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What is a Real Estate Referral Fee?
A real estate referral fee is a fee that a brokerage pays to another brokerage. We will call
the brokerage who pays the other brokerage “brokerage A”, and the brokerage who
receives the real estate referral fee “brokerage B”.
John Smith works for brokerage B in Orlando, FL. John has recently sold his
clients home in Orlando, FL. His client is now moving to Los Angeles, CA and wants
to purchase a home there. John does not have a license in CA so he cannot
sell his client a home there. John does the research to find a great brokerage for his
client to work with in Los Angeles, CA. John finds brokerage A and reaches out
to them. They agree on a real estate referral fee and draw up a contract for
brokerage A to pay brokerage B a real estate referral fee of 25% of the total
gross commission if brokerage A sells John Smith’s buyer a home.
A few months
pass and brokerage A closes on a home for John Smith’s client. After closing, brokerage A pays John Smith’s brokerage which is brokerage B 25% of the total
commission that brokerage A made off of the transaction. John is happy as not
only was his client in good hands, but he also received a quarter of the
commission as a real estate referral fee.
estate referral fee's are normal practice in real estate. Most Realtors know of
someone who is looking to buy or sell real estate but maybe not in their
market. If they are not buying in the Realtor’s market, you can still make
money off of them by referring them outside of your market and earning the real
estate referral fee.