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Referral Bias or Fair Dealing?

Tuesday, October 28, 2008


I was recently surprised at the spotlight a listing agent and seller placed on the referral of a closing to “me” by a selling agent.  On more than one occasion, one of the two parties referred to the selling agent as “my referring agent” or as “my close friend” and that reference was made during a conversation in referencing the referring agent where the conversation was focused on the possibility of a “lopsided outcome” to a dispute or disagreement on a contract enforcement issue.

Marketing 101 will tell you that the most important aspect of your business is to build a team of “experts” or those that you work best with in your specific industry.  This is the same philosophy associated with effective networking. It's about building long-lasting connections with other professionals.

After having been in the real estate industry for 18 plus years, I believe that I have established some long term relationships with other business professionals.  The key to effective growth and success in our industry is built on long term relationships that have developed over time. 

In researching this topic, I came across an article by Ivan Misner(1) written for entrepreneur.com. In this article, Mr. Misner states that any successful relationship, whether a personal or a business relationship, is unique to every pair of individuals, and it evolves over time. It starts out tentative, fragile, full of unfulfilled possibilities and expectations. It grows stronger with experience and familiarity. It matures into trust and commitment. Misner describes the process of creation, growth and strengthening of business, professional and personal relationships; it is useful for assessing the status of a relationship and where it fits in the process of getting referrals. It can be used to nurture the growth of an effective and rewarding relationship with a prospective friend, client, co-worker, vendor, colleague or family member. When fully realized, such a relationship is mutually rewarding and thus self-perpetuating.

The first phase of growing a relationship is developed when you and another individual become aware of each other. In business terms, a potential source of referrals or a potential customer becomes aware of the nature of your business--perhaps because of your PR and advertising efforts, or perhaps through someone you both know. Although these associations could possibly flourish into personal friendships, most are casual. Such relationships form a casual-contact network, a sort of de facto association based on one or more shared interests, says Misner.

Misner focuses also on the credibility aspect of the relationship.  He says “credibility is the quality of being reliable, worthy of confidence. Once you and your new acquaintance begin to form expectations of each other--and the expectations are fulfilled--your relationship can enter the credibility stage. If each person is confident of gaining satisfaction from the relationship, then it will continue to strengthen.”  He goes on to state that "credibility grows when appointments are kept, promises are acted upon, facts are verified and services are rendered." The standards to determine credibility are the same as those that you would use to check up on any relationship. "To determine how credible you are, people often turn to third parties. They ask someone they know who has known you longer, perhaps done business with you. Will she vouch for you? Are you honest? Are your services effective? Are you someone who can be relied upon?"  The point is, does your relationship with your business referral partner impact the way you do your business?  Are you fair in your dealings? Are you just as fair to those with whom you do not have the same referral relationship? These are very important questions that each party needs to ask themselves. 

Although the relationship might seem more than a business referral, the ultimate goal is to be fair and honest in your business transactions and treat all with the same amount of ethical value, no matter the association. If the settlement attorney is fair, honest and understands the parameters associated with any referral relationship, the outcome of any dispute will not center on the relationship between the parties but the interpretation of the contract and the resolution of the dispute, no matter the consequences or the repercussions.


(1)Ivan Misner is the founder and CEO of Business Network International (BNI), which has more than 2,700 chapters throughout the world. He is also the author of five books, including his New York Times bestseller, Masters of Networking, as well as Entrepreneur Press' forthcoming Masters of Success.


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