What Is a Referral Fee? Learn the ABCs of Real Estate Referral Fees


For new and established real estate agents alike, the referral fee is one of the best ways to boost income. In fact, savvy realtors often focus entirely on referrals to make huge fees without the troubles of the sales process.

While sales may be lower in some regions, prices continue to climb. For real estate professionals who focus on referrals that means there's a huge upside.

As long as you know the basics of referrals and negotiate upfront, you could be making a serious percentage from every sale. All you need to do is link your friends and family and clients to the right agents. 

Get the facts. Follow this guide to big referral returns:

All Types Of Real Estate 

You may be sitting on a gold mine. With your current network of family, friends, business associates, and clients, you gave a lot of opportunity for referrals. 

Remember, referrals cover nearly every type of real estate transaction. If your network comes to you first you could be sharing the wealth with referrals. 

This means home buying, new construction, commercial real estate, and land buying are all open for referrals. All you need to do is seize the opportunity and connect the right people. 

Know The Rules of Your Brokerage

If you are a new agent or work for an established brokerage there may be different rules for your company. This means you could have limitations on who you can refer clients to. 

You may also have limitations in place as to how much you can take home. 

With the right referral-focused brokerage these rules are out the window. With a focus on refrerral fees, you will have no limits on where, who, and how much you can charge for a fee.

Make sure you know the rules of your company first. 

Negotiate Fees Upfront 

While referrals cover virtually every type of real estate transaction, there isn't always a common understanding of fees. Industry standard in most cases is 25% of the fee. 

That said, with every aspect of real estate there is always room to negotiate. You may want to offer less or more depending on the type of client and the anticipated size of the sale. 

A larger commercial transaction might benefit from some leeway on the 25%. You could see a hefty payday by lowering to 20%.

Everything from land sales, condos, commercial property, and new construction should command a fee. But don't take the amount of that fee for granted. 

Make sure you negotiate upfront.  

Keep Your License Active

There are benefits beyond the opportunities for income and high return with referral real estate transactions. For brokers who are at risk for their license going inactive a referral focus can help. 

Unfortunately, many real estate professionals believe they have to pay heavy fees in order to keep their license. They want to focus on referrals but see all the expense. 

But if you work with a referral-based agency you get all the rewards and an easy avenue to keep your license active. You won't have to retake the exam or pay penalties to get your license reinstated. 

What's even better, is with referrals you aren't limited by time constraints or geographic issues. 

Help In A Market You Are Unfamiliar With 

At least 15 metropolitan areas have reached new real estate heights in recent years. Los Angeles, Dallas, and even Boise, Idaho are locations with plenty of upside when it comes to real estate investing.

You may have a client interested in getting involved with the boom. Or, you may have family, friends, or business associated looking to relocate to another area of the country. 

In every case, making a referral to a local agent with great local knowledge is a must. But before doing so, you will want some idea of the amount of referral fee you will receive.

Get the comfort of linking your client with a knowledgeable broker. And seek the 25% standard fee.

Big Income Potential 

Let's face it: helping clients buy and sell real estate directly can be a laborious process. 

But at the heart of great real estate service is relationships. Referrals offer realtors the benefit of being a helpful conduit to investors without the headaches of hunting for a the perfect property. 

Since indicators like the 20 city composite show that prices are still high, referrals are a big income opportunity. You can negotiate the percentage of the fee ahead of time to make sure you get a fair share. 

Realtors who focus solely on referrals make more money and work less in many cases than those who are the assigned agent. 

Remember, everything from commercial to residential is covered with referrals. 

You Can Earn A Referral Fee Without Realtor, MLS, or E&O

Whether you are new to the business or have a long career in real estate, you are likely already aware of the high fees that come along with Realtor, MLS, or E&O. 

It seems some people are struggling just to break even when it comes to referral fees. In order to get paid they think they need to join costly organizations. 

What's even worse is that these network fees continue to cost money every year. For some agents this means questioning if they should even keep their license active. 

But you can park your license and avoid the big fees. 

Make The Most of Every Referral 

Whether you want to refer friends and family or make a percentage of commercial commissions, LicensePark can help. 

As a referral-only real estate brokerage we offer huge potential income and low headaches for our brokers. Our virtual office doesn't require tedious meetings or corporate requirements. 

In addition, you can avoid shelling out expensive fees to other real estate organizations and networks. Our brokerage was made to allow realtors to excel in the referral business. 

Without those costly fees you can keep the majority of what you earn. We offer all the benefits getting a referral fee without the real estate headaches. 

Don't wait to start earning more. Sign up for LicensePark now.