You feel like you’ve hit the lottery. You found a FREE referral service that will connect you to resources in the community. Why spend money on paying for this when you can get it at no charge. Did you ever think to ask how a FREE service can operate? Of course not, you’re too aglow in the fact that it’s FREE. Especially in the area of housing, free services are popping up right and left. The reality is that the housing market has become very competitive for the larger corporate operations so they are willing to pay companies and individuals substantial financial referral fees. Generally this begins with a contract between the housing corporation and the FREE referral service that requires an initial up front fee. Then, for each referral or move in, the FREE referral service receives anywhere from 50-100% of the cost of the client’s first month rent. And why not, the FREE referral services need to make money and to feed their families.
The issue is more with disclosure. The FREE referral service should tell the client how they are paid – or better yet, the client should ask who is being represented. Is the referral source representing the best interest of the client or the best interest of the companies paying them to refer? What about smaller housing facilities that cannot pay these fees? They’re left off the list and may be a better choice for the client. Understand that there is a significant difference between a referral service and a service that discusses long term needs with clients that usually include long term financial projections. I’ve seen many a referral service place a client in a facility that will use all of a client’s money in 3-6 months. Then where does the client go from there? The FREE referral service certainly won’t be helping them find the next place to live because the client doesn’t have any money to pay the next referral source. Next time, ask your FREE referral services how they’re getting paid and who they represent so that you can be fully aware of the FREE service that you’re receiving.