Transcript Real Estate Coalition Update and Action Plan

Coalition Corner:
Business training tools for HR staff, real estate licensees and other
service professionals in the relocation and real estate industries
Affinity Groups
© 2005, Employee Relocation Council/Worldwide ERC® Coalition
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Program Objectives
• This program supplements a monthly editorial
feature in ERC’s Mobility magazine
• In this segment, users will learn:
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How to define affinity programs
To name examples of affinity groups, and
How affinity groups assist their members
Why affinity relationships create a type of managed
move
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Affinity Groups Defined
• An affinity group is formed for the purpose of
bringing purchasing power to its members, in
order to obtain greater service or economic value
than is possible to realize individually
• Value can be defined in terms of:
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Added convenience
Ease of use
Quicker response
Resources that might not be known or available to the
individual
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Keys to Success
• An affinity group’s success depends on its
strength, realized through a variety of sources,
such as:
– Value-added service(s) and/or rewards
– Brand loyalty
– Trust
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Examples of Affinity Groups
• Some examples of affinity groups include:
– Real estate licensees who are members of the National
Association of REALTORS®
– Frequent flyer programs offered by airlines
– Wholesale Clubs (Sam’s Club, Costco, etc.)
– USAA, which offers its members insurance benefits, credit
cards, real estate services, etc.
– Employers who provide formalized added benefits to
employees without additional overhead
– Real estate brokers who offer services to employers and
direct the business to their own companies
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Value Services
• Some of the ways in which affinity groups offer value
services in a real estate transaction might include:
– Providing counselors to coordinate move details
(including mortgages, title insurance, homeowner’s
insurance, moving companies, utility hook-ups and other
services)
– Offering reduced costs of real estate-related
charges and fees
– Providing rebates (where allowable) on services such as
real estate fees
– Offering access to other consumer programs, such as
college saving accounts and vehicle purchasing power
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Why is this considered
a managed move?
• In the real estate industry, an affinity group will refer its
member/buyer/seller to a member of its network of real
estate companies (or a range of pre-selected companies)
which may offer specialized services
• When a transaction closes, the affinity group expects to
receive a referral fee from the real estate brokerage, a
part of which is sometimes refunded back to the member
– Important Note: Before an affinity group can realize a referral
fee from the real estate brokerage, the affinity group itself
must hold a real estate broker license. It is essential to check
state laws and regulations governing inducements, rebates
and cash back to consumers as well as state disclosure
requirements.
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What’s the Incentive?
• Why would a real estate broker work with an affinity group, knowing
about referral fee requirements? There are several incentives,
including:
– The potential to develop a high
volume of referrals
– An ability to track/monitor the
marketing costs to reach a
targeted audience
– Added assistance in identifying
pre-qualified and motivated
buyers and sellers
– The ability to encourage
consumer loyalty to a program
or brand name
– A means to offer exclusivity
through a preferred network
program
– The added benefits of
additional forms of advertising
and promotion
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Is the Referral Fee Justified?
• Yes, because someone else has already
marketed and pre-qualified the lead with a
predictable closing ratio
• The true issues are cost, profit and
level of effort to get a lead to closing
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In Conclusion
• Any real estate brokerage needs to make a
sound business decision as to whether
the number of referrals being made to the
brokerage will outweigh the competition for
and the cost of the referral fees
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