BrokerageIndustry News

Real estate biz won’t survive on referrals alone

Part 1: Business strategies to stay afloat

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(This is Part 1 of a two-part series. See Part 2.) Is your business built exclusively on referrals? If so, you may soon be struggling with your production and wondering why. A couple of years ago I had a conversation with an owner of a major firm who coaches his agents who do at least $20 million in production each year. We were discussing which business models were the most effective. He told me that his experience was that those agents who relied exclusively on prospecting without developing future referrals worked two to three times as hard as those who used the "by referral" model to generate new business. On the other hand, when there is a market slowdown, agents who exclusively use the referral model often lost up to 80 percent of their business. The reason for this is that the referral model relies on a third party to generate leads for the agent. In other words, the agent does not have direct control of whether he/she receives leads. The agents who had the strongest, most cons...