Jeson Clarke

What are Real Estate Client Referrals?

In real estate, most people focus on commissions when thinking about potential revenue streams. But it's not the only way to make money in real estate. There are also client referrals for realtors.

A referral happens when one licensed agent refers a client to another. Should that client perform a transaction, the second real estate agent will pay a referral fee to the initial agent. Generally, the referral fee is 25 percent of the gross commission received. However, that figure can vary.

Why Refer Clients to Another Agent?

Agents work hard to meet the needs of clients. But sometimes, those needs may be entirely out of an agent's wheelhouse. While some will do what they can, referring clients to another agent is often the best way to serve them. Thanks to referral fees, these situations are mutually beneficial.

Agents still get something for initially working with that client. Meanwhile, the other agent receives a brand-new client and a possible commission.

The most common situation where client referrals for realtors occur is for out-of-market sales. For example, you might have a client you've served previously. You helped them sell an old home or get into the one they live in now. Because you did a great job in the past, they come to you to buy a vacation home.

However, that vacation home is in another state where you're not licensed. Plus, you don't have the market knowledge to help them find suitable properties. In that case, you could refer them to a realtor in the area in which they want to buy property.

Another common scenario is when you're unqualified to assist the client. For instance, you may have a client you served when they needed residential property. But now, they want to buy commercial or industrial properties.

If you're inexperienced with dealing with those properties, you're not qualified to advise them on pricing, closing conditions, negotiations, etc. Therefore, referring them to an agent who is wholly qualified to serve them can benefit you. You still get a percentage of the sale, so it's a win-win.

Author Resource:-

Jeson Clarke advises people about real estate, property investment and affordable housing schemes. You can find his thoughts at local realtor blog.