Some salespeople agree that a broker/owner has every right to charge a referral fee to his salespeople for company-generated business, but most salespeople who responded to my earlier article feel that they pay too much already in the way of fees to their broker. Conversely, all the broker/owners applauded my comments, saying that they will indeed be charging referral fees on company generated business. Furthermore, there were a number of responses asking for ideas on having salaried salespeople.

The calmer heads that prevailed in response concluded by agreeing that there is need for much greater discussion on the subject between brokers and their salespeople. In this article, I'd like to continue my thoughts by outlining some of the leads that I believe a broker/corporate office is entitled to charge a referral fee for.

Let's say that Broker Bob has a company web site, on which all of the salespeople appear. Bob paid for the development of the site, and also pays for the ongoing hosting and updating of the site. On this site, Bob offers Virtual Tours of his company listings. When people log in to view the Virtual Tours, there is a mechanism in place for capturing (with the site visitor's consent) the email address, or other contact information of the viewer. Now, Broker Bob has all these leads coming in from the Virtual Tours. What shall he do with those leads? Well, there are several ways that he can handle this:

1) Give the leads out according to some kind of rotation, with no charge to the salespeople
2) Hire a salaried salesperson to follow-up with these leads, thus cutting the salespeople out of the loop altogether
3) Give the leads out according to a rotation amongst the techno-literate salespeople, AND charge a 20% referral fee

Take the emotion out of the above options, and look at things from Bob the Broker/Businessman's perspective, and really, the option that is fairest is #3. The referral fee covers Bob's out-of-the-ordinary costs, and the company portion of any commission generated covers the usual business expenses.

What about when Broker Bob offers information on the home buying and selling process on his company-sponsored web site? How should any inquiries generated by that section of the site be handled? Well, maybe Bob should offer the leads to the salespeople under the same 3 criteria above. And we come back to the same outcome - #3 is the most business-like decision.

Some of the responses I received from the first part of this article revolved around corporate advertising fees and affinity programs. I'm not too aware of what most major outfits offer in the way of affinity programs, so I'll just pick one I do know about: Free Air Travel.

When I was with Better Homes and Gardens, we, as salespeople, had the opportunity to sign people up to receive free air travel with any of 3 major airlines. Also, the consumer could come to us and ask that they be given the opportunity to receive the free air travel. While I don't remember the exact numbers, I do know that a sale and purchase of over $200,000 each would give the consumer 4 round-trip tickets anywhere in North America that the airline flies. The cost to me as a salesperson was somewhere in the neighborhood of $950. Let's say that someone selling a $200,000 home is going to buy a $275,000 home. That means I get the commission on at least $475,000. At 3%, that's $14,250! And I've only paid $950 to get that commission. I don't know about you, but I'll take a 1450% return any day!

So why do some salespeople feel affinity programs are such a rip-off? Because they don't want the consumer asking them to give-up some of their income. Never mind that the consumer might have chosen to deal with another company if the affinity program wasn't available. Never mind that the Realtor doesn't pay until they get paid. So, like corporate referrals, you don't have to take the affinity-generated business if you don't want to. But before you turn it down, why not calculate the return on investment that you get from all of your other business expenses.

And what about those "awful, greed-inspired" corporate advertising fees? Well, let me see how I can explain this one. In my area, one cannot listen to the radio, open a newspaper, turn on the TV, see a bus or subway, or anything else, without seeing the RE/MAX balloon. I have no idea how many millions of dollars that RE/MAX spends on generating the kind of corporate recognition that they have, but in terms of return on investment to the individual salesperson, you could never, ever in your wildest dreams get 1% of the recognition that the balloon has. I just recently switched companies to RE/MAX, so my Re/Max tab is about $275 per month. For that, I get my brand name exposed everywhere I look. And people tell me that I'm being gouged and ripped-off? I don't get it!

So, as I said at the beginning, there are obviously some crossed wires out there in Realtor-land. The salespeople and the brokers feel that they should be paying less or getting more. We've been bashing this topic around on several of the email lists I belong to, with a few common ideas emerging. I'll put those together with the responses that I receive this week, and see what we can come up with for next time.

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Published: August 10, 1999

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