Real estate referral fees: The good, the bad and the ugly

  • Helping a homeseller find the perfect agent adds value to the transaction.
  • Consumers have a right to know if their agent is paying a referral fee and whether a referral constitutes a recommendation.

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I just love it when a check comes in the mail a few weeks or months after I referred a friend, family member or client to a Realtor in another market. I try my very best to find the perfect match. Sometimes I even turn leads away (insert gasp here) with instructions on how to find an agent and what to look for. There are times when I accept clients from other agents and pay them a referral fee. Usually it works well, and I don’t mind paying the fee for a client who is ready to buy or sell now. That's the good. However, referral fees are also territory for abuse, and the practice can leave consumers in the dark about who's paying who. More leads than home sales Agents and other industry players “capture” leads so that they can sell them. The internet has made it easier than ever to do so. (Indeed, there are far more leads than there are home sales.) We get emails and phone calls about leads who are looking for an agent in our market. Apparently, these leads wait patie...