By Jennifer Gregory
Realtors have always relied heavily on referrals from past clients, but even more now than ever before, referrals are the way to get new customers. Many realtors have found that the majority of their sales during the recession have come from people who passed their name on to friends and family. "I must say that during the 14 years of being in this industry, I have truly come to know the power of referrals in this newly revised market," says Kella McCaskill, a realtor with Deleon Sheffield Company. "In the last three months, seven of my transactions were the result of a referral. Having a solid referral source helps me do what I don’t have the time or resources to do in such a short period of time." Here are a few reasons why getting referrals from past clients is a priority:
They Cost Less
While the national housing market is swinging back up, in many areas of the country markets remain sluggish and real estate agents find themselves continuing to watch their business expenses closely. Bryan Robertson, a broker associate and realtor with Sereno Group Real Estate, says that getting referrals from past clients or other agents is more cost effective than standard marketing. Although there is some cost to keeping in contact with past clients, it can be hundreds—or thousands—of dollars less than an advertising campaign. "To run a single full-page ad in a local paper can run $700 in a single week, whereas a mailer to 200 past clients and fellow agents runs about $100," Robertson says. "The cost of an online network, which also generates referral leads, is even less expensive."
Increase in Distressed Properties
These days a good portion of the real estate market in many areas is made up of distressed properties, such as foreclosures, short sales or those on the verge of delinquency. McCaskill said that approximately seven out of 10 sales are distressed properties. Since the agent learns details of the personal lives of such sellers, the sellers of distressed properties are much more likely to go with a realtor recommendation from a friend or family member. "This would almost be an impossible realtor/client relationship, unless there was a warm introduction from a friend," McCaskill says.
Referrals Are More Likely to Become Clients
Agents find that people who are referred by friends or family often have a higher likelihood of becoming clients than those who found their name online or in an ad. McCaskill says that almost 100% of referrals become clients. When someone has already heard positive stories about you from friends or family, then they enter the relationship with a base level of trust and confidence that you would not have without the referral. Robert Joffe, a realtor with Sotheby’s International, says he does not need to sell himself to a referred client. "If it’s a referral, they are usually already sold," Joffe says. Each time your phone rings and the person on the other end is someone who heard about you from a past client, you are one step closer to another sale or listing without any additional time or advertising money spent. And then you have more time to devote to providing excellent service to each and every one of your clients. Relationships and referrals are essential to success in the Real Estate business.