The Curse of a Referral: Referrals Are Supposed to be Reliable

We have been taught in business that referrals are the most reliable way to find a professional, and we have been taught for decades that the best source of business is referrals from happy clients or friends or business acquaintances.  And that has been the teaching in the real estate brokerage business, at least it used to be.

Referrals are still an important source of business, and a referral from a credible person to a truly professional Realtor who knows what they are doing, has vast experience, is using effective marketing techniques, has integrity, and so on, would be an example of the rule that referrals are good.

But more and more referrals in the real estate business are turning out to be a curse rather than a blessing.  What do I mean?  There’s nothing like a true story to make the point.

I got a call from a gentleman who showed me his house many months ago.  He and his siblings had inherited the property, and it is a very special property.  He really believed in what I am doing in terms of marketing, and he appreciated my 20 years experience as a real estate attorney and my many years in real estate sales and how I am reaching buyers from outside our area on the Internet.  But heirs always have to work together in listing and selling a property, and while he may have felt I was the Realtor for the job, he had a couple of siblings from outside the are who had not met me, but who had received a referral to a “traditional real estate broker and agent.”  Understandably, they wanted to go with this credible referral.

After months of “nothingness,” all of the siblings agreed that their traditional agent was not the great referral they had thought or hoped.  The comment was that the agent put the listing in the MLS and then did virtually nothing.  I cannot tell you how many times I hear that same complaint, over and over again.  I would not write about this if so many people did not keep getting hurt (a delay of many months, especially past the selling season, can cost a seller a lot of money and stress).

What I do to market a property effectively is so much more, but that is beyond the scope of this short article.  The point here is that referrals are not necessarily reliable these days when it comes to real estate agents.  This story I’ve shared is not an isolated story.  There are many more stories just like this.

A gentleman called me to ask about a listing I had, which he had made an offer on through his own agent.  I immediately explained to him that I cannot talk to him as he is represented by his own buyer’s agent.  He was very kind and responded that his own agent was making a mess of things, including his own offer, and that was frustrating to him.  I told him I still must ethically ask him to work through his agent so long as his agent represented him.  Before we hung up, he volunteered that his agent was referred to him by a trusted friend.

While referrals to good real estate agents used to be a simple matter, it has dramatically changed as the real estate market has changed, as marketing has changed, as old media is collapsing, and as Realtors have had to re-invent themselves.  But the traditional brokerage is almost outmoded, which reminds me of print newspapers which are going out of business all over the country.  What is traditional real estate brokerage?  Here’s an interesting bullet list from one author.

• A real estate company that focuses on it’s brand more than the consumer.
• A real estate company that is highly leveraged with office space and expensive leases.
• A real estate company that hires agents blindly creating a revolving door that can damage the brand on which they are spending so much money.
• The real estate company that continues to make promises to it’s agents that it can’t deliver due to corporate bureacracy.
• The real estate company that decreases dollars spent on the consumer in an effort to maintain profit due to high overhead.
• The real estate company who is “trapped in the box” with no ability to truly see “outside of it.”
• The real estate company that defends a 6% commission while providing less service than it did 10 years ago.
• The real estate company that claims to embrace change all the while avoiding it like the plague.
• The real estate company that talks the talk but resists walking the walk.

Fascinating list, isn’t it?  This comes from an article entitled The Traditional Real Estate Brokerage Model is Broken.

Conclusion:  Accepting a referral to a real estate agent from someone today is not much better than picking a name out of the yellow pages (wait, who even uses the yellow pages anymore?), unless . . . the person referring you to that Realtor can speak from a deep foundation of knowledge about that Realtor’s experience and knowledge AND about their effective marketing techniques.  If they cannot do that, you are better off, in my humble opinion, doing your own due diligence to find the best Realtor you can find.

Last Updated on September 2, 2019 by Chuck Marunde