Trends & Tides: Agent Referral Fees and Entitlement

05 June, 2017 posted by: CORE

Trends & Tides takes a look at the ever changing environment of New York City real estate – past, present and future – by offering observations, analyzing perceptions and challenging myths, while giving a dose of reality along the way.

There have been many times over the course of my 25-year-long real estate career in which I have sent a friend, family member or customer to an agent in another city with the expectation of receiving monetary compensation for my referral. On many of those occasions, I took on the role of a liaison between my customer and the agent to whom I referred. In the spirit of adding value to a transaction and actually earning my referral fee, I would provide advice, guidance, opinions when asked and even assist with negotiations on some occasions. That said, there were also times where I simply made a phone call to another brokerage in the area in which my customer was searching and was pleasantly surprised months later when I received a check in the mail that could be as high as six figures for merely making a connection. With referral fees typically ranging between 10% and 40% of the broker’s side of the commission and 25% being an unwritten industry standard, the opportunity to make serious income abounds.

So many in the real estate industry believe that simply providing another agent with a qualified, ready, willing and able buyer or seller entitles them to a piece of that commission. Others feel strongly that they should add additional value to the experience in order to “earn” their referral fee. I feel quite strongly that unless you are at minimum vetting the agent with whom you’re suggesting your customer work or staying connected as a liaison and adding value to the transaction, then you are not entitled to a referral fee.

Most recently, it dawned on me when a long time loyal customer of mine called me to tell me that they had gone to contract on a large parcel of land in another part of the country. My initial reaction was “ouch, that stings” as the referral fee would have been upwards of $500,000. I immediately considered contacting their agent to “introduce myself” as their referring agent. Seriously! I was actually going to call and suggest that I get paid nearly $500K for a transaction in which I played absolutely ZERO part. ZERO! I know for certain that many agents do make an effort to insert themselves into deals in which they have played no part. After I calmed down and really considered all aspects of the situation, it dawned on me that I was not in fact entitled to take nearly a half a million dollars out of another agent’s pocket. I added no value and I didn’t even make the connection between the agent and a ready, willing and able buyer.

In short, it is my opinion that adding value to a transaction in which you have referred a buyer or seller is the only thing that entitles you to a referral fee. 


Loyalty…..Without Allegiance

15 November, 2010 posted by: Shaun Osher

(An oxymoron? I don’t think so.)

As agents, we demand loyalty from our clients.
If we’re lucky (and good), we just might get it.

Question: What do we give THEM in return?
Answer: OUR loyalty!

It seems to me that in the new era of Generation X (and younger)
Our culture, has evolved to expect instant gratification
At the expense of loyalty.
This seems to be the new acceptable behavior. Text me today, and delete me later (when something “better” comes along).

I once worked with a buyer for 18 months!
83 apartments later – they bought something without me.
A new listing…at an open house…directly from the seller.
I didn’t make a commission, but I did get 5 referrals, and a nice bottle of Champagne.
Thank you very much.

Everybody seems to have an agenda
that precludes any sense of allegiance.
And this is considered acceptable behavior?

If you are trying to separate yourself…
Define your brand and differentiate yourself…
By being loyal.
To a fault, if you must.

Your clients and peers will respect it (and you).