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Building a Real Estate Agent Referral Network
Referrals are the lifeblood of the Real Estate business. Referrals can come from current clients, business contacts, members of clubs or organizations you belong to, or just casual acquaintances who may have seen an ad or received a flier from you.
Referrals are often the result of what used to be called "word of mouth" advertising. In today's terminology "networking" is a better way to describe an agent's efforts to generate referrals.
As a real estate agent, what "networking" does for you is that it creates connections between you and other people who can potentially send you business. As a result most real estate agents spend a good deal of time meeting new people, going to social gatherings, holding open houses. Generally putting their face out there so that as many people as possible get to know them.
But not all referrals come as a result of your local networking efforts. There is another source of business that is not local: other real estate agents from out of town.
In fact, for real estate agents receiving referrals from out-of-town agents is an important potential source of business.
The typical scenario: Agent A has a client moving to another city and recommends Agent B in that other city. Agent B contacts the client, finds out what they are looking for, researches and finds a number of homes that fit their criteria.
Then Agent B arranges for showing times, and coordinates a visit by the client to the area for showings. Basically Agent B then takes over and handles all aspects of the purchase.
In some ways this is the best kind of referral a real estate agent can get. When another agent recommends you to their client, the chances are very good that the client will use your services and you'll get the business.
In fact both agents benefit from this arrangement because the referring agent normally gets a portion of the commission - usually as high as 25% or 30% just for making the initial recommendation.
So obviously it is in everyone's interest to pursue referrals of this kind. Everybody wins. Agent B gets a new client, and hopefully a commission on the purchase. The client gets looked after by a trusted agent who is intimately familiar with the housing situation in their new city.
The referring agent, Agent A, provides a free valuable service to his or her client - and gets a healthy chunk of the agent commission as payment. What could be better than that?
As we all know, most people are incredibly mobile these days, change houses every few years, and often move from town to town because of a variety of reasons. This presents enterprising real estate agents with almost unlimited opportunity to take advantage of agent-to-agent referrals.
But taking advantage of these opportunities is not as easy as just saying "Give me a call when you need an agent in my town". There are probably hundreds of agents in your town - perhaps thousands - and they are all saying the same thing - "Give me a call when you need an agent in my town."
The answer is networking. But in this case it is networking with agents in other cities and towns. Most agents use a surprisingly passive strategy when it comes to networking with other agents.
They wait for someone to contact them with a referral lead, do the deal if it materializes, and then maybe keep in touch from time to time with the referring agent.
A much better strategy is to develop of network of agents in as many neighboring towns and cities as possible and then promote yourself to them. Not in an obnoxious, aggressive way, but in an information-sharing, here's-what-I'm-up-to-these-days sort of way.
Introducing yourself to potential networking partners can be tricky. The best way is to tell your prospective partners what they want to hear - that you are looking for someone to send referrals to in their community and you're wondering if they would be interested. Who would turn down such an opportunity?
Another very effective approach is to get involved with a more formal referral network. Since these are agents who have already expressed an interest in generating referral traffic they are perfect prospects for your own networking efforts.
But it takes more than just saying "I am interested in referrals". It is much more effective if you demonstrate your interest by keeping in touch with your networking partners.
One way is to share information with them by sending a regular newsletter or email message from time to time, letting them know of developments in your town, and successes in your own business.
Another good strategy is to actively solicit relocation business from your own stable of clients and contacts. In other words, promote yourself as a "relocation expert".
This is a free service you can offer your clients - one that can be turned into a lucrative commission when you send their business to one of your networking partners.
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