Real Estate Brokers Leverage Strategic Referrals for Future Sales Opportunities

Real estate brokers are increasingly forming strategic, non-competitive alliances with property management organizations to serve property owners who are not yet ready to sell, a dynamic highlighted by real estate expert Moses Kagan. This approach ensures owners receive necessary management support while preserving future sales opportunities for the referring broker. The practice underscores the importance of trust and clear boundaries within the real estate ecosystem.

Moses Kagan, co-founder and partner at Los Angeles-based Adaptive Realty and a licensed real estate broker, recently observed this trend on social media, stating, "Brokers talk to owners all the time who are not ready to sell, but who need help with management." He added that these brokers are "very happy to have an org to recommend, knowing that org won't compete with them for the sale, when it comes." Kagan's firm, which manages a substantial portfolio, including for third-party owners, often engages in long-term property stewardship.

This referral model addresses a common need among property owners who require assistance with day-to-day operations, maintenance, or tenant management, but intend to hold their assets for an extended period or prepare them for a future sale. Such arrangements allow owners to maximize property value and operational efficiency without the immediate pressure of a sale. Referrals are a cornerstone of the real estate industry, with a significant percentage of transactions originating from such recommendations, making these relationships highly valuable.

The success of these partnerships often hinges on explicit or implicit non-compete understandings. While formal non-compete agreements in real estate can be legally complex and their enforceability varies significantly by jurisdiction, the spirit of non-competition is crucial for fostering trust. These understandings ensure that property management firms focus on their core service—managing the asset—without attempting to usurp the broker's role when the owner eventually decides to sell.

The Federal Trade Commission (FTC) recently issued a rule banning most non-compete clauses, effective in September, though exceptions exist for senior executives or in the context of business sales. This regulatory environment further emphasizes the need for transparent and mutually beneficial referral structures that rely on professional ethics rather than restrictive contracts to maintain collaborative relationships between brokers and property managers.