People often ask for referrals when looking for expert services. However, it pains when you hire a “professional” from a trader. This often happens when a referral agent recommends a real estate agent. They do it at a price!
How Do Real Estate Referral Agents Work?
Agents making real estate referrals operate as agent’s agent. They possess realtor licenses and they work in connection with brokerages. A referral agent does not make listings or look for property. Instead, he looks for active agent who pays him for every referral. When a sale goes through, the professional agent pays a percentage of his commission to the referee.
Both listing (seller) and buyer’s agents work with referral agents. Referral fees range from between 10% and 50% of total commission based on several factors. They prioritize referral fee before splitting the commission between the listing and buyer’s agents.
For example, if a seller pays $7, 000 to his property listing agent, the latter can opt to retain $3, 000 and pay $4, 000 as compensation to the buyer’s agent. However, when a referral agent must earn his supposedly 25%, then, the buyer’s agent will earn $3, 000 while the referral agent will earn $1,000.
Controversy Over Referral Agents
There exist circumstances that justify referrals from agents. For instance, a veteran realtor can retire into a referral agent. Alternatively, if a home seeker opts to stretch his search into a state where his agent neither knows nor owns a license to work in, the agent will refer this home seeker to another agent in the new locality. In turn, the former agent will earn a commission. Furthermore, real estate experts never mind paying the referral fee in order to get clients. Despite this acceptance, some professionals detest the dealings with referral agents.
Nevertheless, a referral property search agent should recommend expert agents with sound record or closings in your field of interest. Unfortunately, unethical referees peruse lists and pick agents whom they barely know. These cases continue to increase with the bulging in referral agencies online that promise compete agents around the entire country. Some even haughtier referral agents recommend agents who charge the most referral fees.
What Agent Pays Referral Fees?
People also desire to know the competencies of agents who opt to pay referral fees. It is unlikely for an expert realtor to pay another for a referral when they should outdo each other. It only makes sense to pay these fees when you either are new in the locality or in the profession and you need to jumpstart your career. Aside from these, only desperate and inexperienced agents will pay the referral fee as their only way of getting businesses.
Although real estate business comprises of its set of complexities with more than 80% of agents not making enough from it to sustain their living, the best realtors hardly depend on referrals in order to get businesses.
Intermediaries like mortgage brokers have always dwelt in real estate businesses. Even so, experts in this field view referral agents as pests & parasites evident in their famous quote “Those who can, do: those who can’t, refer”. Above all, experienced referral agents offer their good based on your needs. You simply need to sift for the right one.