About 40 percent of all real estate firms participate in a referral program, while 20 percent of all firms have their own affinity programs to generate leads, according to a report released this week by the National Association of Realtors and Worldwide ERC, a relocation services industry trade group.
Advertising, firm affiliation and years of experience are all mainstays of the real estate profession, and many buyers and sellers select an agent based on previous experience with that agent, the survey shows that a significant share of a firm’s business results from referral relationships: from another broker or agent, from an employer seeking to relocate some of its employees, or an affinity relationship with a particular firm.
This “2005 Profile of Referral and Relocation Activity” survey offers benchmarking information on different types of referral programs, such as affinity, corporate relocation and Internet lead generation, according to an announcement by the trade groups.
Thomas M. Stevens, NAR president and senior vice president of NRT Inc., said in a statement, “The prior experience of home buyers and sellers, and established relationships with real estate brokers and agents are very important. However, we see in many situations that both consumers and real estate professionals benefit through referrals.”
Sandy Taraszki, executive director of the Worldwide ERC Coalition-Center for Governmental Issues, said all types of referral activity have increased. “We’ve seen a growing trend toward consumer incentive programs associated with referral and lead generation programs. Consumer benefit programs – which incorporate rebates and referrals – are currently permitted in more than 40 states,” she said.
Taraszki also stated, “Some firms elect not to participate in referral fee or lead generation programs due to concern about the level of the fees, but this report shows that participation in these programs results in increased conversion rates. The report also shows that 80 percent of relocation referrals result in closed transactions.”
Nearly half of all real estate firms surveyed have either a business development department offering relocation services, or a relocation department. The typical real estate firm had a median of 10 employer-assisted relocations in 2004.
Some other findings:
– Employer relocation programs are most popular with large firms, with 46 percent of those firms participating in such relationships. Internet lead generation is the most frequently cited by small firms offering referral programs.
– Nearly one-fifth of all real estate firms have their own affinity programs that were developed internally, and then promoted to outside groups to generate leads.
– Over one-third of real estate firms offer a reduction in the commission percentage amount as a benefit to both homebuyers and sellers who are members of an affinity group.
– Almost one-third of real estate firms have an agreement with a lead generation company that provides the firm with customer-contact information in exchange for a fee. A majority of firms also generate leads from their firms’ own Web site, or via Internet advertising. The rate of conversion from leads to closed transactions generally is higher from company Web sites than those from other Internet sources.
– Forty-four percent of firms report that they participate in the real estate-owned business, where lenders outsource the sale of foreclosed properties to a real estate firm. One-quarter of firms expect their real-estate owned business to increase during the next year.
The online survey, opened to 28,500 Realtors and Worldwide ERC broker members, generated 1,217 usable responses; the response rate was 4.3 percent, according to the announcement.
The survey of 70 questions covered firm and agent participation in a variety of referral programs including affinity, employer relocation, lead generation and real estate-owned referrals, as well as source of clients and benefits of programs to firms.
The 2005 Profile of Referral and Relocation Activity report cost $50 for NAR members and Worldwide ERC members, and $125 for non-members. Copies can be ordered from NAR by calling (800) 874-6500. Worldwide ERC members can order the report online at http://www.erc.org/PERC_USA/nar_survey_login.shtml.
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