Real estate agents have been concerned about commission compression and the idea that they’ll eventually be replaced. If we stop listening and observe what is actually happening, we will see that the main concern lies in referral fees cutting into our net profit. Why don’t we have to worry about commission compression? What can we do to offset the shrinking effect referral fees have on our profit margins? How can a tool like Contact Junkie help us acquire our own leads?

In this episode, Greg Harrelson and Matt Johnson discuss ways in which we can increase our net profit margins when referrals are cutting into them.

While you’re accepting leads from someone else’s faucet, you must also create a faucet of your own. -Greg Harrelson

Takeaways + Tactics

It’s not commission compression that’s digging into our net profit. It’s the increasing amount we pay for referrals, and the increasing proportion of transactions done with a referral fee. In order to increase our net profit, we need to generate more of our own leads and pay less for them than what we pay in referral fees. Increasing outbound lead generation strategies, doing our own marketing, and consistently giving value to our existing database are ways we can grow our personal lead database and make more profit.