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What is the deal with referral fee's?

By
Real Estate Agent with RE/MAX Results

With nearly 15 years in the Real Estate industry, I am still pondering this question, and I would love to get some feedback on it from Realtors that have an opinion. Below are a few "starting" points of though: 

  • What criteria defines a "referral"?
  • How do you measure the "strength" of a referral?
  • How much do relocation companies charge now in different parts of the country?
  • What is a fair fee to request and why?
  • Do regional prices and market conditions dictate referral fee's? If so, like what?

Feel free to comment, but please try not to make this about "good or bad", just try to justify your thoughts with logic and reason.

Go Bless Somebody today,

Stieg Strand

www.stiegstrand.com

 

Comments (3)
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Pam Simpson
Bob Leigh & Assoc., LLC - Senatobia, MS
GRI, Broker-Assoc.

Stieg, I have only done 3 referrals.  Two were out-of-state clients looking to either puchase or sell in the state just north of my area.  I have no desire for a reciprocal license in that state, so I choose to refer out in those cases.  The other referral was for a client that I just could not deal with any longer.  I referred out to a more patient colleague.  I seem to remeber that I recieved a 25% referral on the 2 out-of state deals.

Aug 20, 2009 05:04 AM
Martine Assaf
Virtual Homes Real Estate - Quincy, MA

Stieg,

In my book, a referral is a client where you had contact with and their search criteria BEFORE you send them to another agent. It should definitely not be a COLD lead, a potential buyer or seller that you never spoke to before. It makes a huge difference when you get specific details and be prepared before contacting the client. It is definitely not a phone number or email address.

I charge referral fee between 15 and 25%. If I send a listing referral to another agent, I normally charge 15% - since they will be the one paying for advertising etc. I have received that same courtesy from other agents. If referrals are higher or if the client is not sure what they want and will require a lot of work, I will negotiate the fee or kindly decline, I need to pay my bills. If the hours spend do not cover the commission paid, I rather spend time with my daughter.

The relocation companies: they are all different, mostly 40% (anywhere between 30- 50%, depends which company you work with).  

The price range does make a difference, I have had agents request a referral fee for a renter that will buy next year. I'll be more than happy to pay a fee once they close, but not on the rental.

Hope that helps!

Martine Assaf- www.virtualhomesmls.com

Aug 20, 2009 05:12 AM
Anonymous
Katherine Stark

I've been reading up on this as I love to work with BUYERS and am in a hot area where a lot of people want to buy right now, Southwest Florida.  What I have found is it varies but this was a good example.  One question I have..is the referral fee ALWAYS right off the top like they say in this link??

http://realestate.about.com/od/howthemoneyworks/ss/compensation_4.htm

FYI, I would happily pay 25% referral fee for any of your serious and qualified clients who want to buy their own little piece of paradise.  I am a research addict and will find them what they are looking for.  I typically do an initial phone consultation, we talk about their requirements and then we utilize an interactive website to search for properties that meet their criteria.  We then typically go on a 2-3 day real estate marathon when they visit and either further nail down some potentials or write an offer on a property.  I try to be extremely efficient and informative, yet fun...it can get a little stressful looking at 20 properties in a 8-10 hour day but the end result is so worth it!  Then their next visit is usually to come set their new retreat up if buying a second home, or residence, if moving. 

Katherine Stark

www.fateinrealestate.com

Oct 17, 2009 08:26 AM
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