Thread: Do you give realtors a referral fee?

I know some state's say it's ok to pass money on to the real estate agent for the referral.

Just wondering if people do this, how often, and possibly how much they typically charge as a fee..

Or do you just send them a really nice christmas gift?

Andrew

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Originally Posted by Andrew Kling

I know some state's say it's ok to pass money on to the real estate agent for the referral.

Just wondering if people do this, how often, and possibly how much they typically charge as a fee..

Or do you just send them a really nice christmas gift?

Andrew

It is illegal in every licensed state that I'm aware of.

Andrew, it seems that you are trying to think of every way possible to get your business going and that is good. But, you are going about it in the wrong way. About the only way to establish a HI business is by hard work. You have to get out and pound the pavement, meet folks and hand out business cards to everyone you meet. It takes time and it is not an overnight process. On the average it will take about 3 years to establish a HI business and in some areas of the country it could take longer.

Paying for referrals is akin to getting a kickback, you really want to have an arms length relationship between the real estate agents and your business. Home inspectors should be a true third party to the transaction and not a kissing cousin.

No licensing here to cause trouble for a HI giving a referral to an agent but the agent would be in HUGE trouble due to the real estate laws. And both would be easy targets for a lawsuit from an unsatisfied client.

Andrew, I see from another thread that you are trying to jump start a new business, but this approach is likely illegal and definitely loaded with peril.

Maybe some service like Mike Crow can help you start up. I know some guys like him, although I don't have any experience with him.

Originally Posted by Lon Henderson

Maybe some service like Mike Crow can help you start up. I know some guys like him, although I don't have any experience with him.

Andrew, I know you are thinking about coming to our Atlantic City Inspection Conference.

Mike Crow will be teaching a class on Tuesday:

“Increase Sales Now with USP’s”
Mike Crow; one 2 hour session
"Marketing Coach Mike Crow brings his principles of creating wealth to our show. He preaches Unique Selling Points make more money. Learn some of the top USP’s for your business."

2013 Atlantic City Inspection Conference Class Packages

When I first started my business I went to the Federal Small Business Association office and spoke with a business counselor. He told me I should pay referring agents $25 per referral. When I told him it was unethical and in violation of RESPA he asked me what I was doing there since I already knew more about it than he did.

Doughnuts and bagels, They like those, throw them in and slam the door shut.
My god man, What were you thinking?

Originally Posted by wayne soper

Doughnuts and bagels, They like those, throw them in and slam the door shut.
My god man, What were you thinking?

Wayne, that's friggin' funny!!!

But seriously Andrew. Paying for referrals is not the way you want to build a business. Any realtor or inspector who would engage in this type of behavior is just asking for trouble.

As already mentioned, this is a violation of FEDERAL RESPA law regardless of what state law (or lack thereof) may say.
Don't even go there.

There are some agents I've worked with that I'd pay to not refer me. Is that still unethical?

Never give cash! If you want to court Realtors, then take some baked goods to the office. If you get a job and you want to show thanks...then send a thank you card. Or bring them a cup of coffee when they let you in the house. Or just say THANK YOU!
But cash???? NEVER!!!

Originally Posted by Jack Feldmann

Never give cash! If you want to court Realtors, then take some baked goods to the office. If you get a job and you want to show thanks...then send a thank you card. Or bring them a cup of coffee when they let you in the house. Or just say THANK YOU!
But cash???? NEVER!!!

I couldn't agree more! Send them a card WITH baked goods and/or a Starbucks card. But really, the gifts are not needed. What you really need to do is send cards that are sincere and show you care, not that you are after their business. If you do a good job and you show them you care you will get repeat business.

I believe in this so much it is part of my business.
Watch the video here:
http://www.inspectionnews.net/home-inspection-inspector/referrals/
then click on "Click here for your FREE trial courtesy of InspectionNews" to send a card for free and try the system. It comes with detailed video instructions.

Originally Posted by Brian Hannigan

I couldn't agree more! Send them a card WITH baked goods .........]

Is it possible to mail a donut?

As other have already stated... baked goods or breakfast during their monthly meetings is a good method to get exposure. You may need to do this a few times and they will usually give you 2-5 minutes to introduce yourself. Be brief and thank them for the opportunity and ask for their business. Another suggestion would be to offer to be flexible with scheduling for realtors, if you can until you are up and running well. Offer late day inspections and Saturday inspections and once you are doing well you can charge extra for these services if your market allows.

Originally Posted by Nick Ostrowski

Is it possible to mail a donut?

Hi Nick,

Actually it is. Well, maybe not a donut but brownies and many other baked goods, gifts and gift cards.

Watch the first video in the box marked #2 here:
https://www.sendoutcards.com/hannigan/
Towards the end they will show you how gifts are added.

Originally Posted by Nick Ostrowski

Is it possible to mail a donut?

Send them some Cheerios and let them grow there own

As Scott P. mentioned "It is illegal in every licensed state that I'm aware of."
Brian's idea of a gift card still would be against the lic law, as petty as it might seem. Would be the same as a gift Visa Gift Card.

Bringing doughnuts to a presentation is different, but paying the Brokerage to make a presentation would equate to payment to the agents.

HI company is very different to from something like a Title company. The Title Company can not effect the decision to enter the purchase contract, just the settlement costs.

Cash is not the determination of value/consideration. If that was the case you could offer a set of tires for each referral.

The worry is collusion and it is a real concern. States with good lic laws have recognized the issue.

How about taking your favorite/highest number of referrals agent to the Caribbean for a week ?

Don't fall into the trap of situational ethics....

I suggest 50% of the inspection fee. Anything less would be an insult.

Good to know, thanks. Because I've talked to some friends that are local realtors, and they get a "consulting" fee of around $30 when they refer their client to a specified home inspector.

And I am starting a business, so I didn't know what other people were doing. I'm guessing it technically not ethical for me to give a realtor a nice gucci purse that sent me most of my work for a christmas present then.

I'll try the buy them food for their monthly meeting approach, see how it goes. I do hope that they like my home made icecream...

Andrew

If real estate open houses are something that is done in your area on a Saturday or Sunday afternoon, you might show up with 3 cookies or so in a sandwich bag, a bottle of cold water, and a few business cards. I've make oatmeal cookies, no nuts or raisins(you don't have to worry about allergies or melting chocolate). You can hit a dozen open houses if they're done in your marketing area in a couple of house and chat up the agents if they aren't dealing with a prospective buyer. I call it my open house survival kit. Get an agents business card for name memory and you have the start of an email list.

Andrew,
""consulting" fee" had me wondering if PA was different from most with lic law. Apparently not. Personally I would rat out the agents and inspectors.

Quick look at PA law yielded the following.

http://www.attorneygeneral.gov/uploa...ection-Law.pdf


28 § 7504. Duty of care of home inspectors.

4 (3) Offering or delivering any commission, referral fee
5 or kickback to the seller of the inspected property or to an
6 agent for either or both of the seller and the buyer for the
7 referral of any business to the home inspector, the employer
8 of the home inspector or such other business or person.

No realtor that I've known has ever asked for a cut. But I did get calls from 3 others that promised me all their clients if I invested $350 with their "venture" (definition: pyramid scheme.) I said no thanks.

Originally Posted by Andrew Kling

Good to know, thanks. Because I've talked to some friends that are local realtors, and they get a "consulting" fee of around $30 when they refer their client to a specified home inspector.

And I am starting a business, so I didn't know what other people were doing. I'm guessing it technically not ethical for me to give a realtor a nice gucci purse that sent me most of my work for a christmas present then.

I'll try the buy them food for their monthly meeting approach, see how it goes. I do hope that they like my home made icecream...

Andrew

That has "conflict of interest" and "improper business relationship" written all over it so matter what type of label they want to put on it.

Originally Posted by Garry Sorrells

Andrew,
""consulting" fee" had me wondering if PA was different from most with lic law. Apparently not. ...

Just to be picky, in case no one else has mentioned it... Pennsylvania does not license home inspectors, yet.

Yes, there is a home inspection law, but no licensing.

Philadelphia does license home inspectors.

Do you give realtors a referral fee?

Only if they were to give me one ...

I'll take 5% of 6% of the sales price any day and give 5% of diddly-squat in exchange ...

You've got to be kidding. When is the last time a real estate agent thought so much of a home inspection report that they forked over 2-3% of their commission to the home inspector? First, it is a conflict of interest, plain and simple. So, it is wrong. Second, you will never make the money back, as lawyers charge more per hour than you do for home inspections. It's not legal.

Finally, consider this: stroking a real estate agent is kind of like stroking a junk yard dog. They like you when things are going their way, when you have the treats, when you talk in the right tone, etc.. But when that ends, or you forget the coffee, they may be your worst enemy. Just don't go there.

Do honest work honestly, and when you come across other honest people - be they real estate agents or not - give them a business card. Let them know you are trying to build a business, and ask them to pass your contact information on. Let your clients know that referrals are greatly appreciated. Before you know it, you'll start building business.

Originally Posted by Scott Patterson

It is illegal in every licensed state that I'm aware of.

Andrew, it seems that you are trying to think of every way possible to get your business going and that is good. But, you are going about it in the wrong way. About the only way to establish a HI business is by hard work. You have to get out and pound the pavement, meet folks and hand out business cards to everyone you meet. It takes time and it is not an overnight process. On the average it will take about 3 years to establish a HI business and in some areas of the country it could take longer.

Paying for referrals is akin to getting a kickback, you really want to have an arms length relationship between the real estate agents and your business. Home inspectors should be a true third party to the transaction and not a kissing cousin.

Thank you for sharing. I had a realtor ask me for money if I want work. I passed. Because other home inspectors informed me it wasn't a garranity for work. Just not a good feeling there with that realtor.

plain and simple it is against the code of ethics-that is if you belong to an association--if you don't do what ever rocks your brain

cvf

Originally Posted by Andrew Kling

Good to know, thanks. Because I've talked to some friends that are local realtors, and they get a "consulting" fee of around $30 when they refer their client to a specified home inspector.

Andrew

Turn him in to the authorities and he will leave a void for you to fill.

There are areas of the country where to get into an office you have to "pay to play". What they do is make you pay a marketing fee to be allowed into the office. There is no guarantee of work just an open door. Fortunately here in Washington State that has never occurred in fact if you provide gifts, meals etc. of more than $25 you are in violation of RESPA laws. If you have any financial relationship with a Realtor you have to disclose it, real estate orient or not.

As previously said you really don't want to go down that path and you will discover those that are involved in those relationships are the bottom of the barrel players. Those are also the junk yard dogs who will strong arm you to go soft on the inspection because thats the only way to get the deal done.

Take the high road and you will be able to sleep better at night and in the long run be more successful.

//Rick

In business more than 25 years,have never given an agent a referral fee,nor would I,build your business by being professional,and by hard work,be ethical,and then you will be working with like minder agents and clients.