Working with Real Estate Agents?

[AndrewSookiassian]

I know there are a lot of life producers who build relationships with real estate agents and get referrals that way. I also know that I can't promise every real estate agent that I'll send them referrals because of the amount of real estate agents I know.

My question is, how do you guys incentivize real estate agents to send you referrals and do it legally? I heard something about if I set up a corporation I can 1099 them for marketing or something. Any info is greatly appreciated.

 

[rousemark]

I know there are a lot of life producers who build relationships with real estate agents and get referrals that way. I also know that I can't promise every real estate agent that I'll send them referrals because of the amount of real estate agents I know.

My question is, how do you guys incentivize real estate agents to send you referrals and do it legally? I heard something about if I set up a corporation I can 1099 them for marketing or something. Any info is greatly appreciated.

It may vary from one jurisdiction to another but in many you can pay for a referral s long as it is not conditioned on making sale.

 

[adjusterjack]

I heard something about if I set up a corporation I can 1099 them for marketing or something.

Never rely on what you "heard." Look up and read your state's agent licensing law to see if that's legit.

2015 Nevada Revised Statutes :: Chapter 683A - Persons Involved in Sale or Administration of Insurance

 

[DHK]

I heard something about if I set up a corporation I can 1099 them for marketing or something.

That's technically a legal question, and I am not an attorney. However, you could set up a licensed entity - such as an LLC. You can have a non-licensed managing member of the LLC to share the profits of the LLC. Have your commissions paid to the LLC to be distributed to the LLC members.

That's the general idea behind MassMutual's Strategic Alliance program:
https://www.massmutual.com/mmfg/pdf/strategic_alliances_program.pdf

However, I would suggest, that if you're going to propose something this formal... that THEY pay for the LLC setup. That can be a few thousand dollars. This ensures that they have 'skin in the game'.

Or they can just spend a week and a couple hundred bucks and get a life license and share business informally.

 

[adjusterjack]

You can have a non-licensed managing member of the LLC to share the profits of the LLC. Have your commissions paid to the LLC to be distributed to the LLC members.

Based on a quick look at the Nevada license laws I don't think that's going to be acceptable to the Nevada Insurance Dept.

OP need to discuss that plan with the Insurance Dept before going through the expense and risking fines.

 

[pfg1]

My experience in over 15yrs working with realtors, most realtors are very wishy washy when it comes to "their" clients. Build the relationships the best you can, give them referrals as you can but don't hold your breath.

 

[BMC]

Are they going to pay you for referrals that you send them?

The best centers of influence don't share commissions. They simply want to build their base of client opportunities. They also want to know that their client is taken care of by someone they trust.

 

[Curiousminds]

BMC.... I agree! Thank you

 

[djs]

Real Estate agents have a LOT of rules around this type of thing as well. It's hard to 'pay' for a referral and not violate some sort of rule, whether its on the insurance side or the real estate side.

Most of the real estate rules fall under respa. If you read what you can't do, there are some great ideas of what you can do:
Following RESPA Rules

So, offer to bring cookies to their open houses. Great idea. Also, it keeps you engaged with them. Not tied to any sale on either side, so it works. (think of other ideas similar to this).

Also, years ago, there was a lot of buzz around a system called Recamp. To be honest, I haven't heard much about it lately, but it does work well. Google recamp, its all about sending out greeting cards to the individuals for years after the referral. It can get expensive and hard to track, but it is effective and helps realtors get followup sales.

Most realtors who sell enough homes a year to be worth creating a relationship with don't worry about compensation for the referral. To many regulation landmines. Of course, an individual realtor who sells 4 homes a year is doing well, so you have to manage your expectations (and expenses) when working with realtors.

Dan

 

[djs]

It may vary from one jurisdiction to another but in many you can pay for a referral s long as it is not conditioned on making sale.

Yes, you might be able to pay them, but if they accept it, most likely, its a respa violation on their side.