Referrals: Do they help your business?

Thanks to referral fees, 42 percent of real estate agents earn between $10,000 and $50,000 per year.

According to the Agent-to-Agent Real Estate Referral Economy 2018 report, in 2017, agents received a median of nearly nine referrals, up from six in 2016. Eighty-three percent of agents are a part of a referral network, with one-third reporting at least 20 percent of their referrals come from a network. And two-thirds of Realtors® using a referral network reported they are not buying leads, 16 percent said they purchase up to 50 leads a year and 16 percent purchase at least 50 leads per year. Fifty-nine percent of Realtors® reported sending out less than five referrals a year, and 60 percent reported receiving more than five per year.

“Referrals are one of the key drivers of business in the real estate industry,” said Scott Olsen, CEO of ReferralExchange, in a release. “If an agent can’t assist a client in buying or selling, a solid referral is crucial. Experienced agents rely on referral networks to provide additional resources for the clients they work with.”

Around 38 percent of agents reported that more than 20 percent of their received or sent referrals ended in a successful transaction. For leads, 38 percent of Realtors® reported that purchased leads closed less than 5 percent of the time. Generally, Realtors® felt more comfortable with referrals than leads. They described referrals as warm, better, vetted, more solid, qualified and trusted source. On the other hand, the words they most associated with leads were cold, inquiry, unqualified, random, chance and contact information.