Real estate brokers face new challenges every day in their efforts to remain relevant to agents and clients. Relevance was easier to accomplish when it was harder for consumers and agents to access information and manage the process of home-buying and selling on their own. Back then, brokers were the face of real estate in their community, handling the local advertising and marketing, as well as running and managing the office.
Today, everything has changed. Consumers and agents control the flow of business, and it’s easy for individual agents to manage their own marketing and business. Consumers have access to view and select properties and can even make offers independently online.
Since brokers no longer “own” the agent-client relationship, they need to find other ways to continuously add value. Otherwise, they will find it difficult — if not impossible — to retain and recruit new agents.
Much has been written about why agents leave/join a brokerage, but it’s usually due to some combination of the following factors:
• Splits/fees: The agent’s split is too low and the fees charged by the brokerage are too high.
• Technology: The brokerage’s available technology is out-of-date or difficult to use.
• Mentoring/training: Agents don’t feel that they are receiving sufficient mentoring and training.
• Brand/culture: Many agents now have their own personal brand, and the brokerage brand or culture might not be in sync with theirs.
Being part of a referral network and making it easier for agents to work with more referrals can help brokers set themselves apart from the competition — and bring itself to equal status if it’s a local, boutique brokerage without nationwide coverage. Top agents use referrals every day to help them support past clients or leads outside of their preferred price point, property type or area, so this is a key benefit to offer.
Because referral networks come in a variety of shapes and sizes, it’s important to find the one that best fits the needs of you and your agents. If you’re part of a nationwide brokerage, it likely has referral/relocation solutions already in place for you and your agents to use. Many of the leading coaching programs make it easy to connect with fellow “coaching members.” Other National Association of REALTORS affiliations have strong, built-in referral and education networks — The Residential Real Estate Council (formerly CRS) is one of the largest with over 31,000 agents worldwide. There are also specialty networks, such as Leading Real Estate Companies of the World, which seek out one or two brokerages per market, or Giveback Homes, which connects agents interested in community-giving. Finally, there are organizations like ours which handle the referral process on a broker’s behalf.
Your agents might be surprised by how many referral opportunities they’re missing out on if they’re not growing this area of business — reaching out to friends or family members in other cities or states, getting active in their communities or sponsoring local events can all yield increased business. Consider developing a training program surrounding how to generate more referrals or implement a “Referral Challenge” in your office to encourage your agents to conduct 50% more referral business in the coming year. You can even hold weekly brainstorming sessions with your agents to come up with new ideas.
Our firm conducts an annual survey (download required) of top performing referral agents and found that referral business can represent over 60% of an agent’s business — 50% from inbound referrals and 12.5% from outbound referrals. The typical preferred referral fee is 25%, and the most important factor to an agent when doing a referral is to ensure that their client is taken good care of. Are your agents doing a similar amount of referral business? If not, there’s room for them to grow.
Increased referral business generates increased value for brokers by increasing overall agent success. It can also help counter the reasons why some agents leave brokerages. Joining a referral network is a win-win situation for everyone involved — enhancing your brokerage value and keeping your agents successful, happy and engaged.
Your real estate business is bigger than you think. ReferralExchange matches your clients with 3 great agents and pays you a 25% referral fee at closing.