Guest post: A 'referral-free environment'

I had a conversation last week with a prominent brokerage leader and the term "referral-free environment" was used. I think he might be onto something here. What if there were no referral fees in real estate, zip, zero, none? No third-party sales of leads, no commission-taxed transactions, no relocation referral fees, and not even those infamous broker-to-broker referral fees.

Think of the possibilities the industry could explore if we referred business free of fees.  Consumers were directed to professionals in other markets based on the quality of service rendered and not the agreement to pay a referral fee. No need to pay 30 percent referral fees for a name and a number.

I don't think we're fooling anyone today. The consumer is getting smart about the difference between getting a fee for making the referral and being directed to a great local broker in the consumer's best interest. I believe that one of the main reasons the government intervened with RESPA (The Real Estate Settlement Procedures Act, which governs all real estate closings) was its observation surrounding the industry's ancient practice of incentive-based broker-to-broker referral fees. Maybe there would be less need for groups like RESPRO - suggesting and lobbying for RESPA reform - if as an industry we just agreed to direct business to the best source of service in a referral-free environment.

--Ken Jenny, TranCen

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