The Realtors® Property Resource is coming.
If you have no idea what I'm talking about, let's get you up to speed first. Check out these articles (and the articles they reference) for some great information about the Realtors® Property Resource (RPR) and what it potentially means to your business. You might want to grab a few extra cups of coffee before you click - this is pretty heavy stuff and the analysis and information might require some serious caffeine.
Feeling up to speed now?
(You're not alone if you feel a bit bombarded with a lot of information in one go. The RPR is big stuff and until it's fully released to be toyed with, I think I'll wait to truly pass judgment on it.)
RPR and your referral network.
We all strive to build a healthy referral network of Realtors® across the country. We make friends, comment on their blogs, chat with them about the latest issues...much like our clients getting to know us, we want these agents to trust us enough with their clients who are moving to our market areas.
Referrals are big business. There is a reason ActiveRain has a referral network link on "Your Home." I've seen referral fees swing from free to 50% (several ActiveRain referrals that I've seen come through the wire have been at 50% - no thanks). From what I've seen the typical amount is closer to 20-30% for a referring agent.
So how does the Realtor® Property Resource affect referrals?
It's just a theory of mine, but let's look at an example. I used to live in Philadelphia, PA. Since coming to ActiveRain, I've become friends with the Somers Team, Christopher and Stephanie, in Philadelphia. We often comment on each others blogs (they better comment on this one!) and I love talking to them because a) they're smart Realtors® and b) they remind me of my former home and the places I used to go in the city. I would gladly refer business to the two of them if a client in San Antonio wanted to move to Philadelphia. I would feel safe in knowing they'd do the best for my clients. That's what referrals are built on.
Let's say I have a San Antonio-based client that wants to move to Philadelphia. "Great," I tell them, "I'm from there and know some excellent agents that work in that specific neighborhood. Let me give them a call and have you speak with them." The connection is made and my client loves Christopher and Stephanie. We've got a referral on our hands. I speak with Chris and he agrees to pay me 25% when my client closes their transaction. We sign a referral agreement and everything works out wonderfully. The Somers search their local MLS for properties matching my client's needs, negotiate the contract, and handle the closing. I get a check for 25% from Chris and everyone is happy, including my client who received excellent care from The Somers Team.
* As a side note I would like to add that I have a specific policy of who I send referrals to and how much I would ask as a referral fee. All the numbers in this article are just there for arguments sake. I would work out any arrangements personally between myself and The Somers Team and this is no way implies that I feel Chris owes me 25% of anything.
So there are three basic (overly-simplified for the sake of this example) steps to what Christopher and Stephanie did for my client:
- Find them a list of properties via their MLS
- Make an offer on a home and negotiate the contract
- Take the contract through to a successful closing
But wait...thanks to the Realtors® Property Resource (RPR) I can eliminate one of these three. With my client still in San Antonio, we can begin compiling a list of homes that they would like to see. Chris doesn't need to search his MLS for my client. In addition, I can provide my client with all sorts of data on the Philadelphia market and more specifically the neighborhood they are interested in. My client comes to Chris well informed and ready to make an offer.
In the past, we were paid referrals almost as a "thank you" more than anything else. We didn't do a ton of work to get that referral fee, just picked up the phone and called on one of our trusted friends (you do know the people you're sending referrals to I would hope). Now, with the Realtors® Property Resource, we can do some of the work before we even pick up the phone to speak with the local agent we're going to refer to.
So, following that logic, if I did little in the past and got paid 25% from Christopher and Stephanie, now that I've done part of the work for them, can't I then command a larger percentage referral fee? Perhaps I should charge them 40% from now on. Maybe even 50%.
Of course, I don't agree to that logic, but I bet plenty will. The "if I'm doing the work, I deserve a bigger cut" mentality will appear in no time after RPR is launched. We're all looking for ways to make more money, so why not right here under our noses?
My thinking follows more along the lines of yes, I will do research for my soon to be out of state client. Yes, I will pull properties from the Realtors® Property Resource for them to get a better understanding of their new local neighborhoods. Yes, I will refer that client to someone who I have built a trusting relationship with. No, I will not ask for a larger referral fee than I would have in the first place. Sure, I've done some more work than I used to, but the fact remains that the agent I referred the business to is a local expert and I am not.
I value the abilities of the Realtors® I refer to and asking them for a higher referral fee just because I ran some property searches (admit it, searching for property is pretty easy - it's getting down to the right house for the client that takes a bit more work) seems like a ridiculous idea. I won't let greed rule the day when it comes to the Realtors® Property Resource (RPR), but will use it to help clients be prepared for their possible move to a new location.
Stay tuned for more news on the Realtors® Property Resource as it becomes available. I am chomping at the bit to get my hands on it and mess around with it. Hear that NAR? I'm ready for some demo time.
photo courtesy of Shot_by_Cam
All content ©2008-2010 by Matt Stigliano unless otherwise noted.
Matt Stigliano, Realtor® Becker Properties | (210) 646-HOME | www.RErockstar.com
"Your all access pass to San Antonio real estate."