Referral fees (agent, commission, realty, agreement)

[Runswithwolves]

Recently I had a friend who's real estate agent had the home listed for 18 months and did not bring in a single offer. My sister as a brand new real estate agent joined a top firm and was highly motivated. Numerous occasions I suggested he try listing his home with my sister. I encouraged her on how to approach him. She promised me a generous referral fee. She sold the home for 2.25 million dollars. Now she is offering me $250 referral fee. So much for GENEROUS. My sister immediately closed a second deal as he had to buy another home. What is industry standard for referral fees, if any? Thank you

[oregonwoodsmoke]

Are you a licensed real estate agent?

If you are not, the standard referral fee is zero. If you don't want the $250, I suggest that you give it back to your sister. In my opinion $250 is a nice tip for doing nothing.

[Silverfall]

You can't get a referral fee if you aren't a licensed agent.

[Lacerta]

As the others said, if you aren't an agent, then $0 would be normal, since referral (or "bird dog") fees are illegal to pay to an unlicensed person.


If you are an agent, you should have had a written referral agreement between brokers. 20%-25% is normal for what I've seen.


Edited to clarify, that is 20-25% of the commission they received, not 20-25% of the purchase price. I hope that was obvious, but you never know.

[jackmichigan]

Originally Posted by Runswithwolves

What is industry standard for referral fees, if any?

The standard here is that you can't receive a referral fee unless you are licensed.

[MikePRU]

Originally Posted by jackmichigan

The standard here is that you can't receive a referral fee unless you are licensed.

Same here. If you don't have a RE license then the referral fee is ZERO.

[jackmichigan]

Originally Posted by Runswithwolves

Recently I had a friend who's real estate agent had the home listed for 18 months and did not bring in a single offer. My sister as a brand new real estate agent joined a top firm and was highly motivated. Numerous occasions I suggested he try listing his home with my sister. I encouraged her on how to approach him. She promised me a generous referral fee. She sold the home for 2.25 million dollars. Now she is offering me $250 referral fee. So much for GENEROUS. My sister immediately closed a second deal as he had to buy another home. What is industry standard for referral fees, if any? Thank you

Since you appear to be in California, apparently your sister is not familiar with California real estate law. Assuming the below online source to be correct (which is from a California brokerage), giving a referral fee to an unlicensed person in California is prohibited as it is in most (perhaps all?) states.

Q: Can a real estate licensee pay a referral fee or finder’s fee to an unlicensed person?
A: No, if the resulting transaction falls under RESPA. RESPA generally prohibits a real estate agent from paying a referral fee to anyone. However, a real estate agent may give someone a token of appreciation after receiving a referral. Furthermore, a real estate agent may give a commission rebate to his or her client.

Source: http://www.longdragonrealty.com/intr...2620055900.pdf