What Real Estate Referrals Can Do for You
Real estate is a referral based industry, meaning that a large chunk of a real estate agent’s new clients come from the recommendation of that agent to the client by someone else. For the most part, there are three primary sources of real estate referrals: former clients or, more generally, a sphere of influence, other real estate professionals, real estate referral companies or matchmaking services. Despite these various sources, getting referrals and generating leads isn’t always easy, and usually takes a lot of work and dedication on the part of the real estate agent. So why use a referral based model to gain clients instead of a more traditional lead-based approach? Let’s talk about how real estate referrals can benefit you.
More Business with Less Effort
Getting referrals is a great way for a real estate agent to expand their client base. 75% of a real estate agent’s new clients come from referrals and word of mouth, but less than 20% of the average real estate agent’s past clients are providing referrals. In other words, 75% of a real estate agent’s business comes from only 20% of your past clients, so referrals are giving you a lot of business. But considering that 86% of real estate customers would not only use their real estate agent again, they’d also recommend their agent to others, increasing your referral rate could bring you a lot more business, with just a few changes to how you handle the clients you’re currently working with. You could even get 100% of your new clients from referrals. That’s a lot less work and risk than following leads or sinking money into marketing schemes!
Easier to Close Deals
Clients gained through referrals can also be a lot easier to work with. After all, someone they know has vouched for you personally, so your new client knows they can rely on you to be trustworthy, competent, and ethical. In fact, according to an international Nielsen survey including people from 58 different countries, 84% of people say that they would trust recommendations from their family and friends over any other form of advertising. Now, compare this to clients found through other methods, where there’s no other party to vouch for you, and you can see why clients gained through referrals are far more advantageous to work with than other clients.
You can also benefit from giving referrals to other customers. Success in real estate depends on relationships, and sharing referrals between real estate agents is a great way to build professional relationships. If you have too much on your hands to take on another client or encounter someone looking for a real estate agent with a specialty that you are not familiar with, sending that client to another agent builds a relationship and makes that agent far more likely to send clients your way as well. It’s also an industry norm to charge referral fees for clients sent to other agents, just be open and honest about the fee from the start and only charge for formal referrals, not for informal recommendations. When you get a referral from another agent, always be sure to respond with a handwritten note and a small token of appreciation to make sure they know how much you value their referrals.
These relationships can also be beneficial if you ever work on a deal with the other agent. If you’ve worked together in the past, it’ll be much easier to cooperate with one another and bargain for a deal that is to everyone’s advantage.
Century 21 Peak
Century 21 Peak is an expert in the real estate industry and provides a comprehensive set of services like asset management, escrow services, personal insurance, financing and more. Their network of independent but affiliated companies provides unparalleled services to homeowners, homebuyers, private investors, brokers, lenders, agents, and corporate clients.