A company is claiming that estate agents are missing out on substantial potential income by not charging for referrals of clients to financial advisers, lawyers and others.
Research involving 166 estate agencies shows that a culture of free referrals means that 62 per cent of agents do not receive a penny for any referrals they make, while 18 per cent say they had not even tried to raise income this way - or if they had, they had failed.
The research has been undertaken by FBA, a company operating a platform for fee-based referrals between agents, lawyers, financial advisers and others.
The company suggests that the culture of ‘you scratch my back and I’ll scratch yours’ may have worked in the past but is now holding the sector back.
“The lack of trust is particularly concerning in a world where transparency and fairness are all-important. Estate agents who believe that they should only refer cases to people they know and trust, or those that rely on reciprocal agreements, may not be doing their clients any favours. The referral networks that some estate agents and property professionals have formed over the years may not give clients access to the best professional advice” says a spokesman for the company.
“The rapid growth in popularity of consumer websites for property buyers and sellers is creating an unprecedented level of competition in the sector and is causing significant disruption to estate agencies. The lack of awareness around alternative ways of working is adding to the problem and is indicative of a knowledge gap that is preventing estate agents from increasing their revenue through new money-making techniques” he says.
The company says agents have a range of potential fee-generating referral systems open to them including:
- reward-based referrals - receiving a cash reward or commission for any client work that is referred to another external professional adviser;
- referral agreements and specialist referral portals – some estate agencies have signed referral deals with specialist offerings in order to ring-fence additional advice capacity to meet consumer demand in key areas such as mortgage advice;
- operating advice supermarkets – access to a ready-made directory of qualified advisors;
- using online open market platforms - these could allow agents, financial advisers and others to upload details of each piece of case work to a platform inviting other registered members to bid for the lead.