Yesterday, everyone in the office who gets NY Times alerts on their computer (read: a lot of us), was notified that due to a tip from Meuller’s investigation, the FBI raided Trump’s attorney’s office to seize thousands of documents related to a number of different issues. The word referral was used repeatedly in the coverage to emphasize that this is not actually part of Mueller’s Russia inquiry, but instead something he passed along to a different agency. It got me thinking about how big a part of this industry is referral-based, and how a lot of people don’t really know the way that works.
As a kind of half-assed NY Value, it was cool to see people at work talking about breaking news in a non combative and simply “wow did you see this?” kind of way. We don’t all agree politically here at Compass, but we all treat one another with respect. I’ve noticed that when I’m outside of the city I have to go more out of my way to stay informed. Here, strangers at bars will tell you that Trump is going to meet with Kim Jung Un minutes after the news breaks (literally how I found out). There have been events I only learned of because a protest was already organized the same day.
I don’t think it has to do with intelligence as much as a focus on being on top of everything all the time here. Information of all sorts is thrust in your face constantly, a barrage of data ranging from the totally interesting to the violently irrelevant. Have you ever been on the subway? Every car is plastered with ads and PSAs, and free daily newspapers are given out in many stations. So even during your commute you’re pummeled with information. Thanks, New York, for basically being a giant billboard factory populated by town criers.
And now, real estate referrals! I actually got two referrals in the past two days, one from a friend who is an agent in a different state, and one from a current client. These are handled slightly differently, and I’ve broken it down to hopefully make it clearer.
The least stressful, most pleasant way to do real estate (in my opinion), is to work by referral. If you are working with the people you know and then the people they know, you are more likely to get along and do well together than if a complete stranger reaches out blindly. A lot of the work I am doing now is to build a system where I don’t have to advertise myself; I can simply rely on working hard for the people I know and the clients I have, and letting my performance lead them to pass my name along.
What a lot of people don’t necessarily understand is the monetizing of referrals. It is illegal to give a financial reward, a kickback or cut of any deal, to someone who isn’t a licensed agent. My client who referred his friends, were he to ask me to give him something in exchange for this referral, would be asking me to break the law. However, these sort of financial incentives are completely standard between agents. If I end up closing a deal with the guy sent by my friend who is an agent in another state, I will give her a percentage of my commission as a “referral fee.”
I have someone in Martha’s Vineyard with whom I’m setting up a referral exchange, meaning we will have a written agreement denoting the exact financial terms of our system. I will send her any business I hear about in MV, and she will send me anything she hears of in NYC. And in each instance, the person sending the referral will receive X percent of the other’s commission once a deal is done. I don’t have an official exchange set up with my agent friend mentioned above, but we have a friendship and a verbal understanding. So it doesn’t always have to be an official thing, but it is technically best to have in writing to avoid any misunderstandings about expectations.
I hadn’t explained this early on, and ended up missing out on the opportunity to help someone find a broker I can vouch for in a different state. Yes, I missed out on part of the commission, but I also missed out on a chance to build a stronger relationship with an agent in a different region. I’m actually attending Compass’s east coast Retreat in DC in May, and while I’m there I will ideally connect with more brokers in more markets who vibe with me, and whom I would feel comfortable referring to people I know.
Feel free to shoot me an email at email@example.com if you currently need someone in a different state, or if you have any questions.