Building a referral business is the holy grail of real estate. No more cold-calling and door-knocking. When you build a referral business, the leads come to you!
But how exactly do you build a referral business in real estate?
How to Build a Referral Business
In this post, we’re covering several ways to immediately start building your real estate referral business. Choose one idea for a quick little boost or implement them all for maximum referral power!
Quick note: this post was originally published in 2020. This is the new, improved version.
Over Communicate
Lack of communication from real estate agents is the biggest complaint from buyers and sellers. So if you want to build a referral business, communication is paramount.
Here’s the thing: you know how these transactions go. Your clients (very likely) do not. While you’re knee-deep in purchases and sales every day, they’ll only buy and sell property a handful of times in their life. And they have a lot of money at stake, so they’re nervous. Always. Even when there’s no reason to be.
Good agents understand and accommodate this.
Set expectations from the very beginning so your clients know how the process works and how long things typically take. Then communicate regularly. Even if there’s nothing new to report. Send a quick text just to let your clients know that you followed up with the Title Rep, and while there’s no news yet, you’re going to keep following up. You never want your clients to think for a moment that you’ve forgotten about them.
And for goodness sake, if your clients (or another agent for that matter) reach out to you, reply asap. Even if you need to go searching for an answer to their question, reply immediately to assure them that you’re looking into it.
Offer Ongoing Services
Here’s something you almost never see agents do: offer ongoing services.
For most agents, once the transaction is complete, it’s a wrap on your services. And this kills any chance of earning referrals.
There are lots of ongoing services you can provide, from the uber-simple to the sophisticated. Let’s discuss a few options.
Free Regular Market Updates
Offering free market updates is a no-brainer and something you should 100% be doing if you’re not already.
All you need to do is send an email once a month with relevant market updates. By relevant, I mean you need to know your clients’ needs and address them in your update. Ask your clients about long-term plans. Maybe they want to upgrade to a family home in five years; keep them posted on the market for larger homes and let them know when it’s a good time to buy. Maybe they plan to relocate a parent; keep them updated on suitable places for the parent. Or maybe they express interest in real estate investing; add them to your investor mailing list!
Naturally, you should include an offer to help the client’s friends and family. Something like, “If you have friends or family interested in the San Diego real estate market, let me know! I’m happy to send them useful market updates monthly as well.”
Property Tax Reviews
Hear me out because this is a HUGE opportunity for savvy agents to 1) provide real, ongoing value to clients, 2) potentially be a hero by helping your clients save money on their property taxes, and 3) build a whole new income stream that produces best during a declining market (when you need the money most)!
Oh, and it’s way easier than you might believe!
I propose you offer to review your clients’ property taxes for accuracy every year, free of charge. With your market knowledge, this takes very little time (in many cases, only about 30 seconds per property) once a year. All you have to do is look at the assessed value (the value the Assessor is using for property tax purposes) on a per-square-foot (PSF) basis and compare that to market value. Since you likely already know the normal PSF value of real estate in your micro-markets, you’ll be able to quickly tell if the assessment is too high, too little, or just about right.
If the value is too little or about right, you simply send your client a letter to let them know that you reviewed their new property tax bill as a courtesy and found that the value is fair. Also, let the client know that you’ll continue checking every year to make sure they’re never over-taxed. And of course, ask your client if they know of anyone looking to buy or sell a home in the area because you’d love to help them.
If the value is too high, you have a golden opportunity. This happens a lot more than you might expect (most often during a flat or declining market when property values aren’t increasing as fast as the Assessor’s office expected). If the value is too high, you get to tell your clients that you think they’re being over-taxed based on the current market value of their property. And you have a service to help reduce their tax bill!
Reducing a tax bill is just a matter of showing the Assessor that their value is too high. Most often, this just requires you to file an appeal application and present a CMA to show the fair market value (very few jurisdictions in the country even require an appraisal!). Once the property taxes for the year are reduced, your client gets lower taxes, and you get a percentage of the savings as your fee for service (generally 35-50%!).
This gives you some solid communication time with your clients, during which you can drop lots of reminders that you work on referrals. And who isn’t going to rave about the real estate agent who just got them a property tax refund?!
Bonus: Even if your clients don’t know people looking to buy or sell, they might know someone who wants their property taxes reviewed. This gives you a chance to introduce yourself to these homeowners and start building a relationship. You might be able to earn their property tax appeal work, but even better, you’re laying the foundation for being their real estate agent on their next transaction!
If you’re interested in learning more, check out How to Make Money with Property Tax Appeals.
Show Appreciation
You might think this goes without saying, but let me tell you, it does not. You must show appreciation for your clients if you expect to earn their referrals.
Some agents are eschewing closing gifts as unnecessary. They provided a professional service, and other professionals, like your lawyer or doctor, wouldn’t give a closing gift at the end of a case or a hospital stay, so why should real estate professionals be expected to give closing gifts?
I can’t argue with that logic. But here’s another fact: closing gifts are an established industry tradition. Your clients will likely expect one, and you don’t want to disappoint your clients.
So I recommend showing your appreciation with an impressive (although not necessarily expensive) closing gift. And not some gift basket or generic bottle of wine that will be gone a day after your clients receive it. But a gift will real staying power, and ideally, something your client’s friends and family will ask about so your clients will have an excuse to talk you up!
Need some ideas? Here are 20 affordable, but impressive, closing gifts.
Get People Talking
You can ask for referrals all you want, but unless your clients are talking to their friends and family about real estate, you’re probably not going to come up in their conversation. So how do you get people talking about you?
We just discussed closing gifts, which can get the conversation started.
“Where’d you get that cool painting?”
“Oh, our Realtor got us that when we closed on this house.”
“Wow! You know, we were thinking of maybe upgrading to a bigger place. Did you like your Realtor?”
“Yeah, our agent is awesome; here, I’ll get you their info…”
But a bigger reach is even better. Here are a few brilliant ideas to get people talking.
Always send something to your client’s office
Rather than wait for your clients to have people over to their home, get the conversation started immediately after closing in a more high-traffic area: your client’s office.
Send a bouquet of some kind (floral, balloons, cookies, fruit, whatever) to your client at the office to either celebrate the closing of their deal or as a thank you for a referral. Naturally, every co-worker who passes by will ask “What’s the occasion?” And your client will get to mention you!
Offer new home photo shoots
Want your clients to mention you all over social media? Offer new home photo shoots.
Sure, you could do the somewhat uncomfortable, low-quality, cell-phone snap of your clients awkwardly holding a sold sign with your branding. But those are rarely flattering enough for your clients to want to post and share.
I’m talking professional photo shoots (similar to engagement photos or modern family photo shoots) that feature your buyer clients in their new homes. These are the photos that get shared!
And I’m not saying you need to offer this for free (although that would make an amazing differentiator if you need one!). You could simply offer this as a paid service; the younger your buyers, the more likely they are to jump on this opportunity to document this big achievement. You could provide this yourself as an optional paid service. Or you could partner with a pro photographer and split the fee.
Either way, ask your clients to tag you or use your hashtag when they post!
Get a Small Win
Great victories come from small wins. Before you move on with the rest of your day, get a small win!
Today’s small win challenge is to pick at least one idea you’re not already using to build a referral business and implement it into your business operations.
