The Importance of Referrals in Real Estate

College of Real Estate CORE The Importance of Referrals in Real Estate


As a real estate professional, there are many ways to attract new clients. You can use different marketing tools and strategies, or you could find a specific demographic to target. The most efficient way would be to network and generate business via social media channels or websites. A repeat client will return to you each time they buy or sell a property, which generates more work. Referrals to real estate businesses are a way for that business to grow. Real estate referrals can come from a current or past client, or from colleagues, friends, and family. In fact, according to National Association of Realtors® statistics published in May 2020, 39 percent of sellers who had a real estate agent found their agent through friends and family, while 27 percent had the same agent they bought or sold with before. So, if you want to learn more about the benefits and the importance of generating client referrals in real estate, then this blog is for you. 


For today’s blog, exclusive for our Core members, we will be talking about how important really is referral in the real estate industry. Research shows that more than 90% of people believe that recommendations from people they know and trust are important when choosing an agent. Recommendations from the real estate industry are not only recommendations but high-quality leads as well. So in the next part of this blog, we will be showing you the importance of client referrals in real estate and how to ensure that you have more of them.


The first one is that client referrals quickly build rapport. In sales, especially real estate, it’s imperative for your prospect to trust you. One of the best and most efficient ways to build this trust is for you to be introduced to the prospect by a mutually trusted party. A prospect is much more likely to trust and become interested in your business if they have heard about a positive experience from a trusted source. It will pay dividends to create incentives for referrals, as customers will talk about your business without you feeling like it’s coming from a pushy salesperson. This can instigate more interest in your services and generally be more trustworthy than cold calling. Word of mouth marketing is better because satisfied friends are the ones talking on your behalf. 

The most significant investment in real estate is trust. Thus, referrals are one of the many ways to build long-term trust with clients. Why is trust crucial in real estate? It’s very simple – real estate is a business of sales and relationships, and both are better when there is trust. Referrals come with testimonials from satisfied clients. This makes your clients more interested in your services because they have received positive feedback on them, making it easier to do business with them. Furthermore, it harnesses client loyalty, encouraging them to talk about the benefits and advantages a realtor offers. It is as simple as letting a satisfied customer leave a comment on a business.

This could also result in a word of mouth marketing. One of the best ways to get a client is through word-of-mouth. You should find someone who trusts you and ask them to introduce you to the client for a better chance that they will believe whatever you say and give them your services. Word of mouth is the single most powerful way to market your services. It can be more effective than tactics such as running an advertisement because whether people are satisfied creates interest in you rather than resentment for trying something new. The word of a satisfied friend, family member, colleague, or acquaintance should never be underestimated. 

College of Real Estate CORE The Importance of Referrals in Real Estate Cost BenefitsWith that, we have our next one which is having cost benefits. Real estate agents and firms can earn more profit by using referral programs to increase their commissions. Studies show that referred customers are more likely to buy services at full price because they trust the business. For example, a real estate office that refers somebody can make higher commissions when the customer buys a home from them. Remember that clients are more likely to reach out to and work with a realtor with a good reputation. Therefore, positive feedback can boost sales in real estate. And compared to the average customer, referred customers are less sensitive to pricing. This means that when you get referrals from a customer, they’re likely to pay higher prices because they are pre-sold on your brand based on your credibility and trust.

Aside from that, client referrals stay longer. According to a study conducted by Goethe University and published in Forbes, 18% of clients referred stay with your business for longer than other customers. The study observed the referral program of a German Bank over three years and found this number remained consistent, indicating that client referrals are likely to be more loyal due to an increased level of trust with you as an agent.

It is not always a realtor’s fault for deals that fall through. Nevertheless, clients can get frustrated which can lead to less successful and more short-term transactions. Deals that come from referrals are more likely to be successful because they have more personal connections. Typically, buyers and sellers from referrals have better working relationships which also means they will work together to complete transactions without them falling through. However, customers who come from websites and social media pages could pose a lesser chance of successful and longer transactions because they would not share the same deep personal connections as someone in a referral deal. It’s easier to build trust with a realtor that is recommended by friends or relatives. This is due to the idea that you have more of a chance to stay with the same realtor over time. The point when it comes down to it is consistency. It is an important factor in making a business’ reputation strong and getting clients.

College of Real Estate CORE The Importance of Referrals in Real Estate ReferralsClient referrals could mean satisfaction. When you effectively utilize a client referral program for your real estate business, you will build a network of satisfied customers that will do the lion’s share of the work for your marketing. When you refer a customer to a colleague, it’s quick and easy. As a result, the customer is more satisfied. Satisfied clients are your greatest assets because they’ll always recommend you. This can boost your credibility in the real estate industry by having satisfied customers recommend you for business.


So if you know the importance of a client’s referrals in real estate, you can save promotional time by building a strong network of satisfied customers. This is accomplished by rewarding clients with discounts when they refer their friends, and giving both parties discounts when the friend contacts you. This saves time and money, so it’s a win-win situation for everyone involved. It’s really a good idea to offer some incentives for referrals, to encourage satisfied and loyal clients to talk about you and your services as people just like getting rewarded. They also like getting involved in something and feel like they’re a part of something good. They will be delighted if they witness your business succeeding because of their help. Positive interactions lead to a higher audience engagement on your website and social media platforms.

Having client referrals also shows that you care about your clients. As mentioned, word of mouth marketing is essential to creating a relationship with your clients. So you should give prospective home buyers and sellers the opportunity to voice their opinion. They will then think of you as someone who cares about their satisfaction because you asked for their input before making any decisions. Satisfied clients will then refer others, which shows that you are someone who really cares about his or her clients. An effective referral system is necessary for ensuring long-term productive relationships with your clients. Whether it be a referral system you have in place or one you need to develop, it is vital!

Also, we know that word of mouth is the most powerful marketing method for any business, and it also works for real estate. So one key way to grow your business is by encouraging clients to refer people they know who are looking for houses. As your company continues to grow, you should implement a successful client referral program by cultivating profitable and long-lasting customer relationships. One more way to ensure that you have satisfied clients and more referrals is to understand what clients are going through. Each relocation comes with many challenges, but before even coming to packing their life into boxes, clients have the challenging task of finding the ideal home for themselves and their families. Usually, there is no ideal one, but finding something that suits the family’s crucial needs, and making a few compromises, solves the situation or at least narrows down the choices. Promote open communication with your clients, have empathy, and be polite. It will mean a great deal and show that you really care.

College of Real Estate CORE The Importance of Referrals in Real Estate Word of MouthAnd lastly, client referrals in real estate will save you money on advertising and effectively grow your real estate business. So if you are looking for free or lower cost advertising, you can use customer referrals. Customer referrals are a good way to grow your business and there are various methods you can use. Giving discounts or commissions is one choice, though another option is using client referrals as an opportunity to offer more benefits for their referrals. Recommendations make it easier to generate interest in your service because they take less time and require fewer resources. Recommendations save you time on making a mailing list, developing digital or printed material, and paying for postage. Motivated buyers and sellers also mean an increased likelihood of a completed sale, which is the goal for both parties involved.

Now the big question is, how can you get referrals? 

The first one is to ask for referrals directly. In order to increase your referrals, ask the client immediately after completing a successful deal if they would like to refer you if anyone else needs an agent. It’s important that this be asked in person or via direct email for the most effective results. You should tell current and past clients that you’ve enjoyed working with them so much, to refer you to their friends or family. You should tell colleagues, family members, and your real estate partners that you’re available for any referrals too.

Sometimes, your clients do not immediately agree to refer a realtor or some just forget. So the next step is to ask again. To ensure that clients know of your services, be quick to remind them if you see an opportunity. However, don’t push them or force their decision.

College of Real Estate CORE The Importance of Referrals in Real Estate Referrals DrawingThat is why it is also important to stay in touch with your clients. Continuing to communicate with past clients can increase your chances of receiving a referral. Repeat customer communications will also help build relationships, and improve their experience as a whole.

Don’t forget to socialize. Social media is the perfect way to connect with other professionals in your industry and find referrals from these connections. You can also create an email template, and email them. This is probably one of the most strategic ways to get referrals. Make sure to create a template that will make a client refer a realtor to another client as email templates are fast and cost-efficient. Also, regular networking events are another great way to expand your network and get more referrals.

Another thing is to be kind and grateful. A simple “thank you” email will make a difference, it doesn’t need to be anything fancy! Following this principle, sending an appreciation and thank you will always mean something to your customer.

And of course, there is a better chance of you being referred if you go the extra mile for clients. You can build a reputation for service excellence by going above and beyond when it comes to clients. If they feel they receive exceptional service, they’ll be more likely to recommend you to others. So show your clients that you care. To build the kind of long-term relationships that lead to referrals, it’s important to show clients that you care about them beyond the closing table.

College of Real Estate CORE The Importance of Referrals in Real Estate Be GratefulTo give your business a more favorable online presence, ask your partners, associates, and past customers to post positive reviews of your business on your website and social cover photos. The recommendation is for clients who have had a great experience with you to spread the word about their experience without you having to tell them to do so.

So, focus on marketing yourself to potential clients and ask them to recommend you to others they know. You can do this by asking them to mention your name when they talk about how they found their ideal home. One more way to go is by kindly asking them to tag you on a photo that they will post on social media announcing that they just bought a new house. When people see a happy family, it is a positive representation of what they want in life, which can be the power to create a lifelong impression. Businesses should work to keep good relationships with their past customers so that the business will come to mind when they have their next need. And as mentioned, attending networking events in the area helps build connections and has the opportunity for getting referrals.

To sum it up, client referrals are one of the best ways to save money on advertising and grow your real estate business. You can use word of mouth marketing to create huge networks and an excellent level of customer loyalty. While simply asking for referrals is one way, it works best to offer your current customers an incentive to refer their friends and family. But the bottom line is that referrals are vital to the real estate industry. They do not only create sales and increase reputation but they also foster actual human connection, which is important in the real estate business. So just remember to be sure you always make referrals a standard part of your practice as a realtor!

That’s it for this blog CORE Member. What do you think of the steps and tips we’ve shared? When are you going to start, if not today? Let us know in the comments below. And don’t forget to subscribe to our channel, click the notification bell, and like this blog. If you think that we have delivered value please share this blog with one person. Just one share is enough for us, for you to show your appreciation for the commitment and hard work we all put together in creating this blog that teaches and helps you on your mission of building your own fortune. And you don’t know that one share could go a long way. And keep in mind that no matter how many times you’re going to read this blog, you won’t see any results unless you take action. Goodbye and see you at the next one!