Referral Based Brokerages and the Little Guy

The real estate industry is changing. Traditional means of advertising have become less effective as home buyers have transitioned to the Internet as a means of identifying property.

As a Search Engine Marketing (SEM) professional, I can corroborate that the cost of online advertising continues to rise; as does the expectation of buyers in their real estate website experience.

The tragedy that we are witnessing is that agents and even brokerages (who once stood a chance, and even flourished, in the earlier phases of the web) cannot compete online with the likes of the mega real estate websites. Real estate professionals are simply out done in technology, marketing budget, brand, etc.

But what if agents from across neighborhoods, cities and even states could work together and go head to head with these mega sites? Pooling together their collective marketing budgets to finance a site that would meet home buyer’s expectations and deliver quality business to these agents.

Well they can. In a traditional business model, 20% to 30% is generally allocated to the the advertising budget. By paying a referral based brokerage a referral fee, you allow that referral model to leverage the budget of multiple agents and brokerages and develop and market a competitive website. As an agent or broker, you can concentrate on what you’re good at, servicing the client. It’s a win win for everybody.

A 2007 study by the NAR states that, “43 percent of buyers relied on referrals to find an agent”. We have developed this model successfully in Hawaii with Hawaii Life. We’ll be seeing you very soon in Southern California.