How many people here think that the business of "referrals" has gotten way out of hand?

Seems that more and more companies are entering the fray with the business model of capturing consumer info and then selling that info under the banner of a "referral" and expecting a fee of 25-30%. A recent Inman Connect tech conference held in NY brought more of these types of companies to view and it appears that they will only proliferate.

Are you willing to tell people "no" if you know that they are not in the business of real estate except to capture and display data? Where is this all leading and are you concerned about the process or resigned to just let things happen? Or do you not care and just think competition is healthy and salute companies with innovative business models?

Should there be a standard definition or set of guidelines for a referral vs. a lead? If so.. what should they be?

That's sort of what the Weichert Lead Network for agents does. I choose not to participate. The referral fee is ridiculous - 35%.

That said I don't know what *I* as an agent can do about it. The listing belongs to the broker...and the brokerage is part of the franchise, and all listings go to the main website - and then, any leads are referrals for the WLN. I handle it by not participating in it or any other program like it.

Also, I turn down referrals that want 35%. I will pay 25%. That's it.

I even think 25% anymore is alot especially with the amount of work it takes to get to closing. Also depending on the sales price.

I have no problem with it on listings. With buyers it tough in our market because of how much work is required recently

I'll agree with that on listings Vacation guy

Great forum topic! Ultimately, I think the answer is relative for everybody. It all depends where a realtor is in their business development. If a realtor doesn't have any of their own leads coming in, working for a % is better than sitting idle and digging deeper into the red. I don't bias toward either side, I'm just saying that the answer is likely "relative" to each agent's career status.

I agree with you also Brian. My wife is a new agent. She is getting lots of spanish language referrals at our company. She isn't saying no to any of them even though they aren't going to make her very much money. If she works them well then they will give her free referrals later on. Some already have. Then later on when she isn't living on other agent's referrals she will join me at my own little company.

The reason I posted this thread is because companies that do not sell real estate (but hold a license), are proliferating in greater numbers to capture consumer info and sell it back to agents as a "referral".

Not sure what can be done but I suspect this will play an even greater role in how real estate is practiced moving forward since it's relativly easy for a company to convince consumers they should shop around for an agent.

Agents can simply not accept referrals, but there is usually another one in line to take it because they need the work. Just like sellers holding out in reducing their asking price - but eventually giving in to market conditions - this may work out the same way for agents in the years to come.

The only thing I can see to slow this down or stop it is to develop a "standard" for a referral vs. a lead, but that's unlikely because everyone has different viewpoints.

There is a difference (at least to me) between a lead (someone who is planing to buy or sell real estate in the next few months) and a suspect. For an on-line company that has a real estate license and provides me with that lead which leads to a closing, I say bring them all here. I'll gladly pay you after the closing.
For those companies that want to sell me a name of someone who signed up on their website before revealing their name, I say, crawl back in your hole. I can find plenty of suspects without letting you help yourself to my money.

This is what I don't understand: why? why will you pay someone who simply "captured" information in order to sell it away a referral fee? These companies add no value to the mix and if they all went away overnight no one would miss them. It's not like they spent time with these people or did anything a brokerage would do - all they did was capture and control information.

So why do agents put up with this? why do you allow these companies to operate in this fashion? if your response is: it's worth 25% to me to pay them if a lead closes... then why not make it 5%? why pay 25%?

Can an Agent actually accept a Referral . . . . or must agreeing to such an obligation to compensate for a Referral be reserved to the Broker ?

I'm one and the same . . . . so I never really thought about it.

What if I had two Agents, and Agent "A" was already working with Customer "C" when my other desperate Agent "D" accepted a Referral for that same Customer "C". What would happen then? I just know that I (call me Broker "B") wouldn't be paying anybody anything anytime.

Kind'a Spooky, heh ?

Of course, most Brokers don't have a clue as to "who" their Agents are working with (or for) until deals are being constructed. Some, not until after there's been a Closing; others not until there's a Summons.

To answer Broker --
I feel this way - this is business that never would have come my way without the referral. I'd rather have 70 or 75% of something than 100% of nothing.
It's easy to play ostrich and ignore the trend, but this is happening with more and more businesses, whether it's home repair companies, service providers or almost any business.
Look at it this way, those of us that handle REO properties often pay a referral fee to an AMC. Without the AMC, most of us would have to spend a lot of money just to garner that business.Real estate agents and brokers spend tons of money on prospect marketing, often with zero results.

Thats why I have added referals to my busines plan. Not paying for them but charging for them.

Real estate has always been about lead generation. Nothing happens without leads.

There's no problem about the referals. The most important thing is, those referals is feeding leads for you to get a client.