A real estate referral fee is a portion of the commission paid to another real estate agent or broker in exchange for a client referral. A typical referral fee is 25% of the gross commission for a single side of a transaction. However, there’s no set standard for a referral fee rate, and, like every other aspect of real estate commissions, a referral fee is negotiable.

In this article, we’ll review why referrals are sometimes necessary, 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 in order to better serve that client’s needs. 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 such circumstances, referring your client to another agent is often the best way to serve them.

Most Common Reasons for Real Estate Referrals

Real estate referrals happen every day, for a variety of reasons. Most of these 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, Delaware is a turf state, and as a Maryland license holder, you’re unable to conduct business in Delaware.

However, you can refer your beach house client to a real estate agent who is licensed in Delaware. 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 Realtor, 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 and industrial real estate agent would be the best alternative for your client.

Real Estate Referral Fees: Chris Answers Your Most Frequently Asked Questions

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 referrals. 

If you have a question about real estate referrals and referral 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? Check out the video at the top of this article for our YouTube video version of our answers to your most frequently asked real estate referral questions.

Real Estate Referral Fees: Money Matters





Real Estate Referrals: Essential Tools

If real estate referrals are a part of your business plan, you’ll want to have a few important tools in your tool chest. Here are some of the questions we get about them:




How Common Are Real Estate Referrals?

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ReferralExchange regularly reports hundreds of thousands of connections made on their platform every year. It’s safe to say that this is an incredibly common practice that happens every single day.


Are There Real Estate Referral Companies?

Yes, there are companies that specialize in real estate referrals. These generally fall into two categories:

  • Companies that generate their own leads and offer those leads free in exchange for a percentage of the commission when the deal closes 
  • Companies that connect agents across the country with one another in order to facilitate their referrals

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 typically steep referral fees (up to 40%) are usually more than most agents want to pay. 

NuOp is our new favorite company 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 Realtors 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 real estate 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 about real estate referral fees. 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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