December 16, 2022
Recruiting top-performing real estate agents is crucial for any real estate brokerage to grow and succeed, so who better to rely on than your current top-performing agents? Current agents and other industry professionals can be incentivized to refer new candidates to the brokerage through referral programs and rewards. Brokerages can access a pool of pre-vetted and potentially high-performing agents by leveraging the networks of their existing agents.
In this article, we’ll look at the advantages of using referral programs to recruit real estate agents, as well as how to set up a successful referral program.
Definition Of Referral Programs
There are several kinds of referral programs you’ll hear about in real estate:
- Clients referring other potential clients to your brokerage through word of mouth
- Agents earning referral fees by referring their clients to other agents they know
- Agents earning rewards by recruiting new agents for their brokerage
In this article, we’re talking about the last one.
At its core, a real estate referral program for recruitment is similar to any other employee referral program: brokerages offer incentives to agents who bring in qualified candidates they know to fill open job positions. If the candidate is hired, the agent who recommended them is rewarded.
Benefits Of Recruitment Referrals
Recruitment and hiring are laborious processes because employers may have to sift through many candidates that they know little about, only the details that made it into the application. Even after a candidate is chosen and hired, details that weren’t disclosed could cause problems down the line, from not meshing well with company culture to not actually having a skill they listed on their resume.
Recruitment referrals bypass many potential pitfalls in the hiring process. Your existing team knows exactly what it takes to succeed, and since the rewards hinge on whether the candidate is hired, they’ll be motivated to recommend candidates that they know can succeed. An Indeed survey on hiring challenges found that 74% of employers agree that employee-referred candidates are “extremely qualified” for their roles.
Not only that, your referred candidates will come pre-vetted for success in the long term. Because your current agents know the candidates, they’ll be able to evaluate the candidate’s suitability for the job and the team before broaching the subject with them.
By leveraging referral programs, you can open up access to a larger pool of recruits who possess the skills needed for success in your field. You may even be able to access potential recruits who wouldn’t have otherwise applied, simply because your current agent let them know that there was a position available that they’d be a good fit for.
Strategies For Maximizing Referrals
One of the most effective methods, understandably enough, is to ensure that your referral program is attractive and beneficial to potential referrers. Reward incentives may include monetary bonuses or other perks. A few common real estate referral program incentives include:
- Earning an income bonus equivalent to a small percentage of the recruited agent’s annual commission, for a set period of time or for as long as they’re employed
- One-time cash or gift card referral bonuses, paid out either upon the candidate’s hire or after a set number of months of the candidate’s employment
Brokerages may also ask their teams directly what kind of incentives would most motivate them to search out and recommend candidates.
The easier you make the referral process, the more likely it is that an agent will refer a candidate. If your referrals require employees to fill out a form, try to ensure they can easily fill it out online. If you can handle some of the required steps entirely on your end, do so—the most valuable part of the process is discovering the candidate, which your agent is doing for you.
Ensure that clear instructions are readily available, such as where to find applicable forms, whether the applicant needs to mark them down as a referrer, and when and how the rewards will be given out.
Challenges In Establishing A Referral Program
To establish an effective referral program, understand that your referral program is an ongoing investment. Multiple challenges may arise, the most common of which is a lack of engagement or motivation.
If your immediate hiring need is large enough, you may drum up excitement by holding contests with additional rewards for agents who refer the most successful employees. For the long haul, though, the most effective strategy is to customize your program to the team you’re incentivizing. Communicate directly with your agents to find the most engaging rewards and consider including options like gift cards to favorite local businesses.
You may see engagement drop off over time after the program’s launch, so make sure to refresh it in your team’s minds every so often.
Measuring Success Of A Referral Program
To start, establish clear goals from the outset. These should be specific, measurable objectives regarding what type of agents you want to recruit and how many referrals you want to generate over a given period of time.
Once these goals are set, track the data regularly—such as the number of recruits or percentage increase in agents recruited through referrals—to gain insight into whether your referral program design is working effectively or needs adjustment.
Moreover, it’s also important to have a system in place to effectively track how well the referred agents perform. Because the overall goal is to hire highly qualified agents who remain with and contribute to the brokerage, candidates who are hired but wash out should be considered when calculating the program’s overall success.
Metrics like overall increase in referrals can measure whether your incentives are working properly, while metrics like the percentage of referred candidates employed for a set amount of time can help you gauge whether the referral program is providing more benefit than other recruitment methods.
Frequently Asked Questions
How Much Does It Cost To Run A Referral Program?
Generally speaking, launching a successful referral program doesn’t have to be expensive. Recruitment referrals save brokerages money in quite a few ways, including job marketing expenses, onboarding time, and time spent finding and reviewing candidates, which can offset the incentives provided.
You can begin by understanding what kind of rewards and incentives will motivate current and potential agents. Do they prefer money, gift cards, or something else? Once you know that information, then you can make an informed decision about including referral program costs in your hiring strategy.
What Are The Legal Requirements For A Referral Program?
Keep in mind that if you’re offering monetary compensation, you need to make it clear that taxes are still applicable.
Be aware that if you rely on referrals too much, you might run afoul of anti-discrimination hiring laws. Agents will naturally tend to refer candidates who have demographic similarities, which over time can create an overly-homogenous work environment. Be sure to diversify your hiring methods—a general rule of thumb is to fill no more than about 40% of positions through referrals, but this is, of course, situational.
Discover High-Quality Candidates Through Agent Referrals
Recruiting top talent for your real estate team can be a daunting task, but with the right referral program in place, it doesn’t have to be. By ensuring that your incentives are attractive and relevant, monitoring the success of your referral program, and understanding potential pitfalls, you’ll position yourself for success. With these strategies in mind, you can see an increase in successful agent hiring rates within weeks or months.
