Referral networks and the fees associated with them are under fire in the real estate industry, but referrals are how Jason Mitchell built his business.
In 2024, Mitchell’s referral network helped his team, the Jason Mitchell Group (JMG), close 10,279 transaction sides totalling $5.1 billion in sales volume, more than any other team in the nation, according to RealTrends Verified Data. According to Mitchell, the success of his team has sprung from his ability to leverage the relationships so much of the real estate industry is built on.
“Every day it feels like this company is suing that company, but the reality is we all need each other,” Mitchell told attendees of HousingWire’s The Gathering Tuesday morning. “We’re connected — mortgage and real estate are so connected. I like the spirit of competition, but at the same time we do need each other.”
Mitchell was an early innovator and adopter of the referral network, creating a referral engine that consistently propels his team to the top of rankings.
“Consumers need trusted real estate agents to work with them,” Mitchell said.
He noted that the majority of agents do very few transactions a year, meaning that consumers have a very high chance of working with someone who does not have a lot of experience.
“Our industry is full of part-time people where this isn’t their full-time career and these great referral companies are helping consumers by connecting them with great real estate professionals and that is a win for consumers,” Mitchell said.
Ensuring a great consumer experience
For Mitchell, the lawyers and regulators currently trying to pick apart these relationships are working against consumers and part of what he feels is breaking the industry and he has had a front row seat to these lawsuits, with his firm facing legal challenges from state regulators in Arizona and New York, as well as the Consumer Financial Protection Bureau (CFPB). Although JMG ultimately received a clean bill of health from these regulators, who had originally alleged his firm was violating the Real Estate Settlement Procedures Act (RESPA), said the process is “never fun,” even though he knew his firm was doing the right things.
“It is not about steering as much as it is about ensuring a great consumer experience,” Mitchell said of why capture rates among his referral network partners is so high. “It is about making sure that if you get a referral from any partnership that the consumer has a great transaction with the agents that you have.”
Over the course of a four year review by the CFPB, Mitchell said his firm never had to change anything about how they do business, leading him to feel that the regulators don’t understand how business across many different industries operates.
Referrals are part of most businesses
“In what business aren’t there referrals?” he posited. “The whole world works on a referral in some way shape or form. If you are not providing consumers with an opportunity to work with a trusted professional by asking them if they are currently working with an agent and providing them with recommendations if they aren’t, you are doing them a disservice. The odds are, if they go find their own agent that isn’t trusted and vetted, they aren’t going to find a good one.”
As for the critics who claim that referrals drive up the cost to consumer, Mitchell said the math, at least for the agents on his team, does not support these claims.
“If you have independent contractors receiving a referral that know they have to pay 100 basis points on that deal, if instead of charging 3% or 2.5%, which is what their typical fee would be on a a buyer broker agreement, they’re charging 4%, then they are gouging the consumer,” he said. “But if you look at our group of agents their average co-broke is 2.6% on self-generated leads and 2.6% on a referral.”
In Mitchell’s view, if the level of commission an agent charges a consumer regardless of where the lead came from stays consistent, then the cost for the referral is coming from the pocket of the real estate professional and not the consumer.
“If a partner is the reason we get to transact, and we give the consumer a great experience, I have no problem in saying the partner deserves a part of the proceeds, as long as that fee doesn’t come from the consumer,” Mitchell said.
With so much industry noise coming from lawsuits, consolidation and the broker-portal relationship, Mitchell said he feels it is imperative that he remains focused on where he feels JMG excels.
“I need to stay focused on what we do best and that is [to] make sure we have great agents and that we keep building our relationships with our partners and the cards will fall as they will,” he said. “I think we will always find a way to make it right for the consumer because if you don’t, you lose.”
English (US) · 