In essence, you need to find other, yet related, streams of income to help support your business while you're building your pipeline, making connections, nurturing relationships, etc.
In real estate, everyone needs money.
It doesn't really matter where this money comes from. Whether it be from a recent closing or a day job. But it is essential that you have atleast one income stream which can help you take your business to the next level through advertising, better photography, etc.
One example of an income stream that is beneficial to both newer and seasoned agents is referrals: agent-to-agent referrals.
4 ways to make steady income effectively
1. Buyer Referrals
Scenario: A potential transaction will already have two agents involved, one representing a buyer and the other one representing a property for sale.
Your Role: You will be referring one service of an agent to another agent. You act as a mediator connecting these two parties together. In exchange for this, you collect the buyer referral fee.
How to get these referrals: Simple. You put together a spreadsheet from email newsgroups or Facebook groups which have pockets and/or buyer needs on them. The data on the spreadsheet must have the pocket listings macthed with the buyer needs you find.
You would also need a Referral Fee Agreement. It's a form which allows you to "step in" between two parties in a transaction.
- Use Knack. It's a simple tool that can cut your time building your database compared to using a spreadsheet. It will also make your data more searchable, faster and more efficient.
- "Cross channel". Make matches between a Facebook Group and an email list which you belong, and you will find great matches that no agent would take time to put together.
- Be persistent and don't get frustrated! These deals undergo escrow period and will really take some time to close. Another thing to keep in mind so you won't lose your cool wondering why you haven't got a check in 30 days is you will gain a lot of information about upcoming listings and potential buyers. Knowledge is power!
2. Office Referrals
Scenario: Agents in your office most always have either a buyer looking or a pocket listing and your office may not have an internal system for matching buyers and sellers together.
Your Role: You will start matching these information. You will become the leader in your office. You'll be the go-to agent for all secret off-market listings and buyers making you the first one to know about them.
How to get these referrals: Do not be afraid to initiate having this kind of system in your office. Talk to your office manager or lead broker about starting this. Don't hesitate to train other agents on how to use it as well.
3. Agent Referrals
Scenario: Newly licensed, hopeful agents looking for a team they can work with.
Your Role: Be their mentor and invite them to be part of your company! This is a great way to generate passive income. For every referral, you earn a portion of every commission they make. This system is also "tiered" meaning that if the new agent signs up ANOTHER agent to the brokerage, you also get a portion of their commission too.
How to get these referrals: Find out what is the office policy for referring new agents to the brokerage. If you don't have one yet, talk to the office manager and discuss how you can start one by tackling its benefits. Refer new agents to the company and make sure they sign up and name you as "referrer".
Few ways to bring new agents on board:
- Use your extended circle
- Use social media to attract new agents
- Start a mini-mentorship program
Later on, these mentorees will become a crucial part in your plans for rapid expansion in your real estate business.
4. Commercial Referrals
Scenario: Most larger brokerages out there have some sort of commercial division. Don't make the mistake of ignoring this lucrative area of the real estate market.
Your Role: Find out EVERYTHING about your commercial division and know what is their referral program. The referral fees on commercial property and even multifamily property can be quite substantial.
How to get these referrals:
- Find Sellers/Buyers via Public Record Building Permits New Construction
- Make friends in your Commercial Division. Learn what areas to target, price range. Learn about what they need at the moment
- Pitch existing clients about their retirement objectives. Present real estate investment opportunities for your clients. Introduce OTHER agent's clients to your Commercial division.
It is essential that you learn everything about the process for these big deals.
Points to Remember
Not every agent will agree to do these types of referrals - in fact, some will just give you a flat out "no".
We don't stop when this happens, we just change the leverage we have and form another type of exchange between the agent so we can still gain some benefit.
For example, if you have a pocket listing that you know of and you happen to need another pocket listing for one of your buyers, then trade your pocket-listing information for the another pocket listing from another agent.
Now, you have to be very cautious with regards to these type of information exchange as it is not well documented. You have to be smart enough to make a sound decision weighing risk vs. reward. After which, if you've done such exchange for few times, you start to build a trusted circle of agents which will help your network grow and produce.
You want to keep your information organized, accessible and mobile.
There are tons of CRM's out there which can help you accomplish this. We can use Zoho CRM or Google Sheets available on your phone.
You will eventually experience a situation where you have a buyer need or pocket listing on the spot so you will need information on demand. You would want to impress your clients with the wealth of information you have.
Information will give you a huge boost of credibility almost instantly so keep it close to you at all times.
Don't let this year end without improving your performance
- Track, tweak and improve constantly
Like any system, you must continually update and improve it, for example, if you are spending 4 hours a day putting together referrals, find a way to cut it down to 2. You can outsource additional work to one of my favorite places - Upwork.com
- Remain mysterious
It's best to remain a little mysterious in your business and not spill the beans on everything you have going on. The last thing you want to happen is for you to give up all the information and remove yourself as the go-to agent in your office.
- Be careful who you trust
Be careful about giving away information without getting something in return. It's easy to become the "nice agent" in the office who helps everyone else succeed, but you have to remember that YOUR business is the number one business you need to grow first.
- Don't expect to see results right away
Patience and Persistence. Those are keys to success in this business. Build a foundation, stay consistent and you will see results - just not right away.
I hope you guys get value out of this. Have a powerful weekend!