Real estate referrals are part of general referral marketing.

Wikipedia’s definition of referral marketing is the following:

“Referral marketing is a word-of-mouth initiative designed by a company to incentivize existing customers to introduce their family, friends, and contacts to become new customers. 

Different from pure word-of-mouth strategies, which are primarily customer directed with the company unable to track, influence and measure message content, referral marketing encourages and rewards the referrer for allowing a company to do so.” 

And when you apply this word-of-mouth initiative to real estate, you have real estate referral marketing.

Getting real estate leads via referrals can reduce your costs per lead and increase your profits.

But there’s more.

I worked out marketing performance statistics in this article.

According to them, these leads often have a higher quality than other lead sources.

They can increase your profits due to their cost-reducing effects.

So you don’t want to ignore this type of lead generation method because of the above benefits.


The Two Real Estate Referral Types Explained

In real estate, referrals can come from:

  • Past, current, or future clients

  • Another licensed or even unlicensed individual

But there are only two different categories of (real estate) referrals. The same is true for businesses in other industries.

There are referrals without rewards.

Those are sometimes called “organic” referrals. They come from clients who were very happy with your real estate services.

Also, there are referrals with rewards. They can come from other licensed real estate professionals or lead providers paid at closing.

Sometimes, real estate agents need to refer a client (without the intent of a reward) out of necessity.


They may have received a client that needs a service that is not within the agent’s or brokerage’s expertise. Or it’s out of state.

In that case, it’s more of a gray area between a referral with and without reward.

But you could also put it in the category of referrals without rewards.

Because this is what it is.

Referral marketing without rewards and word-of-mouth marketing is hard to predict and measure.

Although it’s not impossible,.

Reward- or incentive-based referral marketing campaigns are easier to measure and track.

For the latter, different providers on the market include tracking capacities.

But more about them later in this article.

This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.

Tobias Schnellbacher