A referral is almost always the best source of business for any company. Personal referrals from satisfied clients to family and friends is far better advertising than pretty much anything else you can do. But what about the paid referral – the one where you ask the real estate agent who helped sell your house in one location if they know any good real estate agents who might be able to help you buy in the city where you are moving. Or the web site that offers you a free market analysis of your home, then sells your contact information to a local real estate agent in return for a cut. Or the relocation company that your employer requires you to use if you want any relo benefits and makes you use their hand picked agent to sell your house.
All of the above examples result in sometimes very large referral fees being paid to the referring party. Referral fees typically run up to 35% of the total commission that the firm accepting the referral gets from the transaction. While there is always going to be some cost in acquiring new business, whether through advertising or other methods, 35% of your gross revenue seems like an awful lot to me. In fact, real estate commissions have become so bloated that agents can freely give up 35% off the top, split the rest with their company, and still make a pretty good pay check for the time and effort they actually spend on their clients.
Buyers now find properties on line and tell their agent which houses they want to go see in person. On line photos make it easier for buyers to figure out which properties are of interest and which are not, greatly reducing the number they need to visit. Listing agents can upload information on their listings once and then spread them to hundreds of other sites for free with the click of a mouse. Paperwork which had to be hand delivered can now be sent and legally signed on line. All of these things have made the process of buying or selling a home much more efficient than it was in the past, reducing the work load for any one individual sale immensely. Yet even with all of these efficiencies in place and the price of properties continuing to rise, the commission rate charged by real estate agents has barely budged from what it was 33 years ago when I first got into the business. This has not gone unnoticed by many people who realize there is a tremendous opportunity to skim something off the top and the referral business has become a huge part of real estate.
You may not even know if a referral fee is apart of your transaction. You may have thought that your local agent really does know somebody in that out of state locale where you are moving and referred them to you because he knew they would do a good job for you. More than likely though, your local agent searched for whoever was offering the highest referral fee in your new location, and that agent suddenly became a trusted friend. The web site offering the free market analysis and promises to only have experienced professionals in its network probably has not even made sure their agents are actually licensed as long as their credit card number is valid.
Goddin Real Estate has been offering alternatives to traditional real estate business models for over 10 years. Our emphasis is on providing high level, experienced, professional service based on promoting our clients best interests, not toward getting the biggest check possible for the least amount of work. Goddin Real Estate recognizes that not everyone needs the same amount or kind of services and offers programs designed to match your needs and charge you accordingly. We can also usually save you well over the 35% referral fee other agents will pay someone for your business. Why not refer yourself to Goddin Real Estate and enjoy both tremendous service and tremendous savings.