Here's why referrals are so important for real estate agents

A new survey on referrals has quantified just how important they are, with the advice from ReferralExchange and the Council of Residential Specialists being that they're so vital that they could help real estate agents to keep business flowing around the year.

ReferralExchange and the Council of Residential Specialists found that referrals are actually pretty rare, and so agents should jump at them if and when they do occur. Around 40 percent of agents receive just one to five referrals each year, while 20 percent said they receive between six and ten.

Inbound referrals tend to result in a closed transaction more than other types. The highest rate of success in closing a transaction is when a referral came from the agent’s own sphere of clients, according to the real estate professionals surveyed. The next best referrals came from referral sources like their brokerages and corporate referral sites.

More poignant is the finding that 40 percent of agents report that half of their referrals actually end up with a closed sale, while 20 percent said around a quarter to half of their referrals close.

Still, one thing agents need to consider is the client's seriousness about actually buying or selling. In addition, agents should consider their connection to the person that referred them and whether they trust that person or system.

“The greater the connection to the source, the more likely the referral is serious and will lead to a closed sale,” the study found.

The majority of the inbound referrals real estate professionals say they receive come from their sphere (40 percent) and from other real estate professionals (37 percent). Nearly 90 percent of the referrals that come from a real estate professional’s sphere come from current and past clients; another 10 percent come from friends and family. An additional 22 percent of referrals come from various sources, such as corporate referral sites and the agent’s own brokerage.

“This data reiterates the value of vetting,” the study notes. “Whether referrals are qualified by the agent’s personal sphere or another trusted source — yes, even one on the internet — true referrals have legs. Relationships and human connections matter, certainly more than the slot machine that is Internet lead generation.”