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Real Estate Referral Fees
Written by Dee Kumar, March 17, 2021
A real estate referral fee is an option that agents can take to ensure that they get something out of a deal they may not necessarily control. It helps agents connect clients to the right people. Fees for each closed lead can be significant and provide an alternate form of income. The growth of referrals in the last few years shows that this trend will likely continue.
First Things First: You Need a License
When talking about real estate referral fees, you need to know that these fees are not legally available for those without a license. Referral fees help bring better and more business to various brokers. If you try to get a referral fee without a real estate license, you can get in trouble. Many government and real estate agencies can chase you down once they find out.

Even bird-dogging walks a fine line, and you can get accused of asking for a referral. A bird dog usually helps bring real estate opportunities to investors, and they ask for a finder’s fee in return. This practice is ill-advised and can lead to trouble.

If you’re interested in taking advantage of referral fees, it’s best to study at a school and acquire a license. It may take some time, but it also provides an opportunity for you to pursue a career in real estate as a result.
Why the Need for the Referral?
At times, an agent encounters a situation with a client that requires another’s expertise. For example, you may have sold commercial properties in the past, but you’re not confident with the client’s current demands. You refer the client to another agent who has better knowledge of these types of properties in your area.

Another example is when your client wants to buy a property from a different state. Your license does not reach that area, so you contact another broker and agent.
How Much Is the Fee?
The unwritten rule in residential real estate is that a referring agent gets 25% of the gross commission. In some cases, it can change, but 25% is the standard recognized by many. You have some room to negotiate, depending on the project's scale and qualifications. Be careful during negotiations, as pushing too hard may lead to them declining your offer.
Setting Up a Referral Agreement
The only thing you need to set up the referral is a real estate referral agreement. It is a contract between two brokers that states the commission split and the length of the referral. Many brokerages specialize in handling referrals. These companies connect with many real estate agents and refer clients to these agents regularly.

Once the paperwork completes, you then wait for the transaction to close. It may take some time as the other agent handles the needs of your client. You do not get paid until the transaction completes. When it's finished, your broker receives a check. A referral goes about like any real estate transaction.
An Alternative Source of Income for Real Estate Agents
Real estate referral fees help bring the best possible service to your clients. While you may not be handling most of the transaction, the act of referring business to another agent leads to monetary rewards as well. It’s a great source of income to add to the regular commissions you get. It’s a way to benefit from clients who are always on the move.
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About Host Group 
RE Academy
Host Group is a leading service provider of real estate-centered licensing education. We operate in Massachusetts and based in Boston. We offer a full spectrum of programs and operate virtually, all of our programs are presented in a live stream/on-demand format. HG has won many awards for its services and has earned a high customer rating for over a decade!
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About Author: 
Dee Kumar

Dee founded Host Group Academy in 2008 and since then, has seen thousands of students successfully complete our program and launch their careers. From day one, you will see that his passion for teaching is unsurpassed. It matters deeply that his students pass their exams & succeed in this life!

OUR MISSION: To empower ambitious people, eager to create wealth and fulfill their goals, with the information they need to be successful on their real estate exams and beyond!

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