How Real Estate Agents Acquire New Business

This seems to be the question everyone wants to know if you are a real estate agent. Me? I found mine by referral so there was already a level of trust established. In fact, most buyers find their agents through a referral  or work with an agent they used in the past 61 percent of the time—41 percent referred from a friend, family, neighbor, or relative, five percent referred by another real estate agent, three percent referred through an employer, and 12 percent use the same agent they worked with in the past, according to The National Association of REALTORS®’s 2015 Profile of Home Buyers and Sellers report, one of NAR’s most widely read and cited surveys regarding the home buying process, types of home purchased and sold, and the role buyers maintain with the real estate agents. Seventy-three percent of sellers also used referrals from someone they knew or an agent previously they previously worked with. Overwhelmingly, 88 percent of buyers and 89 percent of sellers worked with an agent to close the home purchase or sale.

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With the increase in the use of digital technology complementing the home search process—44 percent of buyers first looked online and 33 contacted a real estate agent—we can speculate that using the internet and working with an agent go hand in hand in today’s home search process.

So it begs the question—Are the efforts real estate agents put into maintaining digital platforms leading to new customers? For all buyers, 12 percent reported finding their agents online—10 percent from an internet website and two percent search engine or with a mobile application. Referrals and repeat business are no doubt the number one source of new business for real estate agents, but digital marketing is indeed how agents capture an additional fifth of their entire business.

What is interesting to note is that when we segmented the data by age in NAR’s 2016 Home Buyer and Seller Generational Trends Report, we found that buyers ages 61 to 69 found their agents online 17 percent of the time, as this group moves longer distances. As age goes up, the use of a previous agent increases and referrals go down. Older buyers are more likely to be repeat buyers and work with agents they used in the past. Younger buyers 35 years and under, relied heavily on referrals more than any other generation as many were first-time buyers. Nevertheless, 12 percent of Millennials still found their agents through online sources. By demographic composition, single males found their agents 14 percent of the time online, as did 13 percent of both married and unmarried couples.

NAR also surveys its members on the topic in two different reports. Real estate agents, as individual business professionals, were asked in the 2015 Member Profile where their business came from. Again, the median was 20 percent from repeat business and 20 percent from referrals. Sixty-four percent said they received no business from open houses. Agents reported that they received a median of three business inquiries and two percent of all business from their website. Thirty-three percent said they received 1-5 inquiries from their website; however, 32 percent said they received zero inquires. They also said that they spend a median of $130 to maintain a website for the year.

NAR also asked its members where clients came from the perspective of a real estate firm representing a group of agents where they pool their resources in the 2015 Profile of Real Estate Firms. The report states that 55 percent of new customer inquiries come from past clients (30 percent) and referrals (25 percent) for real estate firms. Ten to fifteen percent of new inquires come from the firm’s websites and 5-10 percent from social media. Ten percent of the total sales volume at firms also comes from their own websites and five percent from social media.

Most businesses need digital marketing in order to remain competitive and stay in afloat. Real estate agents and firms are no exception. The industry demands that they put money into creating and maintain their websites and devote resources into creating social media content. Social media, if done properly, can be by and large free marketing and a way to keep in contact with past clients. While having a digital footprint is important, referrals and repeat clients remain the main source of creating and maintaining client relationships in the long run for real estate agents.