts as an endorsement for quality services, which can ultimately save clients time and money. Clients will be able to work with trustworthy vendors without having to sort through online reviews or take a risk on a business. Instead, they can work within a real estate agent’s network. That saves time, and ultimately, money that may otherwise be wasted on working with vendors that fall through. 


Increased referral rates: It’s illegal for a real estate agent to receive any kickbacks for referring clients to mortgage lenders, but that doesn’t mean there aren’t potential benefits for all parties involved. By working with trustworthy vendors and creating an overall pleasant process for clients, real estate agents can build their reputation and may ultimately see their work pay off with increased referral rates. It’s important to mention this candidly during the referral process.


A 2017 study by RealTrends found 58% of outbound referrals are created by current or past clients. That’s a significant figure showing the power of a trusting relationship between real estate agents and clients.


Set client expectations: The best real estate agents are experts in their fields, from navigating listings through the closing process. How long should underwriting take? What does a home inspection look like? How does closing work? 


Agents can help clients understand the process from beginning to end and encourage realistic expectations to minimize stress and increase their own knowledge base. From there, the next logical step is to set up relationships with the right vendors to keep the homebuying process on track.


Just as there are benefits to encouraging clients to work with specific vendors, there are also some drawbacks. Many of these drawbacks have to do with the vendors themselves, the type of practices a real estate agent engages with and the way they approach the referral process. 


Feeling the pressure: No one likes to feel pressured to use their money a certain way. Real estate agents run the risk of creating an environment where clients feel pressured to work with certain vendors. Some clients will be turned off by referrals, so real estate agents should make sure to read each buyer before making their pitch and to back off quickly if a client shows resistance. Some people like to find their own lenders, and that’s OK. 


Can’t always vouch for quality: There’s no way to control another company, even if that business relationship has been established for years. Companies change and staff members come and go, which means a good referral may turn into a bad one. That can affect the agent-buyer relationship, which can erode trust, make the homebuying process more difficult for clients and eventually hurt an agent’s referral rate.


Possibility of a slower process: Some clients are new to the homebuying process. Others are buying their second or third home and are familiar with the process. If they aren’t moving far from their previous home, they may have their own vendors they’ve worked with in the past, or are more comfortable relying on their own referrals from family and friends. 


When working with first-time buyers or those who are less prepared, they may greet a list of preferred vendors with a sigh of relief. Meanwhile, establishing those first-time relationships may actually slow down more seasoned buyers who know how to get to closing day as quickly as possible. 

Final thoughts 

Real estate agents guide homebuyers through one of the most stressful times in their lives. It’s not unusual, then, for buyers to want to take some of the pressure off during the homebuying process, making vendor referrals desirable for many. 


However, each situation is different, every individual is unique and some may not respond well to a referral list. Ultimately, the homebuying process is an individual one. Real estate agents should treat it as such, and work with each buyer one-on-one to determine not just what’s best for their bottom line, but what’s best for the client. 



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Joe Resendiz

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