WHEN DID "REFERRAL" BECOME A DIRTY WORD??
This post inspired by Justin Gramm describing how he feels about the referral fees.
Mr. Gramm doesn't accept referral fees because: "I just don't feel right asking to be compensated simply for taking an hour to do some research and refer my friend/client to a competent agent in another state."
Unlike Mr. Graham, many agents DO accept referral fees because:
1. Our experience through the day-to-day practice of real estate brokerage gives us the knowledge to identify agents qualified to serve the buyer's or seller's needs.
2. We are often well connected to industry professionals through networks like ActiveRain to identify qualified practitioners that match the buyers specific needs.
3. Agents are more responsive to another agent about their experience and specialties when seeking help for buyers with specialized needs.
4. When requested by a buyer or seller for an agent referral, the consumer relies on our experience and knowledge to meet an agent that will help them with their specific needs.
5. Experience and knowledge in real estate brokerage are acquired through practice, training and continuing education. That knowledge and experience is cumulative and compounds over time to give us the insights to identify good referral agents.
Even if it takes only an hour to identify a good referral agent, that hour reflects our training, practice and experience.
Making a quality agent referral has value, surely value equal to or more than some of the other tasks we perform for buyers and sellers.
Experienced agents and brokers understand that,
WE ARE PAID FOR WHAT WE KNOW, NOT WHAT WE DO.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
"John. Congratulations on finding your home in New York so quickly. How did you find your agent?"
"Thanks Sue, the agent who sold our home in Virginia referred us to him. Yes, he did a wonderful job."
It's a good word to me... plus I am helping my folks to find an above average agent... sad to say but there are alot of agents that are mediocre!
Finding a good agent to assist a past client is "Priceless" for that individual.
We refer and accept referrals all the time. We have resources available to help us determne the best agent in a particular area, and we develop relationships to enable us to offer the most experienced agent in a referral situation.
I go 25% all the time, back and fort, across the board...
I even leave friends out of it. I pick the best qualified people in whatever my referral is going to.
Luke. I leave friends out too. Finding the best agent for a consumer is my goal. I charge 20% coming or going. Works for me.
Katie. Indeed we do.
Scott. I agree completely.
Mark. Me too. I have the connections and the knowledge to know a good agent.
I dont mean to say this in a bad way but ... anyone who doesn't feel that there is value in his/ her time would feel GUILTY in receiving referral fees.
In our business, there are lots of non-billable hours. For example, marketing efforts, blogging, networking, etc. It's not just the actual WORK of showing houses and listing houses (real work on clients) that we consider WORK.
Those non-billable hours should account for something.
In simply the fact that we can put a friend/ family or client with a resourceful, experienced agent in itself has an intrinsic value that I think Mr. Gramm failed to recognized. (Just my personal thought).
How much to charge, now that's another story.
Lenn, I have thought about this many times over. First, I think your fee of 20% is the most reasonable I have heard so far. 35% is a bit too high IMHO.
I know that I do my homework when looking for an agent. The one thing I can say is that if it is inside the Prudential network I feel that I have some control if things go wrong, and they can no matter how hard you try. Perhaps control is the wrong word, but there is a level of accountability there I feel. And all referrals I have done, in or out of the network, have been all good! But no 35%.
Professionals are worthy of their hire. There is a need for value attached to invest. Often I wonder if there is a level of customer in that jsut a quick call and lets see what happen is much different than true clients that are ready willing and ableand will be loyal.
Bonner
It takes time and research to do a proper referral. It's like the preacher who delivers the sermon on Sunday for an hour but has spent a lifetime getting ready for it.
Lenn, referral is never a dirty word. I am always pleased to receive and give referrals to other qualified professionals.
The lending world has not come up with a way to compensate lenders for referring clients to each other.
I didn't read the post your referred too, but will add my 2 cents.
Referrals are folks ready and able to buy.
If I am contacted to work with a referred client, it is a happy day.
Lenn, I can't be everywhere and I want my clients to get the best of service. Every professional uses referrals in their business plans from plumbers to doctors!
From your friend in Washington State,
Paul
Hello Lenn and I think it's a great word also and working 3 different businesses in come in handy to be able to refer clients to other agents.
VB ;o)
Great word and a great thing we do matching past clients, consumers with a new agent with a solid reputation and experience.
Lenn, couldn't agree more. Often times there's a lot more work in developing a relationship and consulting with a possible out going referral than just one phone call to send a prospect out. My partner and I have also been doing quite a few referrals in house and localy as we just have run out of time to handle every one.
Hi Lenn,
Referral fees to a qualified agent keep a customer happy by giving them the best service possible. Many times we can't or are truly not qualified in an area and the best way to ensure you client is well taken care of is to refer to an agent who will do a quality job. It's a win win for all parties. Lenn's 20 % in or out is a win/win..some referral fees have gotten way to high and start the rift some feel on referral fees.
Lenn, we referr clients to other agents across the country, and, yes, a good deal of them we "met" on the Rain. We have also received a number of clients from our Rain activity. Their experiences have given rise to other referrals from friends...it works for the referring agent and the client. And us!!
Not feeling right" for exercising judgment based on training, expertise, personal knowledge is not in my vocabulary. I guess I would fail he Mother Teresa career test!
Lenn....much of my business is from referrals.....my team members not only pay the referring agent, but also me....
Lenn,
Referral is not a dirty word! I love the way Loreena commented, so much of what we are being compensated for in a referral is our knowledge and experience. That's priceless!
All the best, Michelle
I love referrals. They normally result with ready and willing buyers and highly motivated sellers.
Lenn: I have to say, I'm in your camp on this one. I send out my fair share of referrals and do get compensated for them.
I can attest to that!
Lenn.... I don't have a problem with referral fees, as long as it doesn't get added to the borrowers bottom numbers and makes it more pricey. You pointed out some excellent reasons to why someone should be compensated. My only concern is at whose expense and how much. I am just making a general statement in regards to all referrals and not directly tied into realtors.. just my opinion. thanks
Lenn - I completely agree with you. I also always expect to pay a referral fee. It's just what we do. Now how much can be another story...
Well stated Lenn. I read your post right after adding someone on AR as an associate. I like his writing style and thinking. I would definitely work with him if I knew of anyone buying in his area.
Referral fees make perfect sense to me and I don't hesitate in paying them.
Lenn, thanks for this post. I read the post and could not disagree with a position more. My business like your is Internet based. I develop more leads than I can possibly handle, and so I refer out the leads. Many persons are helped by this. First of all buyers and sellers benefit when a good lead is handed out to a competentagent. They either can finally sell their home or buy the home of their dreams.
The next item is agents. I have many agents that make a great living each year from leads I give them. One cannot forget that real estate is a difficult business to survive in. We have no benefits, hospitalization, retirement, unemployment benefits or disability entitlements. 20% to charity? Why not 25%? Why not 30%? 35%? Why skim an extra 5-10% off the top for yourself? How self serving. Charity begins at home. Referrals are as basic to real estate as ABC! Most agents are more than happy to pay a referral fee for their hard work! They appreciate the opportunity for a lead to be thrown in their laps that they did not have to generate by knocking doors, cold calling or by spending big money on a marketing campaign! It puts food on the table, pays a doctor bill, pays for the car, puts gas in the tank, and lets us all live the Americandream! Hope their business models survives. I know mine will as long as there are referral fees!
Lenn, well put, I saw the post, my initial reaction was not to give it leggs, since you addressed it so eloquently we should ask Mr. Gramm to visit your post and have him read our comments.
Lenn, I pay out a lot in referral fees. Referrals probably make up 50% of my buisness. I gladly pay and I gladly receive.
Lenn, When I give referrals I call it phone money. When I receive them I call it a super hot lead. We give and receive 25% for referrals. It balances out all the other hours we don't get paid.
I almost missed this post and I happily receive referral fees and I gladly pay them after I have done some thorough research on the agents. I expect them to do the same job I would and in just as meticulous a manner!
Lenn, referrals are just another income stream from this business. It's sad that some people don't take advantage of it.
Lenn - I agree with you. I refer out a lot and am always open to take referrals as well. If I don't know the area, I'd rather refer it to someone who does.
My first referral I sent out took me more than an hour to find the perfect agent! I do pay a referral fee and I would like referral fees in return. I gladly paid a 40% referral for my first one I received on AR. I received an ABUNDANCE of "back end" selling help from my referral partner.
I guess it just depends on how we look at a referral!
Lenn - I do not see an issue with an agent collecting a referral fee, so I have to agree with you here.
A good referral creates commerce. If you help create commerce you are entitled to compensation.
Lenn- I definitely think that referrals are a good thing. I always get as much information as I can to pass along to the agent that I am referring to. I think that it is important that I give the agent I am referring to not just a name and contact number, but anything else that I may know that will best help that agent assist the client. I have received referrals that the agent literally has nothing other than a name and number. I sometimes get a bit annoyed that for that I need to pay out, but then I remind myself that I may never have gotten that lead if not for that referral. So in the end, any referral is worth a huge thank you to the sender!
Lenn- I just linked to Justin's post that you mentioned here. I do accept and pay referrals fees, but I also wouldn't have a problem referring a client to him, if he were the best suited for the job. I think that he makes some valid points about full disclosure- IMHO, anyway.
Lenn - I consider it a finders fee for matching a buyer to an agent. In the case of a buyer I am usually bringing a qualified buyer to the agent and not just a looky-loo. Seller referrals are those who I have determined are ready to list NOW. I believe in sending quality referrals to other agents - I think anybody would find value in that. I feel I am entitled to put a price on my time and efforts.