Is Your Name a Commodity? How Referrals in Real Estate Work...

Real estate is a referral business. There is no doubt about that. But do you as a consumer know how it really works? Let me tell you a little story that happened to me this week.

I received a lead and contacted the prospective client and told him I had received his lead from a company in another state. Later when we talked, we hit it off and connected right away. We talked about what he needed and I told him how I could help him. As we talked he said, "I'm confused. I didn't contact you from another state. I contacted you directly from your website." Well, that confused me because I knew he didn't come from our website. He said that he clicked on his town and our company info came up and he contacted us directly.

This was a smart and educated man. He had been reading a book for first-time home buyers and he knew he needed an Exclusive Buyer Agent before he even began looking at properties. So he did a search for an Exclusive Buyer Agent in his Oregon town and proceeded.

He wanted to know more about the referral site he went to. Well, I have nothing to hide - I'm an Exclusive Buyer Agent - if I know something, my prospective clients, and clients know it too. (I'm about as transparent as they come.)I shared that when a lead comes in through this site, I have to pay a 20% referral fee.

This man was furious. He sent me the link to the page he "contacted us" from and I looked on the referral site and saw that what was presented to him looked like a direct connection to our company. I could understand why he was upset, I was upset too. (The company doing this was set up years ago before I began to work with my real estate company. I had never seen what they were doing.)

My prospective client was very upset that someone in another state had taken his name in a way that he felt was deceptive. He was angry that part of my commission would be given to someone in another state who did nothing more than harvest his name and not provide any real, personal service to him. He was upset that this money would leave our local economy and go somewhere else. He was angry and disappointed.

Real estate IS a referral business. The lead site is doing nothing legally wrong. (I do believe that the site should not imply to visitors they are contacting someone directly when they are not, but that is another issue.) The bottom line here is that consumers don't understand how referrals in real estate work and if they did, they would do things differently -at least this man would have because of his strong feeling about the matter.

Other clients who came from this same site were disappointed when they heard we would be paying a referral fee to this same site. One of them lived two miles away from our office and came through this well optimized site. It is my motivation to do an even better job with my marketing so clients can find me directly. Honestly, that is what all real estate agents and Exclusive Buyer Agents want - to be found directly and avoid referral fees. But in the end, we pay for and ask for referral fees when we receive or send business other agent's direction. Some real estate agents have figured this is an easy way to make money and only work the Internet trying to harvest names to send to other real estate agents or Exclusive Buyers Agents and never work directly with clients in any way.

If you want to keep local dollars in your local economy and you want to make sure the real estate agent, or in my case Exclusive Buyer Agent, doesn't have to pay a referral fee to someone out of state, to someone who really didn't do anything but have a great website for harvesting names, dig a little deeper and contact the REALTOR (R) directly by phone. If there is not direct phone number to the company, you can be sure that you are not contacting them directly. A referral site will always put a filter between you and the real estate agent or Exclusive Buyer Agent. An agent's website will also have a very different look to it. Here is what my custom website looks like: www.OregonExclusiveBuyersRealty.com

A directory site is a great place to start a search, but if you don't want your future real estate agent, or Exclusive Buyer Agent to pay a referral fee to someone you have never spoken to or have a connection with, don't give them your information. Not everyone cares about this to the level the man I spoke with did, but if you do - don't give your information to a directory site. Not every real estate agent or Exclusive Buyer Agent is listed in every directory site. Just search a little farther down the search pages to find a local connection. Come to Active Rain and find a local agent as well.

The man I spoke with was so upset about this situation he contacted the Oregon Real Estate Agency. He was a socially conscious individual and he was offended by becoming a commodity without his knowledge.

Referrals are a part of the real estate business. Giving and receiving referrals is an aspect of real estate that most consumers don't understand fully. That is why I'm sharing this information here for consumers.

You are invited to join the Consumer Education in the Real Estate World group on Active Rain.