Referral Fee or No Referral Fee? A Conundrum

I would think that there is an ethical issue here. The agent has a signed contract dated prior to the referral agreement. The buyes are objecting to the referral fee... I would think that the daughter would release the referral agreement upon the suggestion of the issue being brought up to the state board of ethics.

When I do a referral fee (either giving or getting), I always ensure the client knows.  I want them to know the other agent is still involved in some fashion, just as I want them to know I'm involved if the referral fee is coming to me.

As Tammy Lankford put it, requiring a client signature would sure make it such that my process would become redundant.

The daughter/realtor, what a piece of work.

To answer the question, I wouldn't have agreed to the fee without speaking with the clients; and then, if they asked that I do give the referral, would have done so reluctantly since I didn't "see" a referral being part of this procuring cause for the agent//buyer.

Would I pay it now?  No.  I'd likely lose the case, but I'd be just as big a piece of work as the daughter is and I'm make her earn that referral fee, and earn it very very very well.  The force with which I would argue against paying it, I would surely ensure the clients knew I was doing everything in my power not to pay. (Of course, maybe this is my response on a Friday night when I'm frustrated and I'd expect my broker to advise me to pay it)

One more question....does this piece-of-work daughter have brothers/sisters/aunts/uncles/friends looking to buy or sell in the Washington, DC area?

Just so I can be on the look-out for rogue requests for referral fees.

As an outsider I guess I would wonder why the daughter's request for a referral fee was even considered since she did not refer anything to the Realtor.

Since  the daughter did not offer full disclosure of the family problem she entered into the referral agreement in bad faith. Would it be enforceable?

Hope it turns out as well as can be expected.

I suppose the next step would be for Jennifer to speak to the daughter and say something like "Your family relationships are none of my business, of course, but I need to let you know that your parents got pretty upset when they learned you were receiving a referral..." and see how the daughter responds....

Who knows, maybe Jennifer will become instrumental in bringing about a family reconcilliation.

That said, I tend to be pretty easy going when it comes to allowing referral fees ... you never know when the shoe will be on the other foot  :-)

While I have to agree with many of the comments that said she should have talked to her clients about the daughter's request before signing I do have to disagree on whether to pay the referral. Your agent signed a referral agreement. In essence she entered into a contract to pay the daughter and therefore is obligated to follow through. I understand the moral and emotional side of the situation but the agent got herself into this by signing the agreement. Learn a lesson and move on.

Good morning Mimi.  This is always a tough one.  I would have brought it up off handedly in a conversation with the parents.  Would have done so just to make it clear was surprised at the timing.  Just last month had a referral situation that I felt I had been 'worked' on.  I think we have all delt with this before in one fashion or another.  Always tough and I certainly would never be one to judge anothers decision.  Karen Fiddler, Broker/Realtor I too am a big believer that 'no good deed goes unpunished'  Sounds harsh yet have seen it too many times to ignore.    Mark

Very interesting post and comments about a situation that we might all encounter someday. Amazingly, the response initially, should have been to have the daughter send you the referral agreement or agent agreement to you between her parents and her as the agent within 48 hour, since you'll need it anyway to source her funds at COE.

However, since that didn't occur, you agreed to her demand and you should pay her.  Mom and dad will have to accept the facts or bail on the purchase and buy another property, hopefully, you as their agent.  A very tough challenge, yet, I'm certain everybody in the AR community would like to know the final outcome.

Wow! That is a tangled situation indeed. I have an aunt that is a Realtor and I have been thinking about this very scenario. What happens when one of our family members purchases or sells a home? I think I would acquiesce and give her the referral. I suppose one day we will see. Great post!  

She should probably explain to the Buyers that she thought they had talked to her daughter and although she did not want to pay a referral fee she thought she was buying some peace and cooperation.  Then she should file an ethics complaint.  This other agent seems to have implied she was acting with her parents consent and knowledge.  The other agent was not honest and obtained the fee under false pretenses.  She should tell her clients what she is doing.

Talk about a sticky situation!  I think I would have offered a small referral fee too...just to keep the peace.  To be perfectly honest I would have never thought to call and ask the parents.  One of the many things I love about what we do is that there is never a dull moment.  You can learn something new (to improve how you do business) every day.  Thanks for the post!

Mimi - Since the signed referral agreement is broker to broker I would say the agent is legally obligated to pay. I understand it upsets the parents but they are not parties to the referral agreement and therefore can't negate it's terms. As an attorney friend of mine once told me, there's morally right and legally right. Legally the agent should pay. Morally I could certainly understand the position of not paying.

I really enjoyed coming across your blog among the many archieves. Thanks for being apart of Active Rain.