Every agent gets into real estate with visions of easy paychecks rolling in. But the reality is real estate takes work. Leads don’t just come to you from some lead fairy. Although… one lead gen source that is almost like sitting back and collecting checks is real estate referral fees. If you haven’t tapped into the world of referrals yet, don’t worry! We’re here to remove some of the mystery around real estate referrals and the associated fees for you.

In this article, we’ll review why referrals happen and how real estate referral fee agreements work. We’ll also answer some of the most frequently asked questions about real estate referral fees, and give you a chance to ask your own.

Free Real Estate Referral Form Template

The only paperwork required for a real estate referral is a real estate referral agreement. This is a basic contract between the two brokers who oversee the referring agents. It covers how the commission will be split, the length of the referral, and other terms of the agreement.

Even though this form is very important for real estate professionals, not every association or brokerage has one available for their members. That’s why we’ve created a free, customizable, easy-to-use template you can download and start using today. Click below to get started.

Download Your Free Real Estate Referral Fee Contract Template

What Is a Real Estate Referral?

A real estate referral happens when one agent or broker passes a client to another licensed real estate agent or broker. Why give away those hard-earned leads? Well, as much as real estate professionals strive to be the go-to resource for all things real estate for all their clients, there are occasions when a client’s request is something we simply can’t deliver on. In those circumstances, referring your client to another agent is often the best way to serve them.

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Level up your referral game with SOLD.com’s qualified referral service for agents. When home buyers and sellers come to SOLD.com and decide they need a real estate pro to get them through their transaction, you’ll be ready to take the reins. The best part is you can sign up for free and you don’t pay a fee until the deal closes. Stop chasing leads and let them come to you.

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When Should Agents Refer Clients to Others?

Real estate referrals happen every day, for a variety of reasons. Most referrals happen because of one (or more) of the following circumstances:

Out of Market Transaction

Let’s say you’re a real estate agent working in Maryland, and you have a client who wants to purchase a beach house in Delaware. Even though these states are right next to each other and Delaware has full reciprocity with all states, it might not make sense for you to conduct business in Delaware.

However, you can refer your beach house client to a real estate agent who regularly sells on the Delaware coast. In exchange for that referral, you (or more accurately, your broker) will receive a percentage of the commission on the Delaware transaction.

Related Article
Real Estate License Reciprocity & Portability: A State-by-State Guide

Unqualified Transaction

As a licensed real estate professional, you have the ability to facilitate lots of different transaction types. But, if a client comes to you with a request for help on a transaction type you’re not familiar with, a referral might be the best way to provide them with the service they deserve, even though you’re technically licensed to help. 

For instance, say you’ve got a client who you’ve helped with residential real estate transactions in the past, but now they want to sell an industrially zoned building they own. If you’ve never worked on a commercial transaction, you may not be qualified to give your client advice on pricing, negotiation, or closing conditions. After all, the best practices of residential real estate may not apply to commercial or industrial real estate. So, a referral to an experienced commercial or industrial real estate agent would be the best alternative for your client.

Too Many Clients

It’s a great problem to have, but too many clients all at once can put you in Stressville fast. This might be the perfect time to ask for a little help from a fellow agent in your brokerage. For example, let’s say you are one of your brokerage’s top-producing agents, and your plate is running over. You get a phone call from someone who found you through your social media to help them buy a home, but you’re too busy to provide your typical stellar service. There’s a newer agent in the office who doesn’t have nearly as much business, so you talk to them about taking on the new client. That’s a referral, and you can split the commission accordingly.

Real Estate Referral Fees: Your Most Frequently Asked Questions—Answered

Now that you know the basics of what a real estate referral fee is and why they’re used, let’s dig a little deeper into some of your most frequently asked questions about them. 

If you have a question about real estate referrals or the associated fees that you don’t see an answer to, leave a note in the comments section below. I answer referral questions every week, and would love to answer yours!

Don’t feel like reading? Scroll up to the very top of this article for our YouTube video version of this FAQ.

Real estate agent counting 20 dollar bills

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Real Estate Referrals: Essential Tools

If real estate referrals are a part of your business plan, you’ll want to consider what’s in your tool chest. Here are some of the questions we get about the tools that make this process easier:

Where Can I Get a Real Estate Referral Contract?

In order to make and receive referrals, you’ll need a real estate referral contract. We suggest using the same one every time so you’re familiar with the terms and know exactly what to expect from the other party. Many associations offer a referral contract template in their toolbox of forms, so check there first. If your association doesn’t provide one, we’ve got one for you. Grab our free, downloadable template below.

Download Your Free Real Estate Referral Contract Template

Should I Use an Electronic Signature Platform for Referrals?

Yes. Electronic signature platforms make the act of soliciting and keeping track of your referral contract quick and easy. Our favorite platform for this is DocuSign. Their system is highly accessible, super-easy to use, and affordable (plans start at just $10 a month).

Even though they’re not a real estate-specific product, they have plans and features designed with real estate agents in mind, so they’ll definitely fit into your tech stack.

Check out DocuSign

What Other Parts of My Existing Tech Stack Will Figure Into Managing Real Estate Referrals?

A real estate customer relationship manager (CRM) with transaction management options will give you visibility on every referral you make. Choose a real estate CRM with top-of-the-line business management tools, like Top Producer, for maximum functionality. However, just about every provider listed in our guide of the best real estate CRMs of 2023 will have features to track all of your leads and referrals.

Visit Top Producer

How Do Real Estate Referral Companies Work?

Companies that specialize in real estate referrals generally fall into two categories:

  • Lead generation companies find prospects and offer those leads free in exchange for a percentage of the commission when the deal closes. 
  • Referral networks connect agents across the country with one another in order to facilitate referrals.

In the first group, some examples of companies offering their own leads as referrals are Agent Pronto, OpCity, and Zillow Flex. While these are good options for some, their steep referral fees (up to 40%) are usually more than most agents want to pay. 

Related Article
Is Zillow Premier Agent Worth the Cost?

In the second group, NuOp is one of our favorite companies offering a marketplace for agents to exchange referrals with one another. They have a nationwide network of agents, are growing quickly, and best of all, they offer a free-forever plan for agents who are still trying to decide if referral generation works for them. Check out NuOp to learn more about what they do and how they can help you and your business grow. 

Visit NuOp

Bringing It All Together

Knowing how real estate referral fees work is a must for any agent. Whether you’ve got clients who are movers and shakers, or you live in a desirable spot where people are moving to or purchasing vacation property, you need to know how to seize these opportunities. They can be a great source of income for you, and the practice is vital to providing your clients with the best service possible.

Have any real estate referral fee questions we didn’t get to? Ask away in the comments!

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