Lead generation... Keeping my clients honest and making sure I get paid

Hi Kristi I'm so sorry for the huge delay in response.

Yes I have a contract, albeit not an official one, it is a custom one that I drafted up which I believe to adequately protect my interests. That being said, I also very much trust the party I'm "selling" the leads to, so the contract is really a formality and to avoid any potential for ugliness.

Now, one point I will make is that I'm located in Canada. In terms of the Internet of Real Estate, there is a stark contrast between our two countries, where ours is still very much protected by the various Real Estate bodies. That being said, I do not doubt there still exist many opportunities in the United States, I just know that you're competing for web traffic with huge companies such as Redfin.

In terms of the transaction, I've done it two ways. The easiest is to keep the lead for yourself. That way, you get 100% of the commission. The downside, for me at least, was that Internet Leads require substantial amounts of follow ups phone calls and e-mails, and after awhile I got burnt out with all of it. In this method, you're legally representing the Buyer in the transaction, showing them properties, drafting the contract etc.

The other way, is to refer the lead. Standard for most North American referrals is 25% of the gross commission received by the agent you've referred to. I have a contract in place to ask for 30% as I'm offering some other services and exclusivity to my "client." In this, it is up to my client to record me as the referral agent when doing the paperwork, to mark down that I'm receiving 30% referral. As mentioned, the advantage is that I am licensed with the same office so I can access the paperwork and keep him honest (not that I expect the need).

I have referred probably 200 leads to outside Realtors, some with a quick referral form signed by both parties, others with the honor system. I have not received a dime from any of them. I'm hoping, as an optimist, that the leads simply never lead anywhere, but there is a real chance that they decided to leave out that referral fee. The downside for them is I never sent them more leads, but I guess I'm the one out money.

So, we have a custom agreement (I can e-mail you the template if you like) to refer all leads at 30%. We also have a standard company referral form which both parties sign, where we detail the client's information, and then it's submitted to the office so if that name comes through we know, and it's legally binding if we can prove they worked with them; but honestly it does come back to the honor system really. And finally, if you represent the Buyer yourself then you're doing all of the paperwork and you're protected in that all documentation says you're getting 100% of the commission.

I hope that helped. Again, I am sorry for the slow reply. If you have more questions feel free to reach out and I'll do my best to answer and get back to you sooner. I'd also love to hear what success you're having with various online avenues, maybe we can compare notes.