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Old 07-19-2012, 09:17 AM
 
Location: Downtown Austin
5,877 posts, read 14,164,500 times
Reputation: 4709

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Realtor A sold home to Smith in 2006 in Austin TX.
Realtor A moves out of state in 2007, but remains in contact with Smith.
Smith gets transferred to out of state job in 2011.
Realtor A refers Smith to Realtor B for potential sale.
Realtor B informs Smith market will not support sales price desired.

I am unaware of any of the above, not involved at all.

Realtor A (still an out of state Realtor) gives Smith my number to inquire about Property Management services.
Smith contacts me and hires me.
I send Realtor A a thank you card and movie passes. There is no formal referral arrangement for property management, though I do like to acknowledge the referral with a thank you.

I take over the property and get it leased.

2012: I inform Smith tenants are giving notice for end of July and that I'll start seeking a new tenant. I put the property up for lease. Smith subsequently asks me about selling. I run CMA, inform Smith I think I can get the price he wants, list it and get it under contract almost immediately for over list price.

Realtor A contacts me and demands a 20% referral fee. I decline, explaining that we don't have a referral agreement in place, that I don't pay referral fees for management accounts that later convert to sales opportunities unless the account came from a local Realtor and an agreement was made up front about what would happen later, in which case I simply send the client back to the referring Realtor to list the home for sale themselves.

Is Realtor A owed a referral fee? Legally I know the answer is "no", but as professional courtesy, am I missing something here or being greedy?

Steve
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Old 07-19-2012, 09:34 AM
 
Location: DFW - Coppell / Las Colinas
26,540 posts, read 31,019,385 times
Reputation: 31038
Steve - No, you don't.

It's always irritating for agents who come in after the fact and want a referral fee. That should be agreed on before the referral is sent.

Stand your ground, I believe you are right. The agent should take better care of business and if they don't, they deserve what they don't get.
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Old 07-20-2012, 07:07 AM
 
2,767 posts, read 2,238,430 times
Reputation: 5453
The referral culture stinks in the vast majority of situations. In most cases, it's greed pure and simple. Excellent discussion earlier about referrals here; Referral or extortion?
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Old 07-20-2012, 07:08 AM
 
Location: MID ATLANTIC
7,121 posts, read 16,112,994 times
Reputation: 7075
Very slimy of Real Estate Agent A.

Although, RE Agent A should get a medal for something I can't say on this forum.
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Old 07-20-2012, 01:18 PM
 
Location: Austin
6,714 posts, read 15,505,163 times
Reputation: 8545
I believe you DO owe a referral fee. Realtor A referred you her past client. When talks are only about rental and property management, I can see why no referral agreement was talked about because that's not a high dollar to discuss and most people don't pay referral fees on a rental.

However, you crossed the line when the client then asked about selling. You should have immediately done the honorable things and contacted Realtor A and offered her the referral fee. You're lucky she only wants 20% and not 25%. I think you're in the wrong. Our business rely on referrals, and you will never see another referral from this agent and she probably has tons of past clients in your area.
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Old 07-20-2012, 02:54 PM
 
Location: Central Texas
19,061 posts, read 34,150,755 times
Reputation: 18845
Quote:
Originally Posted by austin-steve View Post
Realtor A sold home to Smith in 2006 in Austin TX.
Realtor A moves out of state in 2007, but remains in contact with Smith.
Smith gets transferred to out of state job in 2011.
Realtor A refers Smith to Realtor B for potential sale.
Realtor B informs Smith market will not support sales price desired.

I am unaware of any of the above, not involved at all.

Realtor A (still an out of state Realtor) gives Smith my number to inquire about Property Management services.
Smith contacts me and hires me.
I send Realtor A a thank you card and movie passes. There is no formal referral arrangement for property management, though I do like to acknowledge the referral with a thank you.

I take over the property and get it leased.

2012: I inform Smith tenants are giving notice for end of July and that I'll start seeking a new tenant. I put the property up for lease. Smith subsequently asks me about selling. I run CMA, inform Smith I think I can get the price he wants, list it and get it under contract almost immediately for over list price.

Realtor A contacts me and demands a 20% referral fee. I decline, explaining that we don't have a referral agreement in place, that I don't pay referral fees for management accounts that later convert to sales opportunities unless the account came from a local Realtor and an agreement was made up front about what would happen later, in which case I simply send the client back to the referring Realtor to list the home for sale themselves.

Is Realtor A owed a referral fee? Legally I know the answer is "no", but as professional courtesy, am I missing something here or being greedy?

Steve
I don't think so - if I were Realtor A, I wouldn't be bugging you for a referral fee, but perhaps hoping that you would return the courtesy with a referral or referrals in future.
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Old 07-20-2012, 03:07 PM
 
Location: Needham, MA
6,007 posts, read 8,067,658 times
Reputation: 4878
Quote:
Originally Posted by FalconheadWest View Post
I believe you DO owe a referral fee. Realtor A referred you her past client. When talks are only about rental and property management, I can see why no referral agreement was talked about because that's not a high dollar to discuss and most people don't pay referral fees on a rental.

However, you crossed the line when the client then asked about selling. You should have immediately done the honorable things and contacted Realtor A and offered her the referral fee. You're lucky she only wants 20% and not 25%. I think you're in the wrong. Our business rely on referrals, and you will never see another referral from this agent and she probably has tons of past clients in your area.
While I disagree that Realtor A has any right to ask for a referral fee, I would agree that if Realtor A is a source of significant future referrals then the best tact to take would be to pay the referral fee. Not paying the fee and cutting off a pipeline of future business would be penny wise and pound foolish.

If this is likely the only business you'll ever get from Realtor A, then I would tell them to go fly a kite.
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Old 07-20-2012, 03:21 PM
 
Location: Martinsville, NJ
6,103 posts, read 10,281,274 times
Reputation: 3860
Quote:
Originally Posted by FalconheadWest View Post
I believe you DO owe a referral fee. Realtor A referred you her past client. When talks are only about rental and property management, I can see why no referral agreement was talked about because that's not a high dollar to discuss and most people don't pay referral fees on a rental.

However, you crossed the line when the client then asked about selling. You should have immediately done the honorable things and contacted Realtor A and offered her the referral fee. You're lucky she only wants 20% and not 25%. I think you're in the wrong. Our business rely on referrals, and you will never see another referral from this agent and she probably has tons of past clients in your area.
I disagree. Realtor A didn't refer a marketing agent to this client; he referred a property manager. After having worked with this property manager, the client decided to ask for their assistance as a marketing agent. Realtor A had nothing to do with that. And Realtor B isn't "lucky she only wants 20% and not 25%." Realtor B did a good enough job that the client wants to hire them to do something else. If Realtor A thought they were going to be getting a referral fee for any and all future business between client & Realtor B, they should have made known that expectation up front.
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Old 07-20-2012, 03:58 PM
 
Location: Downtown Austin
5,877 posts, read 14,164,500 times
Reputation: 4709
Realtor A knows I do sales. In fact, it's 2/3 of our business. I manage rentals mainly for our investor clients and from sales leads that decided to hold off for a better sales market. The management portfolio is a good compliment to the sales business, as we sell into and out of our management portfolio monthly.

Realtor A never has, nor never will refer a sales client to me. Not because I'm not a good sales agent, but because of other relationships with so many other sales agents. That's fine, I don't have a problem with that.

If Realtor A, instead of just giving my number to the client as a property manager, had called me and said "I want you to babysit (manage) this house for 1 year at which time it must be referred back to the other sales agent I referred them to instead of you, or you must pay me a referral fee", I would have said "no thanks". Partly because I'm not interested in that type of arrangement, and partly because it's like being second one asked to the prom.

No conversation ever occurred between Realtor A and me. Just the call from the client who said they got my number from Realtor A. When I asked the client, as I always do, why they want to lease/manage instead of sell, no mention was made of Realtor B and that consultation. They simply said "we can't get back what we paid in this market", which I agreed with after they told me what they paid.

So, from my standpoint, I'm taking on a new client with no strings attached, other than a thank you card I need to send. Whatever I make of that client relationship going forward is of my own doing. There is no referral agreement, not even an unwritten understanding, about future potential referral fees.

If the sale completes I may reconsider, but I was offended that Realtor A was offended when I didn't just say "sure, no problem" in response to the demand for "only" 20% of my gross earnings on a sale that was first sent to another Realtor but which ultimately ended up with me because of my good works and trust established during the past year with the client.

Steve
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Old 07-20-2012, 06:10 PM
 
Location: Salem, OR
13,193 posts, read 29,413,241 times
Reputation: 10691
No I don't think you owe the agent a referral fee. They referred you a property management client. You obviously did a good job for them, so in my opinion you earned the business on your own.
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