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   ARTICLE   |   From Scotsman Guide Residential Edition   |   April 2006

Build Realtor Referrals: 5 Tips

Follow some simple steps and watch your Realtor-referral business take off

Referrals have long been the lifeblood of the real estate and mortgage industries. According to a National Association of Realtors study earlier this year, 44 percent of homebuyers choose their Realtors based on the recommendation of a friend, neighbor or relative. In turn, these Realtors recommend mortgage brokers to their homebuyers.

When you consider that homebuyers generated more than $2.5 trillion in loan originations in 2005, it makes sense that establishing mutually beneficial relationships with Realtors should be important to mortgage brokers.

In fact, the Realtor is the most influential part of a borrower’s homebuying and mortgage-choice process. For help in completing the largest purchase of their lives, borrowers are more likely to go with the broker that their Realtor recommends.

So the most important question to ask yourself is: “How can I become the name that local Realtors drop when their homebuyers ask for a broker recommendation?”

It’s who you know

The need for referrals is not unique to the mortgage industry. Even Fortune 500 companies rely on consumer advocacy to sustain their growth. They devote billions of marketing dollars each year to develop grassroots evangelism of their products.

Word-of-mouth marketing is such a large part of budgets at major companies that there is even an association to police its practices — the Word of Mouth Marketing Association (WOMMA).

Although many mortgage brokers don’t have the resources of a typical Fortune 500 company, you can learn to become one of the first names Realtors drop when making recommendations to homebuyers.

These techniques can be boiled down to five WOMMA-inspired tips that brokers can adopt into everyday business.

1. Identify the influencers

This is about focusing your message and tailoring it to a specific audience. Instead of sending a mass-mailing to all Realtors, personalize it with a little research. Ask: Who are most influential Realtors in your market? Are there one or two real estate agencies that dominate your area?

Focus on what is important to those individuals and companies by researching what they provide to their clients and what they wish they could provide. After completing your research, ask yourself, “How can I make their jobs easier and make them look better to their homebuyers?”

If you show Realtors that you have the answer to this question, you’ll both see a difference where it counts — in the bottom line.

2. Only smart gimmicks work

We’ve all seen the “refer-a-friend” program in action. Cable companies will give you a month free if you get a friend to sign up for a one-year commitment. Gyms will waive your membership-startup fee if you sign up with a friend. Airlines will give you 10,000 miles if your friend applies for their frequent-flier programs.

Why not apply the same thinking for your top local Realtors? Give them a coupon for a free home inspection if they refer another Realtor to you. Waive the appraisal fee if a Realtor refers another Realtor.

Again, think about what is important to Realtors in your area and develop a refer-a-friend program accordingly.

3. Be good at what you do and admit mistakes

Of course, once you get those coveted referrals, you have not only your reputation at stake but that of the Realtor who referred you.

Remember, for every good experience consumers have, they will tell five friends. For every bad experience, they will tell as many as 20 people. Do you remember how many people you told when the telecom company refused to remove fraudulent charges from your bill? How many fewer people did you tell about the optometrist who fixed your frames for free?

This is compounded by the tools at our disposal. For example, some disgruntled consumers use blogs and chat rooms to publicize complaints and discontent for a particular company or product.

We all aim to give our jobs 110 percent all the time, but that’s simply not realistic. We can’t always deliver stellar results. Sometimes there are elements out of our control that result in a negative experience.

The No. 1 thing to remember is to admit the mistake — even if it’s not your fault — and then, most importantly, to fix it promptly.

4. It’s not about product; it’s about perceptions

Get to know what is important to Realtors in your area and ensure that you are perceived as an expert in that field.

Are you in a market that has a high number of nonprime borrowers? Be known as the nonprime expert. Are houses in your market snapped up faster than they get put on the market? Be the broker who gets loan commitments in seconds.

As the market evolves, do your homework to be ahead of the trends. By reading trade publications and the local newspaper’s business section, and by networking with colleagues, you can make educated guesses and prepare for the future.

5. Be the hero

Once top Realtors regularly refer homebuyers to you, remember to work with lenders that are flexible to last-minute changes your borrowers may have. If borrowers find a new property or decide they want to opt for an option ARM instead of a 30-year fixed, must you resubmit the loan file to your lender? If a borrower has a question, do you need to leave 15 voicemails for the underwriter before you get an answer?

Some lenders offer everyday real-time access to your loan pipeline with automated decisioning engines that provide loan commitments, not just prequalifications.

Save time and look like a hero by working with these lenders whenever possible.

Easier said than done

The best brokers work hard and know their stuff. Putting these practices in place will only help your hard work and knowledge pay off.

The best brokers also know that these steps are not one-offs. You can’t cherry-pick your success tactics. You need to be strategic, working each of these top tips into your daily business.

Remember, referrals work best when you think of them as a partnership. The guiding principal behind all the top tips is to always think of how you can help your Realtors. Borrowers will always ask the person who drives them around town searching for their perfect home for a broker recommendation. The goal is to make sure your name is the one that gets referred.


 


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