A referral is one someone tells someone else that they should use your services. And, those referrals are typically “sold” on you before you even speak.
Some interesting points uncovered in the 2016 National Association of Realtors Profile of Home Buyers and Sellers and 2017 Home Buyer and Seller Generational Trends:
- Sixty-four percent of recent home sellers used a referral or the same real estate agent they had worked with in the past. That number jumps to 74 percent for home sellers aged 36 and younger.
- Referrals continue to be the way that most buyers find their real estate agent. Referrals by friends, neighbors, or relatives were higher among buyers 36 years and younger (52 percent, up from 46 percent last year) and 37 to 51 (39 percent). Recent buyers initially contacted their agent by phone and interviewed only one agent.
Those are some impressive stats, but, how do you GET referrals?
There are several different TYPES of referrals. We’ll go over:
- Agent to Agent Referrals
- Service/Company to Agent referrals
- Sphere of Influence Referrals
Agent referrals. Do you ever go to conferences or real estate events outside of your area? That’s one way to connect with agents that might have clients/friends/family moving into your area. Those referrals are a bit of a long shot unless you can predict the future and know that an area will have people leaving and moving to your area.
But, agent referrals from a nearby city might be less of a long shot. In that case, you might be more strategic about your continuing education. Instead of taking classes at your local board, seek out continuing education classes a couple hours away from where you live. There’s great networking in these classes!
Note that agent referrals aren’t free. They usually cost 25% of your commission, or whatever you and the other agent have agreed to as a fee.
Best Practice
Get the referral fee in writing BEFORE you start working with the client. We’re all professionals and it’s quick and easy to get iron out the details in advance. That will prevent surprises for either agent.
Service/Company referrals. There are services or companies that will give you referrals without advance payment but they expect a referral payment at closing. HomeLight is one example. Essentially they’re doing some sort of advertising in your market (PPC, or some other form of lead generation) and they’re happy for the referral amount as payment.
Best Practice
Typically these referrals are not exclusive and are shared with multiple agents. Speed to lead – aka a fast response – will help you convert more of these leads to clients.
Sphere of influence referrals. Getting referrals from your past clients and/or sphere of influence (friends, family, anyone else you know) is generally low cost or free of advertising expenses. But, you might have some cost and time invested in nurturing those relationships.
Inman News had a good article on how to ask for referrals that was unlocked at the time this was written.
Another resource on getting referrals.
Best Practice
Every referral deserves a handwritten thank you note. Perhaps a gift card or another token of your appreciation would be appropriate as well.