The Referral Fee Rebuttal

The Referral Fee Rebuttal:  Mindset and perspective are the top reasons agents fail in real estate.

A couple months ago I posted a two part blog, The Referral Fee Myth.  The purpose for this blog was twofold:

  1. The Referral Fee Rebuttal:  Mindset and perspective is the #1 reason agents fail in real estate.Support leaders constantly challenged by agents that resist referral fees.
  2. Support agents in recognizing how small they may be thinking when it comes to referral fees and create an opportunity for them to see things from a different perspective. A perspective that will ultimately increase their business by way of the dreaded referral fee transaction.

When I wrote the blog I knew it would invite some push-back and as always, I welcome it.  Low and behold someone showed up on the blog and shared their opinions.  Check out what an agent had to say after reading The Referral Fee Myth:

Agent:  Its not referral fees you should be blogging about- its low ball buyer broker fees from rip-off realtors that you should be blogging about- they want to pay you 200 for a 1200 rental listing and then charge 200 to your client for a “filing fee” plus they charge other petty charges and outrageous credit fees – and then try to brand you as unethical for not showing their properties- when in fact your protecting your clients interest

Me:  The principles are universal, whether referral fees or rental placement fees. Like any business there are always going to be people that don’t do business the right way. I suggest not giving those people any of your energy.

Agent:  Anyone paying 50% to their broker is falling for a bunch of BS

Me:  That is one perspective Kevin. Here’s a question to consider. What is the value of your database? How much value is there in the long run of business to pay a referral fee once, and then A. Get referrals in the future from that new client you never would of had otherwise and pay no fees on those transactions. 2. Market yourself around that new transaction (The one that includes a referral fee) in multiple forms to generate more business and pay no referral fees on those transactions.   Food for thought.

Your Mindset is Going to Push You Out of the Business Long Before Your Lack of Skill-sets Ever Will.

We are in an industry where the number of people that fail is epic.  The turnover in our industry is constant.  Perspective, Approach, and Mindset are the top career killers in real estate.

As you can see in the comment from my blog, this agent will stand on a hilltop and make it very clear that referral fees paid to a broker are the worst thing you could ever do.  This agent is far from alone in their belief.  The unfortunate part of this is the agent was never educated and painted the true inspiring picture of opportunity around paying referral fees. In my final response to his comments in the blog I made an effort to broaden his perspective by sharing some compelling thoughts around the cost-prohibitive referral fee  transaction (in his eyes anyways). I hope he was enlightened and if not, maybe what I share with you next will support him and you in embracing the transaction that involves a referral fee, even if it is 50%.

Self-discovery is the highest form of human persuasion so I am going to ask some questions for you to consider and weave in there some facts.  My wish is that it will shift your mindset on the next opportunity you have to do a transaction involving a referral fee, and for you brokers, my wish is it serves you in how you communicate referral fee based transactions in the future.  By the way, the explanation is not manipulation, it’s rooted in truth.

Let’s play out a little scenario and start with some assumptions for Super Agent Smith.  He closes 20 transactions a year, works 50 hours a week, and averages about $5,000 earned per transaction.  With 4 weeks of time off for vacation each year the agent works 48 weeks a year totaling  2,400 hours of work per year.  My math gives me these baseline numbers:

  •  The agent puts in 120  hours per realized closing
  •  The agent makes $100,000 a year
  •  The agent’s time is valued at $41 per hour
  1. How much money do you spend in marketing dollars to produce a transaction?  You won’t spend those dollars when provided a referral.  Be a business person, inspect your business, income and expenses.
  2. How much time is spent at $41 per hour to procure a lead and follow up on the lead until they are ready to start working with you?  Those dollars in the form of your time won’t be exhausted when provided a referral.  Do the math on that one.
  3. How many friends, neighbors, co-workers, and family of the buyer or seller referred to you might buy or sell in the next 18-24 months? Would you have been exposed to those opportunities by refusing to take a transaction that involved a referral fee?  How many of those transactions will you get (Not paying a referral fee on future business you generate) if you refuse to pay referral fees?  Zero

Must I go further?  My mother always taught me to never count the money of others.  If you really took the time to reflect on the above considerations and you still feel that referral fees are too high or refuse to pay them, my sense is you are caught up in ego and allowing that to get in the way of even greater productivity than you are already experiencing.  Think like a business person, shift your mindset to reality and out of an unproductive space that may be holding you back from growing your business in an area you never considered.

Ready to focus on the referral fee myth? Start Here

Tags: , ,

Facebook Comments:

Leave A Reply (No comments so far)


No comments yet

Get New Posts Via Email

Enter your email address to subscribe!

Click the image to subscribe to Jon’s iTunes Podcast

coaching with jon cheplak

Contact Jon