Too often real estate agents forget about referral opportunities when their friends or clients move away from the area. In truth, these situations yield, pound for pound, some of the easiest money an agent can make. While sad your friends are leaving, they are going to live somewhere, so you might as well lend a hand. You know your friends, and as an agent, you should know what to look for in an agent. In this regard, you really are helping your friends from hooking up with someone who will cost them both time and money.
So how do you wedge yourself into the middle of a remote transaction? It’s actually pretty simple.
If your friends are moving, we have to assume they have done some research and know the basic areas of their new town. To begin, simply surf the Zillow app with your friends. Get an idea of what they are thinking. This will also potentially point to agents you can refer. Google things like “best neighborhoods in X”, “trendy areas in X” or perhaps something specific to your friends. It is not hard to get a feel for something when the locals are describing it. A little homework will go a long way.
After you get some agent names and local areas pinpointed, continue to surf the Internet and check out the agent’s websites. Within 20 minutes you should have a few names of agents who you think could be a fit for your friends. The next step is engage the remote agents and this will vary according to specific situations.
The first tip in finding an agent is to NOT call the agents who are advertising on the Zillow app. They have paid a small fortune to be listed on Zillow and will most likely offer bad odds for landing a favorable percentage. Don’t select an agent who brags about how many house they have sold. That is a chop shop, and friends don’t let friends go to chop shops.
The second big tip: be honest about your clients. If they are qualified, ready to go and know what they want; that’s great! You can hold out for a top percentage, 30%-35%. If you know your clients will require hand-holding through the process, you may be looking at 20%-25%. If your clients are vague, but will buy at some point, you are looking at 10%-15%. Negotiate this as if you were on the receiving end.
What would you do if someone, out the blue, dropped a $500K client in your lap? It didn’t cost a dime and if the process is quick, why not agree to a 30%-35% referral. If you really believe your client is strong, and your first agent said no to a 35% referral—call someone else. As you know, most Realtors will fold like a cheap suit. A strong client can utilize a less seasoned agent. On the other hand, if you know your client will require work from the remote agent, you will want a more seasoned agent which will mean giving up some percentage points on the referral.
Don’t give your friends the agent contact information until you have a signed agreement with the remote agent. Also, be sure to line up a back-up agent. There is always a chance your friends and the selected agent won’t get along. Once you have a signed referral agreement and have connected your friends with a remote agent, your work is pretty much done.
What does this mean? Let use the $500K home as an example. Given the standard commission rate of 3%, the remote agent is looking at $15,000 dollars in commissions. Thirty (30%) percent of that is: $4,500 dollars. With a couple of hours on the web, a few emails a phone call or two, an agent can easily generate thousands of dollars. Even a $250K referral property still nets over two thousand dollars. And don’t think this is just for sales either. The art of renting isn’t what it used to be.
Today, apartments in places like the suburban “Avalon”, can exceed $5,000 a month. (I am NOT making this up) Agent referrals are based on a percentage of rent. At these price points, agents can realize thousands of dollars by simply having their friends add their name to the application as their agent. It doesn’t matter where you live, if you are licensed, you get paid. It quite simply, can't get any easier!
Over the years many people have asked how to get started in real estate. One obvious first step, is to NEVER let a friend move ANYWHERE without telling you first. Even if you don’t want to sell real estate, but have a lot of friends, get a real estate license. To your friends, become their “realtor” guy. Over the years, and decades, your friends will move around often. It really is unbelievable how much money a licensee can generate in real estate without ever having to become an actual salesperson.