Who’s Who in the World Of Real Estate Referral Networks?|
The real estate market can be full of sweat and tears. It is even more challenging getting that one valuable lead that will grow your real estate business. In this article, we look at how referring clients to other professionals and businesses can create a strong client base. We discuss the strategies of building a referral network suitable for your business. And how you can constantly sustain your collaboration with your partners.|
What Is A Real Estate Referral Network?|
A real estate referral network is a network that is formed based on trust but has multiple business transactions amongst those in the network. A client flies in from out of state, and you have no leads regarding transaction specialists in that state. If your business model has segmentation, then business partners with referral networks are a great way to have those in-state residents. This allows you to offer local leads to your clients while also referring them in to other businesses.
Referrals work wonders. Based on the most recent report by the National Association of Realtors’ (NAR) consumer profile, 39% of the sellers use referrals to locate their real estate agents. This mutual support consolidates businesses, creates regional know-how, and cuts marketing costs. Here is a quick guide to making your own one.
6 Methods for Establishing Relationship with Other Real Estste Agents
1. Determine the Types of Real Estate Referral Partners Required
The first thing that you should do is prepare a list of services that you feel are required out of your clients and their properties. In most cases buyers and sellers will require assistance related to their property and financing. But you can be more innovative and divergent. Here are some of the common industries that are ideal for creating a network of cross referrals:
- Moving companies
- Home inspectors
- Lenders
- Insurance brokers
- Estate planning
- Companies dealing in construction
- Interior decorators
- Plumbing works
- Electrical works
- Painting works
- Roofing works
- Landscaping and gardening companies
- Other real estate agents (pertaining to other geographic regions or different segment)
2. Fill in Potential Referral Partners
Consider your professional network. Who in your professional circle already fits any of the mentioned categories above? Out of coaches, mortgage brokers and financial planners, with which one do you interact with the most? What plumber or electrician do you have for your home or client referrals?
Talk to people who know, check reviews, even make a few calls to find out more detail. Cut it down to two or three providers for each category and arrange meetings to discuss them in person.
Don’t stress too much. – If the business executives you speak to have other engagements or simply don’t have the availability to meet in regard to a strategic partnership, don’t push it. Either you will find another time that is suitable for them, or you will move to the next name in your list.
3. Apply for a Referral Partnership with a Real Estate Brokerage
First impressions are important, and the first opportunity you have to meet someone is a deciding factor on whether you would want to work with them or vice versa. Based on our meeting, do we share common interest and would working together be feasible? Would other people who liked working with you also enjoy working with them? Are there impactful aspects in your approach and strategies that would appeal to him? Ask yourself, will other people use your name or established brand to gain depth in their claims? Look for real estate referral partners you believe you will be effective with and enjoy working with.
You have to come to a consensus on how a referral will look like, as well as any particulars regarding the wording or the procedures that you may need. Will we buy business cards to hand out or do we not intend to do so This means at the end of the day business card handing tools will be introduced Or for example, would you and your referral partner constantly be emailing each other to introduce someone to a client? Is there a referral commission to be paid? Be plain so the facts are clear, because both of you want to enjoy your new relationship.
4. Include Your Partners in Your Marketing
As well as referring clients to your contacts, endorse the services and content of your new partners on your websites. This shows that there is support and makes for a team effort that could encourage cross sharing, which will allow you to gain access to their networks too.
Referring network members should include in blog entries or newsletters that pertain to those industries. Use social media to tag and share their post and videos when they become relevant to your audience. Like and comment on their posts. For more dynamic content, use your new referral partners and interview them. This is how you promote trust and credibility with your audience as well as show them how much they matter in your network.
Expand the outreach of your promotional pieces to your audience. Make it a habit to distribute your business cards to the referral partners and deposit new listing marketing materials for their future use.
5. Make Sure to Make Regular Contact with Your Real Estate Referral Network
This is not a one time only set and forget real estate lead generation system. The duty of a real estate agent is to look for better ways to enhance the referral relationships, gain more trust and credibility and get more business.
Regular and timely follow up is a way of saying I am committed to our joint success and would help you to achieve this goal. This makes you more relevant to your partners and increases the chances of getting more referrals from them. By employing this practice, the clients get better services as there is better integration of processes and the clients’ journey is seamless, hence the clients get repeat business as well as the potential to gain other referrals. Effective communication in this case allows resolving the issues swiftly (for example: if the provider did not render the type of service to the clients that one would like them to) and platform for new information and feedback on the matter which makes the referral system better.
Following up is indeed a great chance to thank for the referrals which in the way helps further develop the partnership. Regular communication helps agents in assessing the impact of their referral partnerships on business development and growth and also optimize their strategies to focus on the most fruitful partnerships.
6. Avoid Violating Any Manager Referral Rules
In most cases, referral networks are a totally reputable business practice. However, it is necessary to abide by the manager referral regulations as well as those that have anything to do with quote pro quo or sponsorship arrangements. Always remember these relevant regulations:
- Under the Real Estate Settlement Procedures Act (RESPA), administered by the Consumer Financial Protection Bureau (CFPB), no person is allowed to pay clients a kickback or a referral fee that is not based on a service provided. This means you cannot receive or pay fees solely for the referral of clients without that service being appropriately rendered.
- Every jurisdiction has its own compilation of real estate referral fee statutes and rules. Most often, they require that all persons involved in the transaction, including those who are not licensed, be informed of the referral fee, that a fee is reasonable in relation to the services rendered, and that the fee is paid for services rendered.
- The following rules regarding referrals can be found in the Code of Ethics developed by NAR:
- All Realtors are obligated to inform the clients about referral fees.
- The inability of the referral arrangement to guide the client on the free will directive is of significance.
- Some anti-kickback laws may be relevant especially in the case of federal mortgage loan. These laws also aim at preventing unethical or illegal outlays or benefits that could somehow influence the referral with the client.
- The agents should inform their clients about agency relationships and referral fees to ensure that they are given full and unquestionable disclosure. This is important to protect trust, avoid conflicts of interest and be professionally ethical.
There are specific guidelines which when followed will enable you to participate in ethical referral partnerships that are mutually beneficial to your business and that of your clients.
Professional Real Estate Referral Networks
You should also consider being a member of professional referral networks, to complement the ones you form naturally through community relations.
A professional real estate referral network is a circle of real estate professionals who work together to get referrals from each other and share opinions about the market. These networks usually consist of licensed real estate agents and brokers who have confidence in the operations and services provided by each other.
The Operational Effectiveness of a RealEstate Referral Network
A real estate referral network includes the following components, including their fee structure:
- There are companies or brokerage firms or professional associations, which has a large pool of agent members, and to maintain basic requirements, they often screen with an application before any submission of joining these networks.
- This systemic or inter-systematic way of targeting improves agent’s business activity as they attempt to serve the clients better, as agents refer clients to each other, one of the common practices, the referring one introduces the client so that the client keeps in touch and a smooth transition can take place.
By allowing individuals to establish referral contacts, conditions and payment (average of 20% to 35% of the commission the agent, who receives it into his account in case of selling a house, pays to the network) these networks tend to expand their scope of business. Payment for the fees is automatic at the receiving agent’s commission, which means the referring agent only gets paid after the deal is completed. An example of this is when the agent that made the intercession for the referral opportunity and the company that gave the agent the access reserve a part of the commission from the sales, so the percentage has to be paid separate or can even be done without such arrangements if the agent builds a network of his own.
Best Real Estate Referral Networks
Here are some prominent examples of real estate referral services:
- Leading Real Estate Companies of the World: This organization consists of a network of individual brokerages, and any agent not already affiliated with a franchise brokerage can seek to join the organization. A member, in turn, exploits a well-established referral network which facilitates matching clients with designated agents in other parts of the world.
- ReferralExchange: This matches clients with three most qualified real estate agents from the client’s vicinity. The company wishes agents to have qualified leads, and manages the referral from point A to point Z so agents get the qualified leads.
- Agent Pronto: This service is intended to help home buyers and sellers by linking them to real estate agents that have a proven record of accomplishment. Also, agents incur a referral cost to the company in the event a prohibited transaction is successfully completed.
- HomeLight: HomeLight assists clients in identifying agents by providing data to support its recommendations. Those who refer are top-producing agents with invites to join this group and referrals to be received. If a slow-light client is successful in closing a transaction, they are charged a fee.
- Zillow Premier Agent: Zillow for agents refer a service and agents make contact with leads that were produced from the platform. An agent will pay a fee per estimated amount of each closed transaction significantly when a Zillow lead refers to them.
- Redfin Partner Program: Redfin avails its customers the services of partner agents if there are no redfin agents in the area that the customer is located. For every closed transaction partner agents pay a referral fee to Redfin.
These referral services are beneficial for the real estate agents since the agents have the opportunity to increase their businesses and also reach out to clients
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