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Published by the CIPS Network of the National Association of REALTORS®
First Quarter 2005
Become Part of the Future, Now!
By Carmela J. Ma, CIPS, CCIM
Referrals are a substantial source of income for many real estate professionals: Work in this business long enough and do a good job, and clients will be handed to you. U.S.-based sales agents know this well, and know the value of referrals from fellow professionals. Referrals are so valuable, in fact, we pay for them—typically around 25 percent of our side of the transaction for residential and between 10 and 15 percent for commercial, although this varies from agent to agent and deal to deal. Our Canadian colleagues also practice this. Except for a relatively small handful of brokers elsewhere, however, paying for client referrals is generally not done and, in some cases, is outwardly rejected. U.S. REALTORS® have a hard time understanding why this is so. But, many of our colleagues around the globe are not yet aware of the profits and opportunities in referrals.
In some international markets, commission percentages are very small, so brokers a are less inclined to share. In other markets, clients remains clients of the original broker—even if they work with another broker to buy outside their market—so there is no legal or logical basis for "transferring" a client to another professional. To complicate matters further, some U.S. states prohibit paying a fee to an “unlicensed entity,” which seems to make sense—until you wish to do business with a broker in a country where there is no licensing. Efforts have been made to educate licensing authorities about this issue and to provide model language to accommodate a global market. The point is that there are still barriers to payment of cross boarder referral fees—for a variety of reasons.
The International Consortium of Real Estate Associations (ICREA) has had a Transnational Referral System in place for more than two years now. It provides standardized referral forms that brokers can voluntarily use to negotiate specific fee arrangements. The system also provides an arbitration process to use to settle disputes between brokers. Brokers have used the system with varying degrees of success. Why? There are two million brokers/agents in the ICREA network. Identifying an agent in another country who is aware of the service, understands how it works, and has bought into the concept will not always be easy. I'm confident that over time this will change, even if ICREA does nothing further. Good business practices always spread.
Now, with assistance from the U.S.-based Council of Residential Specialists, ICREA has developed a Transnational Referral Certification (TRC) course. It debuted at the REALTORS® Conference & Expo in Orlando in November 2004. The primary delivery system for this certification course will be the Internet, but ICREA pilot-tested the program in a live forum to 150 people in Orlando. Of this group, more than half opted to pay the US$99 certification fee to be officially certified and become part of this new network of TRC professionals.
The TRC course is designed to inform brokers worldwide about the benefits of client referrals as a source of income; about the benefits to both the client and the broker/agent; and about the specific tools and resources available from ICREA to help facilitate a successful referral. The course is self-paced, allowing students to spend as much time as they need with a module to understand the material. On average, the online course will take four to six hours to complete. This can be done over a period of days or weeks, at the student’s convenience. An interactive Q&A at the end of each module helps students prepare for the online exam. Once students successfully complete the course and pass the exam, a certificate is automatically generated online and the broker/agent’s name is added to a searchable database of TRC professionals. This database of certified professionals is key to the success of the system, as referring agents will now be able to easily locate an ICREA affiliated professional who understands the client referral concept and is interested in doing cross-border referrals. In the early stages of this new service, there will be a limited number of certified professionals from any given city or region. I encourage you, as a CIPS Network member to be among the first to become a TRC professional!
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