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How Real Estate Referrals Work and 4 Reasons to Use Them

For quality agents working in competitive markets, it’s hard to match up with clients when large brokerage agencies get all the leads. With a referral network, agents can get a leg up.
For quality agents working in competitive markets, it’s hard to match up with clients when large brokerage agencies get all the leads. With a referral network, agents can get a leg up.

Whether you’re a new agent or you’ve been in the industry for years, it’s likely you’ve been surprised by how competitive the industry is. Some agents seem to have all the luck and are always busy even when the market seems slow. That’s because successful agents are taking advantage of referral networks.

When you work as a Partner Agent with Clever — or any other referral network — you get access to more hot leads than the average agent. Here’s everything you need to know about real estate referrals and why to use them.

What Are Real Estate Referrals?

A real estate referral is when a portion of realtor’s commission is paid to a broker or other agent in exchange for contact with a client. While these fees are always subject to negotiation, the standard practice is to offer 25% of the total commission that the agent receives.

Referrals come into play when an agent is unlicensed or unqualified to help a client in a certain area. For example, if an agent meets a client who wants to buy in a neighboring state, they’ll call an agent licensed in that state. If the deal closes, the first agent receives a real estate referral fee.

Referrals also benefit new agents or independent agents receiving the leads because they don’t have to look for and manage hundreds of leads that may not end in a finalized transaction.

How Companies Offering Them Work

Buyers and sellers use these real estate referral companies so that they can get matched up with the perfect agent for their needs. After they sign up, companies get in touch to answer questions and verify their information. By doing this work, leads are vetted and secured before they’re passed on to agents.

Companies who offer referrals do the work of matching clients with agents in their network who will work well together. Referral companies make these parts fit together in exchange for 25% of the referred-side commission.

Why You Should Use Them

Choosing to use a referral network might seem like a costly affair until you start calculating the overhead that you’d otherwise have to pay for the services they provide. Just hiring someone to take phone calls and log customer information can take a bite out of your profits as a realtor, not to mention the costs of marketing and outreach. Here are five reasons to join a referral network like Clever.

1. Let Them Do The Lifting

Finding new leads takes time and money. You have to get the word out about your own services as well as put your face and your name where clients can find you. Referral networks have years of practice in putting their name and brand out there in front of potential customers.

Attracting and finding clients is a full-time job, well worth the referral fee.

2. Get Customers Who Are Ready to Act

It’s a waste of money to advertise to people who aren’t ready to buy or to sell yet. But it’s not always apparent who’s ready to pull the trigger

When you get a referral from a network, they are sending you someone who is ready to take action. That lead has gone from warm to hot and all you have to do is to seal the deal. Rather than taking the time to check in with leads on a regular basis — another costly expense — get leads that are ready for action.

3. Save Time With Intake

Getting information from clients, logging it, and organizing it all takes time and energy. Customer intake is an especially exhausting affair if you’re working all on your own. Leave the administration tasks to a referral company and do what you do best: help your clients.

4. Find the Best Clients in Your Region

When starting out as an agent, it’s hard to make money. Most agents will take whatever client they can get. However, with the help of referrals, you know that you’re getting the cream of the crop, as these are clients have all been vetted.

If you’ve built a strong reputation as an agent, you can rest assured that you’re going to get referrals for clients who are up to your standards.

What Clever Looks for in an Agent

If you’ve worked hard to get lots of positive reviews from past clients, have more than five years of professional experience, and local market knowledge, you’re the right fit for working with Clever. Our Partner Agents are good negotiators and strong communicators. The leads we refer need help from someone who knows the regional market well and has a grasp on local market data.

Contact us today and we’ll pair you with the hottest leads located right in your backyard.


Luke Babich

Luke Babich is the co-founder and Chief Strategy Officer of Clever Real Estate, the free online service that connects you with top agents to save money on commission. He's an active real estate investor and licensed agent in St. Louis, with 22 units currently. Luke graduated from Stanford University and subsequently ran a historic data-driven campaign for University City City Council. Luke's writing has been featured in Homeland Security Today, Mashvisor, Payments Journal, and Bigger Pockets.

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