Generating referrals is a key part of the real estate business. Are you ready to take this old standby and update it for 2008?

When most agents start the business, they normally make a list of the people they know who may send referrals to them. There are several reasons that this approach typically generates only one or two transactions:

  • Friends and family know that the agent is new to the business.

  • The agent may lack an adequate knowledge of the inventory or the ability to close buyers and sellers effectively.

  • Potential clients may fear that the agent will discuss them or their finances with others they know.

In order to succeed, agents must expand beyond their personal circle of friends and family. As one veteran agent put it, "When you start in the business, it doesn’t take long to run out of family and friends who will do business with you. On the other hand, there’s never a shortage of strangers."

Creating and maintaining a strong referral database is challenging. Some programs rely on mailers. The challenge is that unless you design something unique, you may be mailing the same person exactly the same materials that another agent is sending. Furthermore, the phrases that say "I’m never too busy for your referral" or "Oh, by the way, if you know of someone who is thinking about buying or selling a home, I definitely would appreciate your referral" have been so overused that they are no longer effective.

Today, there is a much better way to generate referrals and to do so almost effortlessly. If you haven’t joined, this is one of the quickest ways to expand your referral database. Their motto at LinkedIn is "Relationships matter." This site is an excellent business-to-business way to connect on the Web. Currently there are more than 19 million experienced professionals in this network.

When you join LinkedIn, you create an online profile that summarizes your educational and professional accomplishments. Your profile helps you locate others as well as helping them locate you. For example, once you post your profile, the system notifies you of other people who share the same associations that you do. This is a quick and easy way to locate old classmates, former colleagues, as well as to expand your current referral network

To use LinkedIn to build your referral database, invite the people you know to become members. As you meet new buyers and sellers, invite them to become members as well. Once they join, you then have access to the people who belong to their LinkedIn network as well.

LinkedIn also has a place for recommendations. This means that anyone who is in your network can view testimonials posted on your behalf. This is a great way to build online credibility as well as to expand your referral database. For example, ask past clients to join and post a recommendation on your behalf. When your past client posts the recommendation, it appears on both your profile and your client’s profile. Thus, if a friend of your past client is looking for a real estate agent and sees the recommendation, there’s a high probability that you will receive that referral with little or no effort on your part.

Like other social networking sites, one of the best ways to use LinkedIn is to ask and answer questions. Judging from the number of responses to the question, "What is the best way to obtain a REO?" there are quite a few Realtors who are using this feature on a regular basis. Building an online profile helps you to establish credibility. While there are other options for doing this, LinkedIn appears to have jumped ahead in terms of being the most important business-to-business networking site for today’s professional.

The LinkedIn system also makes recommendations about other people you may know. I was surprised when the system offered to introduce me to my sister-in-law who is an IT professional in another state. Furthermore, even though I haven’t been very diligent about using the system, my 76 "connections" link me to more than 460,000 other professionals. For agents, this translates into a wealth of potential referrals, both locally and nationally. By connecting, you now have the ability for others in your network to refer business to you. This is especially useful if your contacts have left the area and still have friends and family where you work. Alternatively, you can also refer business outside your market area as well.

If you’re not linking up your clients with LinkedIn, you’re missing one of the most important opportunities today to generate referrals, post testimonials and grow your online credibility.

Bernice Ross, national speaker and CEO of, is the author of "Waging War on Real Estate’s Discounters" and "Who’s the Best Person to Sell My House?" Both are available online. She can be reached at or visit her blog at


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