How does a real estate referral work?

By Darin Windham
Key Finders Group RE/Max Alliance

How does a real estate referral work? We hear this question from so many people. Every day, in every US market, real estate recommendations are transmitted from agent to agent.

Referrals are a vital lead source for agents when they adequately get targeted, so they want a consistent stream of them coming in. Each agent earns a commission and expands their network in an ideal referral arrangement. As a result, each agent benefits in a variety of ways!

What is a Real Estate Referral?

A real estate referral is a prospect with whom you’ve talked and concluded that you wouldn’t be the appropriate agent to assist them in achieving their goals. This occurs when the referral client’s real estate agent is unfamiliar with the buyer’s selected region or outside of their licensed state.

The receiving agency will expect to compensate the referring agent for bringing the seller or purchaser to their office. Referral fees vary based on local market circumstances and the client’s demands. Below are three examples of real estate referrals.

Real estate referrals from the community and local businesses

Referrals from the community and local businesses are an excellent method to get your name in front of more vendors and buyers. You are creating a connection with local company owners and organizations in your area, as well as the individuals who operate them. If you give enough value in return and continue to stay in contact, this can be a good source of referral business.

Previous Client Recommendations

In every real estate market, past client recommendations are a proven way for an active agent to expand their already established company. The business strategy for former customer referrals is similar. You will sometimes hear this referred to as a “sphere of influence.” This is the most popular and longest running type of real estate referral service.

Agent-to-Agent Recommendations

Referrals from agents to agents are the best of both worlds. These prospects have previously talked with a real estate agent in a different market. When that agent has concluded that they are ready and need representation, they will go to work. This involves looking for the ideal match for them in a market other than their own. They may have past relationships or an in-house connection at their brokerage in certain situations. However, many may turn to a referral service or network to find the correct agent to entrust with their client.

As a real estate agent, if you don’t have some type of referral plan in place, you’re losing out on a world of opportunities to work with motivated customers without having to go through the hassle of chasing down web leads. Referral-based real estate agents often make their customers feel like they are the only appointment on their calendar and essential to them. And they often provide a greater degree of service than is typical.

We promise to provide first class service for any referrals you send our way!

Darin can be contacted at 256-652-9032 or

“Happy Clients Are The Key To Our Success”

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