The agent-to-agent referral economy is not well known to many. Even the experienced licensed real estate agents, working in the real estate industry for many years, do not realize about referral agent business model.
Highly successful agents have many tricks up their sleeves to grow the Realtor business. One of the powerful tools they utilize is leads from partner referral agents.
Business coaches, who coach top agents, promote referral agents, networking as one of the best channels to grow the real estate services business quickly.
Best Definition of of Real Estate Referral Agent
Real Estate Referral Agent is a licensed Real Estate agent, who sends an agent-to-agent referral client lead to another licensed Real Estate Agent. Real Estate Referral Agent is also known as Referring Agent or Sender Agent.
The sending agent, after the referral fee agreement is signed by both parties, will award the referral and share the client contact information. The agent who received the referral, will contact the client and provide the services to help with buying, selling or renting the home.
Definition of Referred Agent
Real Estate Referred Agent is defined as the licensed real estate agent who receives agent-to-agent referral client lead from another licensed referring agent.
Referred Agent is also known as Receiver Agent. Referral Agent and Referred Agent; i.e. Sender Agent and Receiver Agent, agree on Referral Fee structure prior to sharing the client contact information.
Definition of Agent-to-Agent Referrals
Real Estate Agent-to-Agent Referrals is act of sending referral client lead by one licensed real estate agent to another licensed real estate agent.
As per the National Association of Realtors (NAR) research; agent-to-agent referrals are some of the highest qualified, highest converting leads agents can have.
Another best part of agent referrals, they come with no upfront cost for receiving agents.
Real Estate Agent Referrals Explained
How Real Estate Agent Referrals Work
Ask any highly successful top agents for their secrets, and they will surely mention agent-to-agent referrals in top of the list.
Agent referrals process involves three parties: Referral Agent, Referral Client and Referred Agent. To simplify for understanding the process, let’s call them Sender Agent, Client and Receiver Agent.
Referral Client Needs
There are many situations lead to where an agent starts looking for receiving agent for his/her client to send as referral.
Sending agent probably has working relationship with the client. Client trusts experience and opinion of known agent to assist in their home buying, sale process.
Below are few scenarios where referral agent has need to find another agent for referral.
- Client maybe selling home in one location, moving to another city and looking to purchase there.
- Agent is out of the area presently and not readily available to serve the client.
- Agent represents sellers only. If buyer client shows up, sends buyer as referral to another agent.
- Client is looking for investment property in another location.
- Agent is too busy to serve all clients. Looking for help to send new clients to another agent.
- Agent is retired from actively helping the clients. However, agent can work as referral agent and service the client with help of another agent.
It is important to understand the referral client needs and find perfect agent match.
Client may be looking for property in particular location and needs an agent with expertise in that area, prefers agents with certain specializations like land.
Client may wish to work with agents who speak the language client is fluent in or needs extra hand holding and needs an agent who has more bandwidth to provide top of the line service to make the client comfortable with real estate transaction process.
Finding Perfect Receiving Agent for the Referral
Once the needs of client are understood; it is time to find an agent who is readily available to serve and fits the client needs.
Know that time is of essence. Clients tend to stick and work with an agent who makes the first contact more than 90% of times. You do not want to delay in finding a matching receiving agent and connect the client as soon as possible.
For maximum success; make a 3-way warm introduction through a phone call or e-mail message connecting both Receiving Agent and Referral Client.
It has advanced map search functionality to quickly filter for specializations and find agents to exchange referrals.
Real Estate Agent Referrals Fee Agreement Form
Before awarding the referral, sharing client contact information with receiving agent; make sure to sign written referral fee agreement thats spells out all terms and conditions for successful referral and fee exchange.
Agent Referral Fee, like other real estate transactions, is completely negotiable. Many in the industry use 25% of total office gross commission as referral fee.
However, not all referrals are same and fee can be adjusted based on referral value.
How to avoid common issues with Agent-to-Agent referrals
When three parties are involved: Referral Agent, Referral Client and Referred Agent; potential for communication issues go up a lot.
In one of industry surveys; many agents mentioned communication as the biggest issue with agent-to-agent referrals.
Here are some tools and techniques to avoid common pitfalls with agent referrals.
- Have a clear referral fee agreement. Spell out terms for referral fee including how to deal with if any client rebate is involved.
- Setup procedure on how to communicate between sending and receiving agents and how frequently to update each other.
- Receiving Agent should contact the client and start serving as soon as possible.
- Be pro-active on both agents sides; avoid lost referrals.
- Use purpose built agent-to-agent referrals solution, to ensure referral are successful.
What is the benefit of being Referral Agent
Referral Agent business can be a great source of passive income for agents who have leads but not time, energy, resources to serve the clients.
It opens up another channel of income for active agents. Normally agents focus on serving regular home buyers, sellers and ignore agent referral leads.
By sending the agent referral to another agent; it opens up another stream of income for the Referral Agent.
Is it worth to receive Agent Referrals for Fee?
Definitely worth it. Real Estate business runs on Referrals. Agent referrals are the highest qualified referrals agents can receive.
It saves countless hours of time trying to screen, filter and qualify otherwise raw internet leads.
Closing one successful agent referral may lead to many more client referrals from the satisfied client.
Note these great agent referrals come with no upfront cost.
Secret of top producing, highly successful agents
Agent-to-agent referrals are one of the secrets of top producing agents across the country.
Be actively on lookout for inbound, outbound referrals; build partner agent referrals network and grow realtor business quickly.