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6 FAQs About Real Estate Referral Programs

How would you like a steady stream of new client referrals without having to spend thousands on mildly effective marketing? It’s possible when you team up with a reputable real estate referral program. Learn the answers to your questions here.
How would you like a steady stream of new client referrals without having to spend thousands on mildly effective marketing? It’s possible when you team up with a reputable real estate referral program. Learn the answers to your questions here.

Clients are the lifeblood of your real estate business. Without clients (who actually close on transactions) you don’t get paid.

The trouble with real estate is that most people only buy a house once in a blue moon. This makes getting repeat business a challenge. You have to dedicate a lot of your time to finding new clients. This takes your attention away from the clients who are counting on you to close their deals.

How do you get new clients without distracting yourself from your current ones? Perhaps it’s time to look into a referral program.

Let’s take a look at some FAQs about real estate referral programs to find out how it works.

1. How do I get more real estate referrals?

There are many ways to get more referrals, prospecting with clients, networking, providing excellent customer service, etc.

Using a referral agent is also an excellent way of getting solid leads. It allows you to dedicate more of your time to focusing on your current clients and their needs rather than searching for new ones.

2. Can real estate agents pay for referrals?

Federal law and many states prohibit paying referral fees to unlicensed individuals. You can pay referral fees to licensed agents and this practice is quite common.

If you accept referrals, just be sure they have the proper credentials. The law penalizes the agent for paying out referral fees to those not qualified to receive them. You could have your own qualifications revoked.

3. How do real estate referral programs work?

Sometimes agents refer other agents because their client is wanting something outside their sphere of expertise. Perhaps the property is in a neighborhood the agent doesn’t know well or is a type of transaction the agent doesn’t handle.

Some people work exclusively as referral agents. These individuals have their license (as required by law) and are part of a brokerage, but don’t handle the details of the real estate transaction itself.

They build a referral network of trustworthy agents specializing in different areas/transaction types. They dedicate themselves to marketing and attracting solid new leads, which they then refer to agents for a fee.

4. How much is a real estate referral fee?

The standard referral fee is 25% of the agent’s commission. As with nearly everything in real estate, this can be negotiated. The typical range varies from 20%-35%.

In some cases, (such as bringing a qualified and motivated client) the referring agent may ask for more. In other cases, they may accept less (such as when referring a client that appears to require more work).

5. How do real estate referrals get paid?

Brokers pay out referral fees to other brokers rather than between individual agents. Brokers will ensure that the payee has the proper license when paying out for something that requires a license.

6. What’s is a finder’s fee agreement?

A finder’s fee is simply another name for a referral fee. The finder’s fee agreement is used to make sure that everybody is on the same page. Every time money changes hands it’s a good idea to have everything spelled out in writing.

The agreement should name who is receiving the fee, the amount, and when it will be paid.

Clever Referrals

Clever is a rapidly growing source of real estate referrals. We pour our heart and soul into marketing and providing value for our clients and Partner Agents. We get a steady stream of clients looking for a real estate agent and we need awesome agents to refer them to.

If you’re a motivated real estate agent who treats their clients well, we want to work with you. You pay only when the deal closes, so don’t worry about paying any pesky upfront costs for leads.

We have a team of licensed agents who talk to prospective buyers and sellers and sends the ones that would be the best fit for each particular Partner Agent. We do our best to make sure that the clients we send are solid leads. We’re not interested in wasting your time with clients who won’t close or will drag their feet for months because we don’t get paid either if you don’t close.

Learn more here about our uniquely awesome program!



Luke Babich

Luke Babich is the co-founder and Chief Strategy Officer of Clever Real Estate, the free online service that connects you with top agents to save money on commission. He's an active real estate investor and licensed agent in St. Louis, with 22 units currently. Luke graduated from Stanford University and subsequently ran a historic data-driven campaign for University City City Council. Luke's writing has been featured in Homeland Security Today, Mashvisor, Payments Journal, and Bigger Pockets.

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