Where readers ask and we (the community) try to answer:

Your site is on my daily list of reading and I love contributing in the comments. I had an experience a week back that’s left me wondering about how things work on the inside of the real estate business. I’m not sure what your comfort level would be with the question but you always seem open enough to anything so I’ll ask and understand if you decline. I highly doubt you would post it but I’d prefer to keep the question private [permission was granted prior to this post].

When an agent refers a customer to another agent who covers a different location, example: an Agent in San Jose has clients who decide to look in SF and he refers them to a recommended agent in SF, what’s the average referral fee the new agent pays to the old agent if a purchase or sale is made? Is there a standardized % across the industry, or maybe just if the agents both work for the same company? What if the agents are from different companies?

Thanks for your time, and the great site.
“D”

Thanks for the email and thanks for reading!

So as to shed some light on the matter for other readers, what “D” is referring to is actually a very common practice. A sort of passing of the torch if you will. Let’s say, I have a client here in San Francisco that is selling their home, and they’d like excellent representation on par with what I provide ;-) in another part of the country. I, being a Realtor, want to dip my little fingers into every possible channel of revenue I possibly can. Rather than just selling their home here in SF, I’ll suggest I put them in touch with an excellent Realtor wherever they are going. I do some research online, ask friends, find a good Realtor in Kansas, call that Realtor, tell her I have a client and would she be willing to pay me a 25% referral fee, they always say yes (why wouldn’t you), I tell my clients I have the perfect Realtor, her name is Dorothy, I hand my clients off, tap my heels together, and I just found Oz…a 25% referral for doing next to nothing! It’s a great thing, especially when the sales price is high.

All joking aside, in order to answer the question, the referral commish (like everything in real estate) is negotiable; however, it is usually 20-25% of the agent’s commission, not the entire 5/6% commission that comes off the sales price, whether it is the same company (brokerage) or not.

Thanks for your email. Don’t forget to tell your friends about theFrontSteps on your way to out of Dodge.