Longtime residents of Sarasota will no doubt recall a lawyer who was among the first to cover the airwaves with an offer to refer viewers to a lawyer. For free, even! If you were like me, you would watch with comical cynicism, wondering who in the world would use an 800 service to select the person who would represent them in such important matters? Apparently the joke was on me as this same lawyer was soon building a massive gulf side mansion on Siesta Key while I still dragged my beach chairs across the sand from my car in the public parking lot.
To this day, I still wonder why anyone would use such a referral service, but it is clear that I must be in the minority. Since then, it appears that similar guidance programs have emerged across a range of services. And yes, real estate has not been spared.
Activate one of the many TV shows in the morning and you will see advertisements from multiple sources suggesting you to refer you to a “best real estate sales professional in your market who will sell your house in a day and save you money.” thousands of commissions! And all it takes is a quick, free call. Sounds pretty good, doesn’t it? I mean, isn’t that what every salesperson wants?
It is not surprising that I would have an opinion on such referral services, as I find that they offer few of the purported benefits; they are misleading at best. Let’s explore why.
First, the real estate agents receiving these leads are generally not identified on the basis of quality of service or expertise in a local market. Instead, they simply agreed to pay a referral fee ranging from 25% to 30% of their commission to the third-party referral source in return for a placement on the list. Often times, these agents don’t have a book on their own affairs, but simply seize any opportunity that they don’t have to develop on their own. I would say this is the exact opposite of the process a salesperson should go through to hire a professional to represent what may be their most valuable asset.
Second, the alleged savings offer has two parts. Since the referral service company takes 25-30% of the commission without providing any actual service or adding value, the dollars available to the affected company or real estate agent are compromised. Less money coming in means less money spent on marketing expenses to promote the seller’s house – and less money for unique services to deliver the high experience sought.
In addition, the commission savings represented are generally only possible by offering no commission, or at least a reduced commission, to a cooperating agent for the presentation and sale of the house. While everyone loves to save money, when selling my own property I want to make sure that every buyer’s agent in the market has a strong incentive to put my home on their shortlist to show. Considering how much money an agent generating multiple offers can get for a seller beyond a commission point, this is pretty much a given in my world.
Third-party referral services are just one example of how opportunists have gotten into the real estate game, attempting to raise a percentage of industry dollars without ever having to do any of the activities typically associated with it. to a real estate professional. And why not? Why do a real job when you can just get a toll free number or a website and the money is pouring in?
Perhaps the most prolific third-party intruders are online aggregators such as Zillow and Realtor.com. Many years ago, real estate agents succumbed to the promise of free advertising for their listings and gladly handed over the contents of their inventory for good. This was seen as a great opportunity for brokers with no scale and the money to invest in a top class website to tell sellers that their homes can now be found by anyone.
Years later, and what do we have now? Consumers love the ability to get so much information and all the inventory on one site, but with the rules for international data exchange of multiple listing services, which is true for almost all real estate websites. managed by brokerage firms. The big difference is precision and transparency.
If you go to one of the portal sites, finding the listing agent and company contact details is the modern equivalent of a holy grail search. What you will see, however, are “recommended agents” or “buyers agents” whose information is front and center. So who are these favorite agents? You guessed it. These are often the same agents linked to the reference companies – with little or no specific knowledge of the home or community and probably no significant background. But why should it matter if they’re willing to pay for online impressions or referral fees at close? I think so.
There is a saying in real estate that everyone has heard. It’s location, location, location. And while real estate has grown into a global industry where the best brokerages operate networks of contacts across the country and the world, it’s still the local agent in your neighborhood who will take your calls seven days a week. seven and that is not paid. a dime unless the result is a success.
Technology is a huge advantage in real estate, and consumers have never been so empowered to make informed decisions. For this reason, I am always so surprised at the number of people who entrust their business to an 800 number or to a web portal and, ultimately, to an agent who is rarely an expert for the chosen role.
If you’re like me doing your own research rather than falling into the trap of what’s on screen when you need a professional like a lawyer or doctor, I hope you expand. a level of diligence similar to your next real estate agent. Or you can simply dial 1-800-ask-Budge.
Budge Huskey is Managing Director of Premier Sotheby’s International Realty.