Referrals continue to play a key role in many real estate agents’ business even as the market has softened, according to a new survey, though the industry is relatively evenly split between agents who are raking in the cash from referrals and those who aren’t.
The survey, from lead qualification platform ReferralExchange, asked more than 1,200 agents what kind of impact referrals had on their bottom line in 2018. Of those surveyed, 25 percent received between six and 10 referrals, 19 percent received between 11 and 25, and 11 percent received more than 25.
In other words, slightly more than half of agents indicated that referrals were a significant part of their business.
However, on the flip side, 45 percent of agents received fewer than five referrals last year.
The survey showed a similar distribution for referral dollars: agents making between $20,000 and $50,000 from referrals rose to 20 percent last year, up from 17 percent in 2017. Another 25 percent of agents made more than $50,000 in 2018 — meaning that nearly half of the surveyed agents made tens of thousands of dollars from referrals.
However, a total of 42 percent of agents only made $10,000 or less. (The remaining reported they didn’t know how much they made from referrals.)
Lisa Fettner, ReferralExchange’s vice president of marketing, told Inman this is the third year her company has conducted the survey and that the results have more or less held steady over that time period. She described those results as a positive outcome given that the real estate market in many parts of the U.S. has slowed somewhat over the last year.
“The market is definitely shifting and it was interesting to see that referrals remained a core part of agents’ business,” she said. “I do think that the market is slowing down and settling a little bit and I think that agents need to go back to best practices when they’re looking at their longer term pipeline down the road.”
Market research agency 1000watt conducted the survey for ReferralExchange. The survey involved collecting multiple choice responses from agents online. Researchers also conducted in-depth phone interviews with an handful of real estate professionals.
Fettner said most of the respondents were members of ReferralExchange — which serves a total of about 25,000 agents — though the survey was posted online and open to non-members as well. She also said that most people who responded belonged to multiple networks that provide referrals.
Asked about the splits showing nearly half of respondents didn’t get many referrals or make much money from them, Fettner said that some agents appear not to be tracking their referrals very closely. That can especially be the case when “the market is really crazy” and agents don’t have to hustle as much to actually close deals.
Among other findings, the survey also determined that 48 percent of agents are not currently using social media to generate leads, and that the most valued trait for a referral partner among a plurality of agents (44 percent) was responsiveness.
Going forward, Fettner expects referrals to continue holding more or less steady as a source of business for agents. She also advised agents to continue actively building their referral networks — a process that doesn’t happen overnight but which will be especially important in a more challenging market.
“I think in markets where you’re seeing a slowdown,” she added, “you will see referral business increase.”