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.
Breaking News: NAR/RPR + Cyberhomes = written by Jim Duncan
The Coming Civil War in Real Estate: The RPR Saga Begins written by Rob Hahn
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."
Matt - I was unaware of RPR, but now that you have brought it to my attention I will be checking it out. I have the same attitude as you about the referral fees, will not ask for additional because I actually did a few hours of work on this end.
Mike - I think in the coming few weeks you're going to hear a lot about the RPR. I was lucky enough to catch part of a webinar that was sent out to help showcase the new site and it looks pretty interesting. The discussion about it from people who have seen the webinar is creating a lot of buzz already (both positive and negative). It should be interesting to watch it all play out.
Matt, I appreciate your post and had a chance to read the links you provided. Although the perception may be that agents and clients will have more information at their fingertips, nothing can replace a top local agent with intimate knowledge of the area. If someone is relocating to Cleveland, for example, they will go on line and find as much information as they can. Even if the RPR offers them and the referring agent even for information, there is certain information that only someone in the local area will have. A home may look great on line but there may be a railroad track or powerlines located nearby not shown in a photo that only a local agent could point out. There are also always things going on within different communities such as upcoming construction projects or a commercial project being built near a certain neighborhood that could affect a homes future value, and these things will only be known to a local agent who specializes in that area. I would never discount the value of a top local agent. Thanks for the post.
Dan said perfectly what I was going to say. I don't even know that I would research other areas for a potential referral. What if I say or send something inaccurate. I will leave it to the expert in the area and happily collect a modest referral fee which in my book is no more than 25%. I cringe at what the relo companies take from me so I'm not going to do that to a respected fellow agent.
Dan and Amy - While I do agree that nothing replaces a local agent with a firm grasp of their area, I'm not so sure that this won't give enough information to at least help a good agent make some very well informed decisions - local or not. This isn't just a simple MLS-like listing, the data they are providing is immense (beyond anything I've ever seen in one place and including some data that I didn't even know was available). I certainly wouldn't discount the value of any agent in their local area, but I do think it will allow us to be better informed on other areas. I'd even go so far as to say it will allow an agent to expand their area of interest. It will definitely be interesting to see what transpires.
Barb - I don't see it so much as taking away from the referred agent as helping them out. I'm not going to send you a client and say, "here, show them these houses and nothing more." I might send you a client and say, "here's some of the sorts of places the client expressed an interest in...perhaps you know of some similar neighborhoods or areas that might be of interest?" I don't think it's about taking away from what the referred agent does, but adding to what you do for your client. I know my client well before I send them your way, so wouldn't it make sense that I help you "understand" them and in turn, help them build that trust relationship that my client and I have already built.
I have a feeling this will turn into an interesting look at referrals, not just as they pertain to the Realtors® Property Resource, but as a whole.
Matt, Thanks for bringing some fresh information on the Realtor.com referral network. What I hear you describing is what Donald Trump's book title calls , "The Art of the Deal". I think the details of that "art" are found when all parties feel there was a win-win in the deal. In this case a fair compensation for both agents in the "procuring cause".
Matt - Dan and Amy summed it up well in comment #3. All the data in the world won't replace the knowledge and skill of an agent that works and lives in a market every day.
Steve - I actually wrote a bit about the difference between the "art" and "science": "San Antonio Home Buying: The Art And Science" and "Selling Your Home In San Antonio: The Art And Science" - there is a bit of both in every transaction.
John - I agree that a knowledgeable agent can not be replaced. I want to be sure we're not getting off track here. I am not suggesting that the RPR replaces an agent, I am suggesting that this could be a reason why some agents feel they can command higher referral fees - as they have unprecendented access to real estate information outside of their area.
I was reading about the RPR last night as well. I, for one, am excited about what this may bring to the table (and I hope this is a R.com killer, but I doubt it). Having said that, back to your topic :) ...
As others before be have said, nothing replaces the local agent with first-hand knowledge of their area. I am with you ... I would probably use the system to pull up some preliminary info and give my client some data and ideas and then refer them to a knowledable agent in the area to which they are moving. It gives me a boost in the client's mind hoping for a referral back to me. I wouldn't be asking for any more of a referral fee since the other agent will be left with doing all the rest of the footwork.
Besides, I don't think anyone would want to pay me more than the 75% I already charge for a good referral. :D
Good post, Matt. I check out the links later. btw, I think you could write for a living!
You know without a doubt that it will happen, Matt, no matter what anyone says here. And then there will be the agents who are referring family members that will use the RPR to try to control the entire transaction. I'm excited to see the possibilities of what RPR can do for us, but jaded enough to realize that someone, somewhere is going to use this in an attempt to play agent in an area they may not be familiar with.
Matt,
Interesting way to think of RPR and how it may affect those receiving and giving referrals. I read Rob's article earlier, and he, and you, have many valid points.
I look forward to seeing what is rolled out, because we don't have all of the details yet. A lot is speculation at this point. I agree with Lisa, just above me, where some family members referring other family members out may use this to micromanage the deal from afar...
It should be interesting, if nothing else!
I heard about it this week. Haven't had time to research it.
I'm sure it will be good in some aspects and abused in others.
I will pass judgement the first time I get hit with a a 40%+ referral fee. LOL
Now I usually (if I can find one) refer Activerain members. Honestly I am not going to micro manage a referral or do any homework other than finding a good Agent I trust.
Since there are already agents that try and micro-manage out of their local area, I don't think much will change on that respect. It just gives those that already do it one more excuse to butt in. Hell, I can pull tax records and comps through my title company's web site and Zillow for all that matters - I just don't play that on a referral, anyway.
The only party with a down side on this deal is the MLS from what I can see. I know, given their history, my local MLS will probably fight this tooth and nail. I, for one, would bail from the MLS if they do and the RPR is all is says it's going to be.
One thing's for sure, this will be a game-changer and definately an interesting thing to watch.
Matt, this is a nice post about just one of the implications of a major change that could take place in our industry as a result of an RPR...
As I posted on Rob's post about it, I'm watching with interest as well as a touch of skepticism.
I refer to agents in our region but not my local area (we have a Regional MLS) I don't pull listings for the client, even though I absolutely could.
The reason is along the same lines as those I welcome but do not fear RPR:
I do not service that area and have not taken the time to learn the very unique 'tribal customs' that go with localities. Leaving that to the area experts.
Those quirks and specialized bits of info will never be accurately reported by Z, Cyberhomes or RPR et al...
So agents referring business to my office will keep it real fee-wise, or send their referrals elsewhere. As it has always been.
I'm not worried about the latter.
Matt- Thanks for the mention and it is an honor to be part of your referral network. The same would be the case obviously with folks from here looking to buy or sell in your market ! I have a seller that contacted me from Arizona needing to do a short sale (found my blog) and I referred him to an agent on Active Rain in my network. We worked something out and knock on wood, that deal should settle in the next month or so. Further, in the last year or two, Stephanie and I have received numerous referrals (from agents that found us on Active Rain or our website or remax.com) that has really worked out. This Realtors Property Resource is quite interesting and fascinating ! Still, if I were to refer a buyer to another city, I do not think I would want to do the searching since I was not familiar with the area. But I can see your point that many agents may want to do that. I guess time will tell in terms of how it plays out ! ~ Chris
The RPR blogs have kept me sidetracked over the weekend... very interesting. And your take adds another facet. I refer most of my Buyer business because of the time involved with my websites, etc., and most importantly, I've only lived here for close to 3 years, with part of that time taken up with licensing, etc. I'm not sure how the referrals will evolve, if at all yet, but look forward to reading your posts in this regard. I've never gotten business from any brokerages I have worked with; it has all come from my own website, for what it's worth. Thanks!
Matt - I read about this from 1000Watt Consulting blog when I was feeling really blah can I really couldn't wrap my brain around it. I didn't even think about the referral aspect of it. My bigger concern at this point with limited info is that will we - the agents end up somehow paying for it -eventhought it's not supposed to cost us. I'm all for all the data, maps, graphs etc. but if the data to begin with is less than good (local MLSs) how good is the data really going to be? Getting off track here. I'll have to look into this more, I'm sure we'll be buzzing about this for a while. ~Rita
My intent with this post was just to start the thinking process of the good and bad of the idea of the Realtors® Property Resource. So far, I'm a fan of the concept, but I will be very interested to get a hands on feel for it. I'm working on a post now about it and what I think it means for our future (not just in terms of MLS/property info).
Matt, I just wanted to come back to this post to thank you again for bringing up the RPR. How it plays out will be interesting, but most important right now is for us as agents to be aware of it, and thanks to you we are now informed.
dan
Thanks, Matt! I will keep tabs on this new development now that you've brought it to my attention. And I agree with Shirley--you're a great writer.
Cheers,
Robin
Matt,
I think a bunch of people have summed it up pretty well but I wanted to add my two cents. I am a firm believer that you don't find the house until you find the area you want the house to be in. For that reason I think you are best serving your client by NOT looking for the homes before you refer them to a local expert. What looks good on paper (area-wise) is not always the place you pick. I don't have any numbers on this but I would venture to say that a good majority of folks have an initial idea of where they want to live that is quickly changed due to certain factors (crime, schools, commutability) and they wind up in a different area.
Searching for home before the area is not a good mve IMHO and that decision should be made first. The listings will follow. Finding that area is part of the local experts job and, again IMHO, is the biggest value they bring to the table followed closely by their ability to negotiate the deal. There are very few listings a Realtor can present to a prospective buyer that they cannot find themselves these days. Their strength is in their local expertise and personal relationships.
Patrick
@patrickhealy
Matt,
I like your views here on RPR. I too, read Rob Hahn's post on the "Civil War" he believes RPR is stirring up. It will be interesting to see how this all unfolds. But, it does look there is some really intersting and improved technology that is on its way. I am looking forward to see the benefits, and potential impact on MLS's and large brokerages.
Thanks for the great thought provoking views.
Greg
@gbarnhouse
Matt ~ Maybe I am missing the buzz here. Sounds like a new and improved Zillow to me, with a bit more specificity to accuracy and numbers. Curious to know what new bells and whistles they are providing, and at what cost? Realtor.com has ridiculous fees, and they are supposed to be our NAR-based friend. Perhaps this is a Johnny Come Lately attempt at getting more subscribers for a price! I sure hope not! Waiting for good news...
I think we'll be hearing a lot more on various blogs this week as people return from the NAR Convention in San Diego. I'll keep my eyes out and see what kind of reports I can dig up. Should be interesting.
Melinda - The RPR is meant to be a free resource to Realtors®. It is not a public-facing site like Realtor.com. They are two very separate entities.
The little i know about this.. (and that is very little, but i will learn more), im not certain I like this...someone in their infinite wisdom may offer to make this public information...
On the good side... I really dont like my MLS...maybe they'll stop with their ridiculous fees.
The RPR looks like an excellent tool to position ourselves as the LOCAL EXPERT! You know it will happen--some of us will use it to our advantage and some will never even go to the sight because they know it all already. I say "Bring it on!" I can't wait to add all this data to my arsenal!
Thanks Matt,this is very useful info,I just recieved a link to your blog from my email updates,and I want to repeat this is very useful info.
I wonder if the eventual outcome would be similar to what has happened here in Canada. With our competition bureau demanding public access to a realtor driven system i.e. mls.ca etc.
In simple terms if you create a huge data base and make the public and govt aware of it do not be surprised if they want access. You pay they play.
Paint a big enough target and someone will take a shot at it.
As others have commented if google gets access to a complete data base of homes for sale we are much less relevant to the consumer.Google and others may not bother to create such a data base ,but once it exits, its perhaps a different storey .
Rather than trying to compete or going national it makes more sense to me stay relevant and local.
Jim Straughan Sales Representative
Realty Executives Elite Ltd.Brokerage
London & Middlesex Real Estate
Real nice post. I came here from Claudette Miller's blog. I have a ton of comments and thoughts, but thought I would get educated first. It was nice seeing you at Virtual Rebar Camp today.
I, too, came off Claudette's post. However, I really enjoyed the discussion on referrals. There are some relo companies now that ask for 39% referral. Outrageous.
Rob is right . . . civil war indeed.