Well, I went door knocking today! Knocking on doors is one of the most successful ways for a real estate agent to find new business. I should know… for the first 5 years or so, I was a door knocker 3-5 days a week for at least 2 hours a day.

Over the past 30 years, I have always said “if I ever need more business; I would know what to do!” 

To be a successful door knocker you must be very stubborn and have faith that it will work. Most agents will give up if they don’t get a listing or a buyer the first day or two. It is very important to pick an area near your office or near your home which you are very familiar with. It is also important to know the neighborhood and the home values. I like to hit a lot of homes and not allow a long winded talker to take up my time. (I can always come back or call later if it really is a good lead)  

The best part of door knocking is knowing that my fellow agents will give up before they get out of the office! 

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Question:

I am a REALTOR® and I want to give a gift to a friend for referring a client to me.  Is that legal?

Answer:

The answer depends on several factors.  First, what type of property is involved in the resulting transaction? Second, is your “friend” a real estate licensee, an unlicensed person, or an employee of a company providing special services such as title insurance or pest control work?

There is a legal article, Referral Fee Chart, that illustrates when you can or cannot give a “gift” (any amount of money or any other type of consideration).  In addition, there is a detailed legal article on the same topic, Referral Arrangements.

If you deal with residential one-to-four properties and your friend is a non-licensee unaffiliated with any type of special service company, then federal law–RESPA–generally forbids the giving of a referral fee (any type of gift) to your friend.  The term “generally” is used because RESPA does not forbid a referral fee if the buyer purchases the property using all cash or a loan from an individual who doesn’t typically loan money to borrrowers.

If you deal with residential five or more properties or commercial or industrial or agricultural property, then you may give a referral fee to a non-licensee who is not affiliated with a provider of special services.

Finally, the same rules apply regardless of what you call the “gift”:   a referral fee or a finder’s fee.

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When I started in the real estate business many years ago; finding a customer or client was easy! I picked out a neighborhood that seemed likely to me that someone would need an eager real estate agent and I knock on the door and left my business card. If, I left enough cards with a little note on the back, eventually I would have some call backs about why I was at their home. I always tell the truth!!! I told the caller that I was looking for new clients who might be interested in buying or selling a home; and I was wondering if they knew anybody! This is known as “Door Knocking” which can work well for the agent and also for the customer who wants a hard working real estate agent.

I’m not sure if door knocking works today, because I have not done it on a regular basis for about 25-30 years. Also, most of the sellers’ these days are banks that usually are a little difficult to find. I’m not really sure where their front door is!

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