Real estate referrals are a good source of business since they tend to come from a trusted source and have a high percentage of closing. But not all real estate referral companies are the same. They tend to charge different referral fees, maybe charge up-front fees, and some have limits to the number of agents that they allow in for any market.
Types of Real Estate Referral Companies
There are two basic types of referral companies for real estate agents.
One are companies like Zillow Flex and Opcity. These networks usually have a limited number of agents in a market, charge some fee to get referrals in a zip code, or aren’t actually giving referrals, but only leads.
The second are companies like Cartus and ReferralCloud. Cartus has genuine referrals, but usually for a 35%-40% referral fee. They also have a significantly limited pool of agents in any market, usually tied with Realogy companies. Cartus has very good relocation referrals, both listings and buyers. The other problem with Cartus is that they work through the brokers, and not directly with the agents. This means that if you leave your brokerage, you also leave your Cartus funnel of business. Also the broker takes a large portion of the commission, so the real estate agent might only be left with 30-35% of the commission.
ReferralCloud not only provides high quality real estate referrals, but they also are tied directly to the agent. An agent who creates a ReferralCloud account and has a few closings, and then leaves their brokerage will still get the referrals when they switch companies. This means that while other real estate referral companies are broker-centric, ReferralCloud is an agent-centric referral company.
The differences between Real Estate Referral Companies
Zillow Flex is a referral program that takes leads, and attempts to pass them off as referrals. These can better be described as “really warm leads” instead of actual referrals. A referral is defined as a person who is knowingly being handed off from one professional to another. Good examples are when your doctor refers you to someone for more testing, or a specialist. Or a real estate agent refers a client to an agent in another market. This isn’t saying the people working at Zillow aren’t professional, they certainly are. The problem is that they don’t know the client. Instead they take someone that requested information on their website and talks with them, trying to pass them off to an agent.
The reason Zillow has started the Flex program is to get more revenue out of their leads, since many agents don’t want to pay a small fee up front, but they are happy paying 30% or more for an inbound client. Another problem with Zillow Flex is that it is only located in a few markets, and only for agents already paying for leads in those zip codes.
ReferralCloud is a real estate referral company that gets its referrals from other real estate agents. One of the benefits is that the referrals are both listing referrals for home sellers and buyer referrals.
Agents who have clients moving to another market or those who need an agent to list their home in another market can place the referral in the ReferralCloud portal. Once this is done they are assigned to an agent in the appropriate market. The referral is tracked and agents can communicate with each other through the platform to see how things are going. Once the transaction closes the receiving agent pays a 30% referral fee and the referring agent receives 25%. Another huge benefits is that both agents become higher priority for getting assigned referral in their markets for using the platform. This process has been known as “give a referral, get a referral”.
Another upside is there are no up-front fees. Only a referral fee paid at closing.
ReferralCloud is a nationwide real estate referral company
Since ReferralCloud is a nationwide real estate referral company, there is no limit on placing referrals, unlike many franchise referral networks. Many franchises, and even Cartus, doesn’t have the ability to cover the entire US and Canada. Since ReferralCloud is an agent-centric referral company, it works wherever there are agents!
Another advantage to ReferralCloud is the referral management platform. It allows agents to easily locate and track their inbound referrals. When clients are assigned through the platform, not only will the agent get an email, a ReferralCloud staff member will call the agent and make sure that the agent is aware and is in a position to provide service the client.
Another great feature is the communication portal within ReferralCloud. This allows each agent involved in the referral to make notes so that there is a recorded timeline of events. While ReferralCloud is not a full blown CRM, it is a robust tracker and easy to use.
The downside of ReferralCloud is that the network is small but growing. As of February 2022 there were 1,000 agents in the platform nationwide, compare to 30,000 agents for Opcity. It will likely take a few years for the network effect to take hold so that agents get regular referrals, but since there is no up-front fee, and the agent that places the referral still gets 25% without having to hunt down an agent in another market, its a win win. Not only that but the agent will eventually get an inbound referral client as a reward.
|Listing and buyer referrals||Small growing network|
|25% referral fee paid to referring agent||30% referral fee paid at closing|
|No up-front fees||Not “daily” referrals|
|High priority for inbound referrals for using platform|
|Agent-centric (agents can take account with them)|
In any case, as the ReferralCloud network grows, agents will get more referrals and also grow their exposure to other agents who have referrals to give.
Cartus is a Realogy partnered real estate referral company that primarily uses Cartus brokerages to place its referrals.
Most of their business is actually relocation referrals, so this means that are working with customers both buying and selling. So Cartus has both listings to give as well as buyer referrals. While they have a steady stream of referrals for agents, the deciding factor is how the broker assigns the referrals. In a large brokerage, there might be a couple agents the broker has chosen to work Cartus referrals, so this means that those agents get all the referral business.
Other brokers use their Cartus account as an agent recruiting platform, promising leads to agents that join the company. The problem with this is that those agent will only occasionally get any referral business since they have to spread the referrals out to numerous agents. Another issue is that if an agent who has been working Cartus referrals leaves their brokerage, the business stays with the broker, and those agents won’t be getting new referrals at their new company
Most franchises have their own real estate referral network within their companies. Many of them are well known like ReMax, EXP, Keller Williams, Century 21, etc. Many others are smaller regional franchises and companies like Weichert, John L Scott, Realty Executives, etc.
These companies tend to already have their own referral networks. They work on a similar model. An agent places a referral through their system and they go find another agent in their network to assign it to. They usually take 5-10% of the commission for doing so just like most relocation companies do. One huge downside is that these companies only focus on agents in their same franchise, so if you aren’t with Coldwell Banker, you won’t get a referral from them.
The problem with national franchise real estate referral companies
The biggest problem with these companies are they aren’t really national. Even the largest Franchises in the US have holes in their network. This is because even the largest franchises are just a very small sub-market of the real estate industry. So the agent is going to miss out on referrals that come from agents at other companies, since there is no way to pull all agents together independent of brokerage.
Opcity is a well known real estate referral company. They have over 30,000 agents in their network and they buy leads from a number of sources. Since they are owned by Realtor.com they have a robust number of leads that come in through their website as well as other companies that they buy leads from.
Their model is strictly on a referral fee basis, charging each agent a referral fee at closing. While Zillow has attempted to copy this model, they still primarily get their revenue from having real estate agents paying for leads per ZIP code. Some ZIP codes are over $1,000 per month and they sell them to numerous agents!
Downside of Opcity
It is no secret that while some agents love the leads they get from Opcity and have no problem paying a 35% referral fee, other agents do not feel the same way. Many times there are complaints that these agents are given the same leads as other agents, so they are actually competing with agents in their market for the client. This is probably a good strategy for Opcity since they have a higher change of getting paid a referral fee, while it can be frustrating for agents at the same time.
As with any lead, if the agent is good at closing leads there is a higher chance that an agent will have a closing.
|Opcity advantages||Opcity negatives|
|High volume of leads||35% referral fee|
|Covers entire US||Leads are not exclusive|
|Relatively easy to sign up for account||Leads have low closing %|
Summary of Real Estate Referral Companies
ReferralCloud has both exclusive referrals (not leads), is nationwide, any agent can join, can assist in placing outbound referrals, only charges a 30% referral fee, and the agent can change brokerages and still keep their free account.
Zillow Flex has semi-exclusive leads, but is only in a few markets and those leads may also be sold as part of their zip code program. They do have a high-volume of leads but a low closing ratio.
Cartus is a national relocation real estate referral company, but only a limited number brokerages in each market can be a part of their network. Their referral fees are high, but they do offer high quality relocation referrals.
Opcity is a large lead generation company that is nationwide. Almost any agent can apply for the network. There is a 35% referral fee and a low closing rate, since the leads are likely given to numerous agents.