Referrals are a time-honored way to get new business, and with the advent of the Internet, it is even easier to take advantage of fee-based referrals. From third-party agent to agent referrals to company referred leads, fee-based referrals are growing. The question is, how significant are they in the course of daily business. Will they be more important in the future due to the Internet?

The September Mr.Internet/Realty Times survey regarding fee-based referrals offers interesting insights into this and other questions.

"The reason this survey should be of interest to Realtors is the development of fee-based referrals online," says Blanche Evans, publisher of Agent News. "Two trends that suggest this are an increase in third-party referrals among brokers and agents who are unknown to each other. The second is the growth of broker to agent fee-based referrals that are captured by the broker online."

"With 60 percent of homebuyers on the Internet, what is happening is that there are a tremendous number of leads that aren't being captured, and these two solutions offer a better opportunity for lead conversion," says Evans. "The problem is that Internet buyers and sellers seek information earlier in the homebuying and selling process, so many aren't ready to be "captured." This can be frustrating and confusing to agents who are used to working with ready-to-act customers offline."

Michael Russer, aka Mr. Internet, expressed surprise that many agents were unfamiliar with these trends. "Over 39 percent did not use any kind of fee-based referral," says Russer. "Fewer agents than I expected were aware of the possibility, and many said they didn't know about these services or where to find them, which may indicate their unfamiliarity with Internet resources."

More telling, said Russer, was the fact that many didn't think online fee-based referrals were worth the trouble. "I find that sentiment is stronger as you get into the higher income brackets - they can create their own business," says Russer.

"I really can't blame them," he explains. "Less than 11 percent said that fee-based referrals were less work. That means that 89 percent said they were the same or more work. That's not a good sign. I think that's an indication that the referrals aren't highly valued. Agents are asking themselves, "Why should I put in as much or more work and get less money for it?

"According to the comments, many of the pure online plays were not looked upon favorably," he continues, "The leads were regarded as not being of good quality, and it was regarded as more effort to serve those customers."

Evans sees resistance to fee-based referrals as a short-term problem only. "It's still early in the leads generation game. Where it all breaks down right now is lead retention. Some brokers don't have effective lead capture systems in place, although some are working on the problem with technology solutions and onsite lead managers. That means they will be increasingly interested in leads that come from the Internet, because those can be easily tracked.

"But the real problem to overcome is that the brokers' agents are simply not trained or equipped with tools to nurture and retain a long-term lead," she says. "It will be up to the brokers, their technology programmers and third-party partners to figure out ways to help agents work those leads more effectively."

"They need to think in terms of making the agent the center of information relay to the online consumer because that is where most leads will come from in the future."

Editor's note: Twenty-one people out of 90 responded with the correct answer to last month's challenge question - "What company that is affiliated with a major franchise is the first in the industry to offer online "fee-for-services" brokerage?" The answer is "Blue Edge" (Coldwell Banker.) The winner of the challenge question was selected using a random number gneerator on an Excel spreadsheet. This month's winner is Ed Tobey, Realtor. Ed has won a copy of Michael Russer's Internet marketing manual, e-POWER, and a year's free subscription to the Real Estate Update, a newsletter format lead generation/retention/capture tool.