The Silicon Review
“The ugly truth of real estate is that 80% of all new agents quit within their first year. I wanted to create something for these agents who got left behind.”
Realty Connect is an exclusive brokerage for ‘referral only’ agents. Although their agents hold Active real estate licenses, they don’t represent clients or help people buy or sell a home personally. Instead, they simply refer their clients to other agents who do all the work in exchange for a referral fee.
Realty Connect was founded in 2015 and is based in Reston, VA.
To highlight and further understand what Realty Connect stands for and seeks to explore in this segment, I sat down with Dana Jensen, who serves as the company’s Chief Executive Officer.
Below is an excerpt.
Q. What was the inspiration for Realty Connect?
When I started out as a licensed salesperson in 2003, I really enjoyed selling real estate and did well for a few years. But when the housing market crashed in 2007, I wasn’t prepared and had to take a break. I wanted to keep my license but couldn’t afford to pay all the required MLS fees, Association dues and Realtor® expenses (generally $2,000-$3,000 a year). Without these, no Broker would hire me. Why would they? I didn’t “fit” their model. My options were to let my license expire or go inactive.
That’s when I learned the ugly truth of real estate. That 80% of new agents quit within 1 year. Even worse, 90% are gone within 5 years! Of course, most people would stay away from entering a new career that only had a 10% success rate, but they don’t teach you any of this in real estate school. That’s when it clicked. The industry is so focused on recruiting top-producers, it’s easier for brokers to replace struggling agents than to try and help them. Unfortunately, this is what happens to 90% of agents, so they just quit and let their license expire.
So, once I got back on my feet and bootstrapped this company a few years later, I wanted to create something for these agents who got left behind. Everyone laughed at my idea, but I knew there were lots of agents out there just like me who had invested hundreds of hours and thousands of dollars to get their license, but just weren’t getting the return on investment they needed to stay in the game. I wanted to offer them an easy and affordable way to keep their license (Active), but more importantly, I wanted to give my agents the ability to make money and be successful. I figured that’s why we all got into real estate to begin with. We just needed a different set of rules.
Q. What is the difference between a regular real estate agent and a “referral” agent?
Although Realty Connect agents hold Active real estate licenses, they don’t represent clients or help people buy or sell a home personally. Rather, whenever they have friends, family and people they know that are buying or selling real estate, our agents simply refer this business to a regular agent who represents the client and does all the work. In return, our agents get paid a referral fee. Generally, this is between 25%-75% of the total commission. For example, the average real estate commission in the U.S. is about $10,000. Of that, our agents would earn $2,500-$7,500.
Q. You have developed a network of over 25,000 top-rated agents serving all 50 states. How does that work?
The agents in our network do all the work of helping someone buy or sell a home. They are the agents that show homes, represent clients, list homes for sellers, write contracts for buyers, etc. Our network includes agents from every real estate company you have ever heard of and hundreds more. From our perspective, we’re not really concerned about the brand name of the brokerage the agent works for. We only care about the quality of that individual agent. Once we identify a top performer, we invite them to go through our 5-step vetting process. Only about 5% of all agents make the cut, but this is why our agents can feel confident that their clients are always being matched with the highest caliber agents in their market. Once an agent places a referral within our network, we take care of all the matching, managing, tracking, and accounting. Once the transaction closes, all the agent has to do is just let us know where they would like us to mail their check. It’s really that easy.
However, agents don’t have to place their referrals into our network. They can also place their referrals directly with the agent of their choice, even if that agent is not in our network. At the end of the day, it’s all about making great matches between individual clients and great agents. If our agents can do that on their own, we’re going to support them.
Q. How do you plan to combat your competition?
Like any other business, we have competitors. However, most use outdated technology, offer limited agent resources, and have antiquated business models. By contrast, Realty Connect is a technology company, which allows us to deliver great agent experiences that are fast, easy, and efficient. This gives us 3 distinct advantages.
First, we are the only national referral brokerage in the country that pays our agents 100% of their referral fees. Most of our competitors work on a “split”, meaning they take up to 50% of their agent’s commission! For example, our average referral commission is $2,500, but we have paid agents referral fees of over $20,000 in the past. Now imagine if your broker took half of that check! Our philosophy is that we do the same amount of work for each transaction, so why should we take more just because an agent was lucky enough to get a big client? For that reason, we just charge a flat $295 transaction fee. Otherwise, our agents get 100% of their referral commissions.
Second, Realty Connect is the only referral brokerage in the country with a nationwide network of agents serving every zip code in all 50 states. Most referral brokerages only operate on a local or regional level. The geographical coverage they offer agents is much smaller.
The third advantage is an unmatched level of agent support. We’re invested in the success of our agents and offer business cards, agent websites & proven strategies that get results. We even created an online community, “Encore”, where successful agents can connect with each other to share their best referral techniques and new ideas with other agents in the group while learning their methods and secrets too. Encore agents generate dozens of referrals every month, so we’re excited to see this community thrive.
Q. What plans do you have for Realty Connect in the future?
Most people don’t know this, but 70% of all real estate transactions in the U.S. are generated by referrals each year, so we have some ambitious plans for the future. To make sure we get it right, the question we ask before making any big decision is: “How can we offer the highest level of quality, at the lowest price possible, that will deliver the best agent experience?”. The first 5 years were full of challenges, but now over 1,000 agents join Realty Connect every year! It’s exciting to see the company grow, but our focus has always been about helping our agents succeed. Since membership is only $100 a year, it’s easy for our agents to get a great return on their investment. Plus, with an average referral fee of $2,500, just one referral can pay for a lifetime of membership.
Agents can earn referral fees on their own transactions too. Most agents make 2-3 referrals each year, but we’re always trying to find new and creative ways to help them become more successful. But this company is built 1 agent at a time, and we try to make sure our agents are having great experiences whether they are joining as a new agent, submitting a referral, or getting paid their referral fee the same day we receive their commission check. As long as we stay focused on taking care of each agent, we’re confident the company will continue to rise in the market. I invite agents to visit RealtyConnect.com and discover why Realty Connect is “The BEST kept secret in real estate”.
A Value Driven Leader
Dana Jensen is the CEO & Principal Broker of Realty Connect and has always had an entrepreneurial passion for real estate. Driven by a mission to offer real estate agents an easy and affordable way to keep their license Active, his company is pioneering a new opportunity in the real estate industry.