I can’t believe I am writing this post because I know some real estate agent will get upset with me for talking about this, but there is a fascinating discussion happening behind closed doors at ActiveRain. ActiveRain is a real estate blogging network that I belong to. I can’t link to the post and the comments because it is a members-only blog post.
Referrals by Salem Oregon real estate agents
The issue of referrals comes up constantly in real estate forums. A few consumers scream on real estate forums to NEVER hire the home inspector recommended by a real estate agent. Some consumers believe all real estate agents refer them to the worst home inspectors…the ones who purposely overlook things in order to “close the deal.” What always seems to come out of these conversations is that they never really trusted their agent from the start, but felt guilty terminating their relationship because the agent had spent so much time with them. Then when they get a bad referral, they generalize that to the entire real estate agent population. Me, I love my deal killer.
Referrals fees (20-25%) are common in the real estate industry when an agent refers a client across the country or to another licensed real estate agent. Not too long ago I had an agent ask me to give her 50% of my commission in order to work with her client. I don’t give out 50% referral fees and so she said she would keep making calls until she found someone that would. She did. What I wonder is does that client know the reason that agent was selected is not because the referring agent thought they were top-notch, but because they were willing to give her more money. I think consumers ought to ask that question.
This latest discussion is about making referrals to a lender. In this situation the lender rocks. The real estate agent that has made referrals to this lender says he is great and clients say wonderful things about the lender. All is good, right? Well, not exactly. The agent is upset that the lender isn’t referring buyers to her. The real estate agent wants reciprocation. I give you referrals; you give me referrals.
The discussion is really interesting. Most real estate agents completely disagree with her. I am in the camp that it is part of my job to ferret out the best we have here locally. When I run into a really good lender in a transaction. They get put on my list. When I come across a really bad lender/contractor they get put on my “talk clients out of using them list.” No referral expectations exist for me. I rarely get referrals from the lenders I recommend, and one of them in fact can’t refer to me since he has to refer in house. He is still so good, I can’t not recommend him.
The point to my insane ramblings here is pretty simple. If you aren’t 100% sure that your real estate agent is out looking for your best interest, then point blank ask them “what kind of referral fee are you paying that agent?” or “do you get referrals from this lender?” or “is this home inspector really thorough?”
I’ll tell you what is in it for me in the referrals I make.
- I get to go home knowing that I didn’t purposely harm someone else just so I can get paid.
- I get to know that even if something goes wrong in the transaction, I did the best with what I know.
- I get to spend less time dealing with “real estate transaction drama” when I surround myself with good, professional people. When things do happen, I know I can count on the professionals I refer my client to, to act in my clients best interest.
- I get to make the transaction less stressful for my buyers and sellers when we are surrounded by good, professional people.
- I get to have a clear conscience and not be a hypocrite when I talk to my kids about how we are nice to other people.
- I get to have clients that refer their friends to me.
A home is an incredibly expensive asset that doesn’t come with a 90-day Target return policy. I encourage all of you, that if you have the slightest doubt about your real estate agent’s referral, to ask “why are you referring me to this person and what is in it for you?” Make sure you are satisfied with the answer before moving on.