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What You Need to Know About Real Estate Agent Referral Fees

What You Need to Know About Real Estate Agent Referral Fees


The real estate industry is one of the most competitive fields, and it’s important for agents to stay on top of their game by understanding referral fees. Referral fees are compensation that a referring agent can receive when they refer a prospective buyer or tenant to another real estate agent. These referral fees can be a great way for agents to increase their income, but there are also certain guidelines and regulations that need to be followed. Let’s take a look at how referral fees work in the world of real estate.

How Referral Fees Work

Referral fees are payments made by the receiving agent when their services are requested by someone referred by another agent. The fee is usually calculated as a percentage of the commission earned from the purchase or lease agreement. Agents typically charge anywhere between 15-30%, although this amount can vary depending on the market they are working in and the type of referral fee being charged. In some cases, agents may even charge up to 50%. It’s important to remember that referral fees aren’t always required; sometimes agents voluntarily pay them out of appreciation for the service provided by the referring agent.

Rules and Regulations

It is important to note that referral fees are subject to certain rules and regulations, so it’s important for all parties involved to familiarize themselves with these rules before entering into any agreement regarding referral fees. For example, many states have laws which limit how much an agent can charge for a referral fee and what types of services must be performed in order for an agent to be eligible for payment.

Additionally, some areas have laws which require disclosure forms when entering into a transaction involving referrals – this is especially true if you intend on charging more than 20% in commission or other monies earned from such transactions. Furthermore, there may be limits placed on how much commission one agent can earn from another under state law – so it’s important to know your local laws before you enter into any agreements regarding referrals!


Real estate agents should understand how referral fees work so they can maximize their earnings while still complying with local laws and regulations. Referral fees can be an excellent way to increase income but should only be entered into after researching all applicable rules and regulations beforehand. By understanding how referrals work and following all applicable laws, agents will be able protect themselves financially while providing quality service for their customers. With this knowledge in hand, real estate professionals have everything they need to make informed decisions about using referrals in their business practices.

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