Referral FAQs
Denise answers questions from our readers on creating a referral process and setting expectations.
Over my real estate career as an agent, managing broker, and real estate trainer, I have given and received many agent-to-agent referrals. I believe there is a superior process for referrals and that setting expectations is important.
But what happens when things don't go according to plan? Below are some questions I have been asked over the years:
Q: Denise, I gave a referral to an out-of-area agent that came highly recommended. At first the communication was great but now…crickets! Both the agent and my referred clients are non-responsive. Did they buy? Did the agent drop the ball? Did the buyers go in another direction? All I know is that my phone isn't ringing and I haven't seen a referral check. What is my next step?
If you are not getting response by phone, change the communication to email which can be documented. My rule of thumb is to send up three emails to the agent, a few days apart, and a 4th to the managing broker if you don't get a response. If you still don't get a response, send two copies of a letter and send these certified mail to the agent and the managing broker.
Q: Denise, I was on the receiving end of a referral that turned out to be an agent referring me a relocation company lead. I didn't learn about this until after I had spent the whole weekend touring buyers who were relocating to my area. The relocation company was expecting a deep cut PLUS I had to give the referral fee. I don't work for free! How can I keep that from happening again?
I hate to say it, but you should definitely be asking more questions up front in the future about the payment parameters. I realize this probably happened quickly, the agent may not have been aware to warn you about that ahead of time, but it would behoove you to get a copy of the contract also that binds those clients to the relocation company to verify you are beholden to that as well.
I go back to the expectation form which is critical for understanding everything that is going into a referral from communication to payments. This is available for Club Zebra members here.
Q: Denise, an in-area agent recently referred some buyers to me, claiming she had too much business at the moment. She is only asking for a 20% referral back and seems to have washed her hands of these clients. I think it is because these are really horrid clients. They are demanding of my time, are late to showings, won't communicate with me about their pre-approval as interest rates have gone up, and won't give me much feedback on the 20+ homes I have shown them already. I would have fired these buyers already but didn't want to risk the possibility of losing future business from this agent. What should I do?
This is a great time to reconnect with the referring agent and give them a summary of what is happening. If the agent knows these are difficult clients but the agent has worked with them in the past, the agent may have tips for you. You may also want to run through a discussion with these buyers to get them back on track and set some boundaries. Just having that conversation with the agent lets that professional know that you care, are proactive, and that you can work collaboratively which sets positive engagement for the future.
Q: Denise, I received an in-area referral from an agent with buyers who were looking for a home with an approved income-producing ADU, which is something I specialize in. I didn't have a buyer agency agreement with these buyers, we only looked at a couple of properties since there aren't that many available, and they wound up writing an offer with a listing agent of a home the agent was holding open. Obviously, I am upset, but the referring agent is very upset as well since they aren't getting a referral fee. I feel awful, and am upset with these buyers who did something I advised them not to. What do I need to do?
Change your process! When you take a referral, you are beholden to the referring agent to get the job done. That means making sure your "I's are dotted and your T's crossed. In this market and with changes that are coming in the future, I recommend adjusting your process now to formalize your buyer presentation which includes a buyer agreement.
Furthermore, if you are giving a referral, making sure that the receiving agent gets a buyer agreement signed should be part of the expectations document I addressed earlier.
Q: Denise, I have never gotten a referral! How do I set up a system for letting people know I would love a referral from another agent?
The key here is that you need to have something the other agent doesn't have. That may be location-based, but it can also mean that you have expertise in an area that they don't. It can also be that you have time that they don't have. Let's drill down these three opportunities:
- Out-of-area referrals - You need a way of connecting with out-of-area agents. That could be networking with agents in the larger area (like our ENCORE coaching group that draws in agents over a 150 radius - and beyond!), being a part of your state REALTOR association, or even volunteering with the National Association of REALTORS. You might also consider a membership-based designation such as CRS. You may also consider a business-networking organization or an interest-based national group such as the LGBTQ+ Real Estate Alliance. You must connect!
- Expertise referral - You can get referrals from in-area agents if you have a level of expertise in a field that they don't. For example, there are plenty of general agents around, but how many have expertise in commercial? With investors? With equestrian properties? With waterfront? With seniors? In a particular area such as an area with a complex HOA? There are no shortage of niches to explore and once you do, you may find opportunity knocking at your door!
- The "Help” referral - Have time on your hands? Busier agents often look for ways to leverage their time, and that usually means referring buyers to agents who want them. Letting your brokerage know you are open to working with buyers or even helping agents with vacation coverage could be a good way to begin building relationships…and more referrals!
Referrals can be a strong part of your real estate business - on both the buying and selling side. Communication and expectation-setting are the most important things you can do to be best-assured of success.
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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.