This article explains how to become the go-to referral agent in your market whenever an out-of- the-area real estate agent has a client to send to your area.
We discuss proven ways to become the local expert in your market.
Finally, we wrap it up by showing with minimum effort; how you can achieve maximum results to ensure that other out-of- market agents know you’re the go-to person any time they need an expert Realtor in your area.
First, let’s start with the basics.
What is a referral agent?
A real estate referral agent is a licensed agent that connects sellers and buyers with experienced agents in other markets outside of their local area.
Note: Several states have local laws dictating a special status real estate license that restricts agents from sales but allows them to send referrals to their brokerage. In this article, we’re focusing on the active agent.
Real Estate Referral Agents have established relationships with homeowners looking to sell and home buyers looking to purchase a new home. For several reasons, they may not be the best for that particular transaction. When that’s the case, they’ll find another expert in the client’s desired market and refer the client to that agent.
Why would someone use a referral agent?
There are often reasons why an agent who has a great relationship with someone isn’t going to be a great fit to represent them in a real estate transaction.
The issues vary from person to person and transaction to transaction, but there are a few common reasons.
Sometimes the desired property type doesn’t quite match the agent’s expertise. For example, the traditional residential Realtor will refer clients interested in buying commercial real estate to a commercial brokerage.
Another widespread reason a real estate agent will send outbound referrals is due to geographic location.
Real estate licenses are usually bound to state borders, and agents typically only have advanced knowledge of their local market.
When a client needs an expert outside of the geographical area their trusted agent covers, that agent will look for an outbound referral partner.
When sending an outbound referral, the referring agent will usually receive a standard commission rate of 25%. Still, each situation is independently negotiated based on the details of the client’s needs.
How can agents get more referral clients?
There are several ways in which agents can get more referral clients. Let’s break down each method here so you walk away with a comprehensive strategy for building your business as a referral agent.
First, they can ask their existing clients to refer prospects to them. It’s essential to explain what kind of relationship they have with the client and what makes them an excellent choice for that particular transaction.
They should also state exactly what they will do for the client as a referral agent.
Agents may be surprised with how receptive their clients are to the idea, especially if they’ve had great experiences with that agent in the past.
This can serve as a reminder to ask for referrals. Sometimes what’s apparent to an agent is not always obvious to a client, and an occasional reminder can go a long way.
Keep in mind that real estate commission requirements dictate that referral fees can only be paid to a licensed broker, never to the general public.
What are Outbound Referrals?
Another method is to build outbound referral relationships.
This method can include any number of strategies that involve an agent forming strategic relationships with other agents and real estate brokers across the country.
There are no boundaries or standard practices (as long as all agents meet the local licensing requirements in their state) regarding how many markets or which agent will be the best fit for the client you’re looking to refer.
It’s vital to perform due diligence when searching for an outbound referral agent. Here are a couple of best practices to point you in the right direction.
Identify a niche in your local real estate market.
Start by identifying a niche in your local market, the area you know best. Once you’ve done that, you can dig into why those people move when the time inevitably comes.
You’ll find some common threads. Sometimes in urban commuter areas, you’ll notice a trend that young professionals move out of their two-bedroom condos around the age that they have their second child.
If they’re staying in-state, there may be a popular suburb that most people move to from the city. If that’s the case, you can find an agent in that area to refer clients to and begin an outbound referral partnership with them.
In areas where it’s less clear or more challenging to find a referral partner, services like ours offer a toolkit to help agents make sure they’re sending their clients to a trusted, vetted referral partner who will take good care of the client.
Having a ready tool incentivizes you to actively engage to get more referrals for inbound and outbound transactions. Software tool will limit your upfront cost, so you don’t have to pay additional referral fees to third-party companies on every real estate transaction they’re associated with.
Find agents who service the types of clients you don’t.
You can also build your outbound referral strategy by finding agents who work in different market segments. Commercial and industrial properties are often a different niche than residential agents avoid and refer out.
Strip malls and commercial office space are other opportunities to find referral partners in and around your market.
There are many benefits to building outbound referral relationships with other agents. The following example we’ll look at is when outbound referrals become inbound referrals.
Building your inbound referral agent strategy.
How do agents get referrals from other markets or even out of state?
The most common way referring agents get referrals is by building relationships with agents in other markets well in advance.
By being prepared, you ensure you’re not at risk of not negotiating the best fee for your referral, at minimum losing those 25% referral fees by scrambling to find a quality agent for your client at the last minute.
We covered some quick strategies in another article “guide to real estate referrals” you can visit here, but today we’re going to explore the often talked about but rarely executed Digital Mayor Strategy.
What is the Digital Mayor Strategy for Real Estate Agents?
The Digital Mayor Strategy is a term you’ll find all over the internet since the rise of social media marketing in the real estate business.
The goal is simple: become the most trustworthy referral partner in your market, so others will trust you to be a great referral partner for their clients.
When the mayor of a small town walks down the street, everyone knows who he is. When he stops in to get lunch at the local pizza place, they know him by name.
In this strategy, you become the trusted referral partner for the small businesses and local shops in your community first. Later, as you continue to build your presence in the community, you’ll have residents mention, “We see you everywhere!”
How to Get Started with The Digital Mayor Strategy for Real Estate Referrals
This is the point where most agents turn around and walk the other way.
The idea sounds great in theory, but when it comes time to turn the camera on or sit down at the keyboard to do the work of becoming a local expert, frequently, something else becomes a priority.
Start small, and focus on showcasing stories, businesses, and people from the community – not production quality.
You can get started with your phone and a $10 phone stand. Make sure the camera is at eye level and stable. Have a source of light in front of you (daylight keeps it simple.)
That’s all you need for production value right now. If you provide great information, no one will remember you didn’t have any special gear. Focus on the community. It’s OK to share real estate information occasionally, but don’t overdo it.
There are exciting stories in your area that people would love to hear, but no one is covering them. Local businesses that have been around for a long time are a great starting point, as are prominent people in the community.
Leverage digital marketing to build your local brand.
If you have your website, consider adding landing pages or niche-focused pages for your community. Each market area has its niches, but let’s use the example of a commuter city with a train station that’s within walking distance from residential neighborhoods.
A simple 5-minute video where you set out to show the walking route to the train would be a great attention grabber for anyone who’s not familiar with the city but is considering moving in the future.
Start by showing the route on a google map and talk to the camera for 10-15 seconds.
Cut to a quick interview with the owner of the coffee shop where everyone stops in the morning, giving the viewers a behind-the-scenes look.
Wrap the video up by walking into the station and showing the ticket machines or purchasing window and arrival and departure boards, so anyone not familiar gets a sense of what the station looks like.
That’s it. Later, you can repeat the process for the commute home. Instead of the coffee shop, stop off at a local bar or restaurant and do another interview, showing the viewers that your a local expert, and know the ins and outs of your market (not just the real estate, but the community, too.)
This method has been wildly successful for agents who execute it properly. You’ll find that it starts slow, but if you keep at it, you’ll reach a point where people begin to become familiar with you.
Over time, you’ll notice that searches on Youtube and Google will point people toward your content, too. That’s one way you’ll become a local expert.
How to establish yourself as the local expert fast
One of our referral toolkit features is the ability to promote yourself and your local expertise on our platform, so anytime agent logs in looking for a referral agent in your area, they see you right away.
No waiting for search engines to find your content or residents to see 7-10 pieces of your content over a couple of months – our ads ensure agents see you as the local referral expert in your market.
If you’d like to learn more about building your business by referral, we post a short, actionable breakdown, tactic, or strategy designed to help you grow your referral business every week.
Read our previous post about agent-to-agent referrals guide and why they are key channel to grow real estate business quickly.
You can help clients across the country, not just your local area.
As a Realtor, we often forget that we can actually help clients across the nation. Not just the local area where our expertise lies in.
Imagine how quickly you can grow business if you can increase your income by 25% annually and it compounds fast from there. In National Association of Realtors survey, majority of active referral agents mentioned that 1/4th of their incomes comes from agent-to-agent inbound and outbound referrals.
Next time when you are having conversation with clients, business partners, family and friends; if you hear conversation about someone wanting to buy/sell home in another area; do not pass it. Know that you can help them as referral agent and provide great service.
In similar fashion; there are agents from across the country looking for agents in your area to help their clients.
This is where having your own private agent-to-agent referral network shines. Build one pro-actively using easy to use free Referrals.io tool kit and become a top producing agent.