For licensed agents

How much is a referral fee in real estate?

There is no set rate. Trade sources commonly quote 20 to 30 percent of the receiving agent's commission, paid from one brokerage to the other at closing. The number that counts is the one in your signed agreement.

You agreed to send a client to another agent, or one was sent to you, and now somebody has to name a number. Nothing sets that number for you. What exists is custom, a federal rule about who may be paid, and whatever your state and your brokerage add.

What the published numbers say

Paperless Pipeline, a transaction software company, writes that a typical fee is 20 to 30 percent of the receiving agent's commission, and that "there is no standard referral fee rate for brokerages." Other agent trade blogs give a similar range. We found no national survey behind any of these figures, so treat them as custom and not as data.

Lead generation programs that charge on a closed deal are a separate thing. They set their own schedules, reported in roughly the 30 to 40 percent range depending on price point. If you are in one, the number that counts is the one in your agreement.

How to work out the fee

The percent applies to the commission, not the sale price. Multiply the two percents together to see the fee as a share of the price. On a side of 2.5 percent, a 25 percent referral fee works out to 0.625 percent of the sale price. Commissions are not set by law and are negotiable, so use the numbers in your own agreement.

Whether the fee comes off before or after your brokerage split depends on your brokerage, and it changes what you keep. Run yours in the commission split calculator, or use the referral fee calculator to see the fee per deal and across a year.

Referral fee versus commission

A commission is what a brokerage earns for the work on a transaction. A referral fee is a share of that commission paid to the brokerage that sent the client, usually for doing no further work on the deal. The client does not usually pay it separately. It comes out of the commission the receiving side has already earned.

Who can be paid

The federal rule is the Real Estate Settlement Procedures Act, and its regulation is 12 CFR 1024.14. It says no person shall give or accept a fee for referring settlement service business on a federally related mortgage loan. Then it carves out one thing agents rely on:

A payment pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and real estate brokers.

That exception applies when all parties are acting in a real estate brokerage capacity. It does not stretch to a lender, a title company or an inspector paying you for a client. Those are the payments the rule exists to stop.

In practice the money moves from broker to broker, not from agent to agent. The receiving brokerage pays the referring brokerage, and the referring agent is paid through their own broker. Paying someone without a license for sending you business is generally not allowed. Your state sets the details, so ask your managing broker before you offer anyone anything.

What a referral agreement should settle

The percent, and whether it is a percent of your side or the whole commission.
Which deals it covers: one property, or any home this client buys or sells.
When it ends, and whether a fee survives after it ends.
When it is paid, and that it is paid only if the deal closes.
Which brokerage pays which.
How either side can cancel, and what happens if an agent changes brokerages.
Signatures from both brokerages before the client is referred.

What we could not verify

A national average referral fee. Every figure we found comes from a vendor or trade blog.
The rules of any one state. They differ, and some limit who can collect a fee or require a disclosure.
How your brokerage orders the fee and the split.

Common questions

What is a typical referral fee in real estate?

Trade sources commonly quote 20 to 30 percent of the receiving agent's commission. There is no standard rate, and the number is whatever the two brokerages put in writing.

Who pays the referral fee?

The receiving brokerage pays the referring brokerage, usually at closing and only if the deal closes. The agent is paid through their own broker.

Is a referral fee negotiable?

Yes. It is an agreement between two brokerages, so the percent, the term and the conditions are all up to them, within state law and brokerage policy.

Can I pay a referral fee to someone without a license?

Generally no. Ask your managing broker what your state allows before you offer anything to a past client or a friend.

Can a lender or title company pay me for a referral?

The federal regulation bars fees for referring settlement service business on a federally related mortgage loan. The exception covers real estate agents and brokers acting in a brokerage capacity, not those companies.

Read the sources yourself

Where Listing AutomatEr fits

Listing AutomatEr is a desktop app for Mac and Windows that posts the listings you have permission to market to Facebook Marketplace on a schedule. It takes no cut of a commission. It does not get the permission for you, and it does not decide whether a post meets a rule.

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