By Michael Antonik and Shabir Amlani

Real estate sales reps are finding it increasingly difficult to generate business. There are several reasons for this situation: an increased supply of agents, lower volumes of real estate being bought and sold, unfavourable regulatory changes such as those triggered by the Competition Bureau and an increase in the number of discount brokerages, among others. The onslaught against real estate sales reps seems to be coming from every direction. What can be done to mitigate the damage that continues to be inflicted?

Some sales reps do not fully realize the potential leverage they have relative to other professionals and how they can use it to their advantage. Within the context of a real estate transaction, sales reps are the first people clients come to. To understand how this creates leverage, it is first necessary to lay out the steps in a real estate transaction.

A transaction necessitates the use of several different professionals. First the real estate sales rep helps a purchaser client find some real estate, or lists the property of a selling client. Usually the purchaser client goes to a mortgage broker or specialist next to obtain a mortgage. After these interactions, a client goes to a lawyer to deal with the legal component of the transaction. After the lawyer, the client may contact an insurance agent in order to purchase insurance on their property.

Given this order of events, real estate agents are at the top of the pyramid because they have the ability to direct clients to the other professionals down the line. Many clients ask their sales reps if they can recommend mortgage brokers or lawyers.

This position of power can be directly or indirectly monetized by sales reps. They can get a share of the proceeds earned by those lower down in the pyramid by taking a referral or other fee. In order to receive an outright fee, the sales rep must have access to professionals who are willing to pay the fee.

For those who choose not to pay outright referral fees, sales reps can ask professionals to reciprocate the favour by referring clients to them. There are several ways in which sales reps can be rewarded for the referral of a client.

Although the other professionals enter into the picture further down the transactional line, they are occasionally asked by clients to refer a real estate sales rep. This holds especially true if the professional deals with areas other than real estate transactions. For example, in addition to real estate law, some lawyers practice immigration law. They are often asked by newly arrived immigration clients about the purchase of residential and commercial real estate.

Or, occasionally clients will go to a mortgage broker for a re-financing so they can renovate their property with the hope of selling it at an appreciated value. Given that in this context the mortgage broker is the first one to be contacted, the client may ask their mortgage broker to refer them to a real estate professional.

Sales reps can also direct those down the line to refer files to one another and be rewarded for such efforts. For example, a real estate agent who refers a client to a mortgage broker and lawyer can request for that lawyer and mortgage broker to refer to one another when they have the ability to do so. Since in this situation the sales rep is the reason why the mortgage broker or lawyer gets business from one another, the rep can legitimately request a referral fee or reciprocation.

Because sales reps are in the privileged position of being the first people clients approach, they should in some way get compensated for the power of being able to direct clients to other professionals. Real estate salespeople usually invest the most time, money and effort into marketing and business development while the professionals further down the line rely on the agents for referrals and, consequently, spend far less on marketing. Given the difficult environment in which many sales reps find themselves, it makes sense to use whatever means are available to them to increase their revenue streams.

Michael Antonik and Shabir Amlani

Michael and Shabir are lawyers and the founders of Uniivaa (www.uniivaa.com).  Their mission is to provide a professional-to-professional online referral marketplace connecting real estate agents and brokers with other professionals such as lawyers, immigration consultants, paralegals, mortgage brokers and financial advisors. They also have extensive experience teaching at both the university and professional level.  Email [email protected]; phone 289-400-4822.