Change is coming to communities across Washington State. Do you need guidance about what middle housing means for your buyers and sellers? Middle Housing - duplexes, triplexes, cottages, ADUs, and increased density - is already impacting what can be built on a property. Knowing where, what, and when these changes are coming to your community will be critically important. The Middle Housing Resource Center, will be chock-full of videos, resources, and more, all designed to help you become an essential expert to your clients.
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How much money do you think you could earn from sending out referrals if you really made a concerted effort? $25,000 a year? $50,000? What if I told you this amount could easily exceed six figures per year if you had a system for attracting the type of lead you were willing to refer out and a system for working with the agent on the other end? Would you believe me?
I can tell you with certainty that I have set this up for myself when I was selling and it earned me hundreds of thousands of dollars. I have also helped other agents set up different versions of this based on their circumstances with similar success.
Although there are many ways you can set this system up for yourself, today I am going to focus on the four most common referral systems that allow you to implement the system and then sit back and collect the shared commission.
I covered some of the additional components you are going to need on my Denise Live this week: The Do's and Don'ts of Real Estate Referrals. Club Zebra Members (become one here) should check that out. I talked about finding the right agent, setting up expectations, and communication. This is important information to have in addition to setting up the systems below:
The Buyer Referral
This is likely the most typical business model that agents strive for - get to the point in which you are handling listings only and then refer out the buyers. In fact, many agents have a vision of building an expansive team of buyer agents. But that takes time, money, and management and most agents really just want to leverage their time better. I say, keep it simple! Develop referral relationships with 1-3 agents and each of you run your own businesses.
To build this type of business model, most agents need to rely on a lead generation source that delivers those listing leads so that 100% of your desired income is covered by listings (with buyer referrals being the gravy). In my experience, the best way to do that is through niche marketing and developing a geographical farm. Our Lead Magnet program is designed to do just that. It is important to know that developing a niche market and targeting a farm is an investment. Realistically, it will take around 18 months of consistent mailing to really start to get traction. In terms of budget, it is going to take between $500-$1000 minimum per month to really make headway depending on how your content is being created and how you are mailing. If you aren't ready to make that kind of investment, then this is not the right type of referral system for you at this point in time. That is okay as there are plenty more options out there!
The Investor or Out-Of-Area Referral
If you have a robust database with equity in their homes, perhaps it is a good time to start talking with them about the power of real estate investing, with long-term and short-term rentals, a second home, or commercial. If this is out of your wheelhouse, then teaming up with another agent locally would be a good option, IF your area is prime for investing. Some areas are too expensive for first-time investors to make headway and should look out-of-area for their first foray into real estate investing.
In either case, providing a referral to a local specialist or out-of-area specialist will provide you with a nice referral check simply for talking to your database about investing.
How to get started? Do an equity study on each past client. Determine how much equity they have earned versus their approximate mortgage balance and start the discussion. I suggest having a worksheet that you follow for that meeting that provides them with equity options such as:
That way you have an agenda to talk through options, see where they are at, and answer their questions.
The "ENOUGH!" Referral
When I was selling real estate, at one point, I had sold over 100 homes in one year. I felt on top of the world until my accountant informed me that basically all the income I had earned for the last 27 homes I had sold was going to go to taxes. Ouch! Although this was a painful lesson, it gave me my “ENOUGH” point - the point at which I could stop working for the year (or better-choose the clients I did decide to work with), refer out the rest, and make smarter, tax-strategic decisions about that extra income.
If you are a high-income earner, have you talked about your ENOUGH! point with your accountant? What are you going to do with that extra time?
The "Retirement" Referral
This is one of my personal favorites but it takes several years of planning and execution to get it just right. As a real estate professional, you amass a book of business - past clients who would not only do business with you again, but become your raving fans, referring others to you to help with their real estate transactions. There is value in those relationships, but those relationships need to be cultivated, even as you are getting ready to retire.
In an ideal world, real estate agents would be in regular communication with their past clients - from monthly real estate market updates to an annual personalized report, an annual in-person event or live meeting, and more. The better those relationships are, the better the Retirement Referral system works.
As the agent is gearing up to retire, he or she partners with another agent, introduces that agent to their database and defines the new person's role. The choosing of that agent is very important and I don't have time to dive into those details here. However, they will be covered on our Denise Live webinar for Club Zebra members at the end of this month: Referralment, Not Retirement . I hope you join us for that!
The retiring agent and agent partner would work in tandem for a period of time (such as 2-3 years) so the clients get used to the agent partner. Once that period is over, the retiring agent can continue to be available for consultations for a certain period of time, so the clients still see the value in continuing to working with the agent partner's team.
When I retired from my real estate business in Canada, I followed this formula myself and continued to make hundreds of thousands of referral dollars from my past book of business while my agent partner was handling the workload.
Establishing a system for supplemental referral income can be very lucrative - but it doesn't happen by accident! It requires you to define your target audience, potential referring agent partners, and a system for setting expectations.
Join us for FOUR compelling Denise Live sessions designed to help you generate high-quality referrals.
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By Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group, Denise Lones, brings nearly three decades of experience in the real estate industry. With agent/broker coaching, expertise in branding, lead generation, strategic marketing, business analysis, new home project planning, product development, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.