March 14, 2018
Nearly everyone knows what a real estate agent does, but not as many people are aware of what a real estate referral agent does, or why they might seek one out. Being a real estate referral agent can be a lucrative way of earning income in the real estate business, and is a good option for real estate agents who have experience and connections in the real estate world.
Definition of a Real Estate Referral Agent
Quite simply, a real estate referral agent is a real estate agent who refers a client to another real estate agent, who will then manage the client's real estate transaction. Real estate referral agents receive a portion of the commission on the real estate transaction a client conducts after they have been referred. A referral agent must be part of a brokerage in order to act as a referral agent and receive commissions for referrals.
Who Benefits from Real Estate Referral Agents?
Referral agents can offer a win-win-win situation. The client wins by being referred to a trustworthy agent who can handle their real estate buying and/or selling process, particularly in real estate investment locations that the client is not familiar with. The real estate agent who receives the referral benefits by being referred a new client and receiving new business, which will lead to a new commission. The real estate referral agent benefits by receiving a percentage of the commission of the client's real estate transaction. Everyone wins!
When Would a Client Be Interested in Using a Real Estate Referral Agent?
In today's fast-paced real estate investing world, clients are often interested in purchasing property in areas that they aren't familiar with; for example, a second home in a beach town or near a ski resort. The client wants to buy property, but also wants to make sure they are connected to the right agent to help them with the purchase. This is a case where a real estate referral agent can be helpful to the client.
A second situation where a referral agent might be helpful is for new buyers who have not bought property before and therefore are not already connected with a real estate agent in their area.
Finally, a client may have a family member who is a real estate agent, but that real estate agent does not want to conduct business on the client's behalf for conflict of interest reasons. The client then may have their family member refer them to another agent.
Duties of a Real Estate Referral Agent
Since referral agents rely on commission of successful sales by their referred agents, their success depends on generating a significant number of quality referrals. This means marketing their services online and elsewhere in order to create business from clients who are looking for a referral. Being well-connected and visible in the real estate community via a strong network can help with receiving contacts who need referrals.
Another crucial piece of the real estate referral agent job is to know which real estate agents in target markets are available for referrals. A real estate referral agent will want to have a good roster of agents in various, popular real estate markets that they can refer their clients to. The amount of commission that a real estate agent is willing to pay the referral agent can influence which real estate agents a referral agent will refer clients to. Once a client has been referred to an agent, there are typically no other duties for the referral agent. However, a good referral agent will follow up to make sure that the real estate agent to which their client was referred is doing a good job for the client.
How Can You Become a Real Estate Referral Agent?
In order to earn income as a real estate referral agent, you must have your real estate license. You must also be connected with a brokerage that can receive and process the commissions you receive from making referrals. You cannot receive commissions for referrals unless you are part of a brokerage, or have a broker's license yourself.
Once you have your real estate license and are part of a brokerage, you can begin working as a real estate referral agent. Make sure to market your services widely, from social media to your website to any other place where you can make yourself visible to clients looking for referrals. Staying connected in major markets where clients are looking to buy property will help generate leads for your business as a real estate referral agent.
Creating a Win-Win Situation
As you build your referral business and create leads, you will find that being a real estate referral agent can be an excellent way of earning income in the real estate field. The more connected and visible you are as a referral agent, the more successful your business will be. But it doesn't stop with earning commissions. Helping clients connect to good agents is a very useful service. And connecting clients with good real estate agents who provide you with a healthy commission means that everyone - you, your client and their real estate agent - wins.