HomeGain is introducing a new agent-to-agent referral program that it hopes will turn the company into the largest independent referral company on the Internet.
Licensed as a real estate brokerage in almost all states, Homegain is already known as the largest online customer-to-agent referral company. The model is simple: customers can find agents to sell their homes or find them a home while remaining anonymous through the interviewing process. Agents can submit blind proposals to the customers in order to be invited for personal interviews. Once the agent is selected, Homegain is paid a referral fee of 15 percent when the home closes.
Now, with Referral Maximizer ™, Homegain plans to cash in on lucrative referrals that occur between agents, but unlike most referral and relocation company business models, Homegain plans to stay away from the closed transaction referral fee. Instead, it plans to charge agents an annual renewal subscription fee of $199 to be in the system.
How does Referral Maximizer work?
The new referral program will start in April, and will use the same technology as the consumer "Agent Evaluator Profile" so that referring agents can review receiving agents' profiles anonymously. Homegain calls the referring agent the "outbound" agent, and the referred agent is called the "inbound" agent. The outbound agent collects a referral fee from the inbound agent and the fees that they agree to are their own business.
Let's say Agent 1 is a San Jose agent with a client who is transferring to Austin. As the outbound agent, Agent 1 would put a request on the system for proposals from inbound Austin agents. Agent 1 can describe his/her client's needs without divulging the client's identity and the agent may ask for certain experience, designations, locale, or other criteria on which to base a referral. The outbound agent can also disclose the referral fee he or she would like to receive at this time.
Among the fields of information that the outbound agent might fill out are those which will give the inbound agent some idea of what the referral client (the buyer) is looking for:
- Home type (e.g. single family), minimum bedrooms, minimum bathrooms, desired price (e.g.$230,000)
- Date by which the outbound agent wishes to receive proposals back (e.g. April 31, 2001)
- Reason for referral (e.g. job relocation),
- Whether or not the client currently owns a home (e.g. yes/no),
- The Buyer's purchase contingent on sale of current home (e.g. yes/no),
- If current home is listed, the expected date escrow will close, additional comments;
- Preferred type of agent or comments regarding referral policy
Agent 2 is looking to receive referrals. When Agent 1's request for a proposal comes along, Agent 2 can respond with a brief, easy-to-fill-out form
This template allows them to inform the outbound agent about:
- Years in real estate, years in local market
- Referral fee being offered
- Business history (number of buyers, sellers in past 3 years)
- Credentials (license number, professional designations, other designations, membership, education, languages)
- Availability (days, evenings, weekends), MLS affiliation, Web sites and "additional information"
Competitive proposals are then collected and sent to Agent 1 for review .
To make the system work more smoothly, Homegain has an alert system which notifies both outbound agents and inbound agents via e-mail alerts. Outbounds get a message telling them they have proposals from other agents waiting to be read. Inbounds get a message that they have a hot referral in their agent control center awaiting review.
This could work, if Homegain can get enough agents to participate in the system. Already the company says it has 47,000 agents registered in its customer referral database, and plans to leverage these agents into the new agent-to-agent referral system for the additional fees. The company is also planning an aggressive campaign with a target of getting 100,000 agents into the system.
Homegain says it feels it has several advantages to make this happen.
According to Mark Marymee, spokesperson for Homegain, there really isn't another online system for small, independent or non-relocation affiliated agents to find qualified referrals for their clients, so Homegain has first-mover advantage. Second, the referrals are between the agents themselves, giving them more control over what happens to their clients, and a nice alternative to in-house referral departments. Third, agents can still take advantage of franchise or designation affiliations or other criteria to make a referral. A RE/MAX agent holding a CRS designation can request proposals from RE/MAX CRS inbounds if they choose.
"In research we conducted, 69 percent of the agents told us there is a "definite need" for an open, nationwide referral network that feeds leads and submits proposals electronically," says Marymee. "and 68 percent said they would expect Referral Maximizer to add from one to four additional referral deals to their business each year. Moreover, 54% said Referral Maximizer would provide "distinctive advantages" over their existing referral service or network."
In a focus group composed of 200 online agents, Homegain learned that their program was appealing to two groups of agents - those who did few referrals a year, zero to one, and those who do 3 to 10 referrals a year. "The "zero to 1" deal group liked the idea of joining a nationwide network where they could access agents in far off parts of the country, and having an easy-to-use system that would help them enter the referral business," explains Marymee. "The "3-10" group wanted to reduce time spent locating potential referral agent partners and a better way to track the progress of the referral once they handed it over to another agent.
"Several agents admitted to us that they've lost one or more referral paychecks over a year's time because they just didn't have enough time to track and make sure the agent they refer the business to closes the deal and sends them a check. Referral Maximizer offers the ability to track referrals through close of escrow," he says.
Integrity also plays a strong role for online agents. "They want to find the right agent for their clients," said Marymee, and that is more important to them than making money on the referral. Most feel that their reputation was on the line when referring another agent to represent their client."
Marymee outlines that outbound agents currently go about locating an agent in inconsistent ways. "They choose one out of a directory, refer to personal contacts, go with "gut feelings," do web searches for local Realtor associations, use a referral network, or make choice based solely on professional designations or annual earnings."
If Homegain meets its goals it will be richer by $20 million annually, but Marymee says the real plus will be in delivering something of value to agents. "We are looking to help agents with their business and help them through the ease of technology. This is a way for them to earn some money without a lot of headaches."