The Truth About Real Estate Referral Services

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Many of you may have seen the aggressive advertising campaign for a US-based real estate agent referral service. As an agent, I feel that I should make the public aware of the rules surrounding referrals and where your private information might be used for when you give your name and email to some sites on the internet.

I should start with some background. I have been selling real estate for about 15 years and, as with other agents and brokers, new and veteran, I receive a TON of solicitations for products and services 'essential' for realtors. There are countless service providers ready to sell us something to 'boost our sales' and so far, I have only seen that the products merely boost the sales of their providers.

We are currently in a great real estate market. Average houses for average families sell like hotcakes with little or no marketing. Realtor.ca is the best source for buyers looking for active listings. All active listings in CANADA are in one central location. The site protects the privacy of the sellers and the buyers by posting the listing only until an offer has been 'firmed up'. The listing is then removed from the site. Privacy laws are closely followed and accuracy of information is essential.

To post listings on Realtor.ca, licensed agents and brokerages need only enter their listing in their local Real Estate Board Multiple Listing Service. This carries a nominal fee for which the agent or brokerage is responsible. In Ontario, where I practice, only licensed real estate agents and brokerages are permitted to list properties on the Multiple Listing Service or MLS.

When you search for homes to buy on Realtor.ca, you may find one that you like. If you have a Buyer's Representation contract with an agent, you are required by the terms of the contract to refer the properties you like to your agent. On the Realtor.ca listing, you can click a link to email the listing to your agent and your agent can arrange a showing and do any preliminary research. If you are not working with an agent, you can click a link to contact the listing agent for more information or to arrange a showing. It is a super simple procedure. You don't have to remember an agent's phone number or name. You do not have to try to find an agent's personal website or a brokerage website and then try to wade through their listings which may or may not be active and available.

As a realtor, I will receive your request for information on my own protected email. I get your request directly from the Realtor.ca website. No third party has access to your contact information.

Now, let's discuss the referral services.

A referral service is NOT an agent or a brokerage. They are not licensed to legally trade real estate. Your personal contact information provided to a referral site is subject to potential sale. Keep in mind that that is exactly what a referral site does to make money. They SELL YOUR CONTACT INFORMATION to realtors for a fee.

How do I know this?

When I attend real estate conferences and trade shows, there are several companies who offer 'lead services'. Our regulations prevent us from paying a specific amount of money for a 'lead' or referral but these services get around that rule by charging a monthly service fee. Realtors pay a fee and hopefully receive a few leads throughout the month which might lead to a listing or a sale. To be completely honest, I have no idea where the leads originate. I would hope that the contact names belong to people who voluntarily requested more information on local real estate or indicated an interest in selling their home.

I have asked the lead services to explain where the leads originate and I am often met with blank stares. These leads are their product. The service providers (or at least the person manning the booth at the trade show) has no idea how the contact information is obtained. Why would I pay for such a mysterious service? If the contacts are not properly qualified as potential home buyer or sellers, how does the contact differ from merely opening a phonebook and stabbing at a name listed there?

So I think I have clearly shown I am skeptical of the lead services sold to people in my industry. I want to explain the other side of it. I want to explain the real estate referral sites which claim to give the public the names of the 'best' realtor in their area.

I visited the Homelight.com site and was pleased to see that it is not available in Canada (yet!) but I poked around a little to try to see how the ranking and referral works. Well, I found a very interesting 'system' that is little more than a contact referral service. As an agent, I have to register with the service to get access to the leads. So, even if I was an excellent producer with great statistics, I would still have to PAY to let Homelight refer potential clients to me. This is absolutely NOT an impartial referral service. It must make money somehow and the best source if to get the money from agents.

The Homelight site lists a half dozen national franchise real estate companies. My guess is that these companies are the anchor companies and have agreed to pay large fees in order to block other companies from appearing on the service, something like getting an exclusive sales territory. Again, this is support for the fact that this is NOT an impartial referral service.

Finally, Homelight claims to analyze millions of home sales, agents and brokerages by their performance. I can tell you that this data is NOT easily available. In Canada, this information is considered to be covered by privacy laws and is thankfully not available to be posted on the internet. Would you want your home and it's sale price available to be seen by anyone just so they can make a few dollars by selling someone's contact information?

The relationship between a buyer or seller and their agent is a very personal and intimate relationship.I have had clients who could never be slotted into a category based on their needs. I have had clients who needed emotional and financial support during our time together. I have had clients who feared working with strangers or were so introverted that they needed a special person to guide them through the process.

I firmly believe that the best agent for any buyer or seller is someone who can understand their extended needs and appreciate how they are unique.

Relationships matter and I do not think that handing out contact information like cards dealt in a game of gin rummy creates any sort of relationship. Clients are people, not commodities.

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