What to Expect With a Real Estate Referral

by Sundaybell on June 27, 2013


For those that are new to the business (or even been in real estate for quite some time), here’s a few facts about real estate referrals:

Brokerage-to-Brokerage

Most real estate referrals require a standard referral form that is sent from broker-to-broker (or via an agent for a specific brokerage firm to another agent at a different real estate brokerage firm). The reason for this is that any monetary exchange (i.e., the payout of a referral fee) must go from one broker to another. It’s common practice for a real estate agent, or REALTOR, to fill out a referral form and send it to another real estate agent, or REALTOR, in order to process a referral.

What Exactly is a Real Estate “Referral”

A referral is when one agent, or business, has a relationship with a client (buyer or seller) who is looking to make a transaction within the real estate industry that can not necessarily service the client and their needs. So, in this case, they will refer that client to another agent or broker that can service their needs. This might happen in the case of a re-location to another city, time off, receipt of a referral through a company or even just personal reasons. Real estate referrals are common within the real estate industry…it’s just not that widely talked about.

So What Does a “Referral” Cost?

In most cases, real estate referrals can cost anything from a flat-fee or even a percentage of the commission that is earned by the real estate agent that receives a referral. It’s common practice for the two real estate agents, or REALTORS, that are working with the client to decide what the fee will be that is shared between them. That said 25% or more seems to be the going rate for a referral these days.

There is no direct cost to the consumer (the buyer or seller), however, they should be aware that the real estate agents they are working with are splitting up the negotiated real estate commission that will ultimately be paid within the price of the home that is being bought or sold.

When Are The Referral Fees Processed?

In most cases, the referral fee is processed following the close of a property which is usually the day that possession is taken by the new owners. At that point, all the legal documentation is completed and the real estate commissions that have been negotiated have been processed and sent to the representing brokerage firm (who subsequently remove their fees and pay out the representing real estate agent). Once these fees are processed, the client file is reviewed and if there is a referral form in place, the brokerage firm will make payment to the referring agent while splitting up all the fees that have been received. This can happen quickly, or take a bit longer, depending on the internal timelines that each individual brokerage firm adheres to.

Author Bio: This article was written by +Andrew Brest, co-founder of Sundaybell.com: a real estate site that is focused on building relationships between home buyers, home sellers and real estate agents through communication and awareness.


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