Fillable Form Referral Agreement Form

What is a Referral Agreement Form?

A Referral Agreement Form is a real estate document used when a broker has a client that he or she would like to refer to another broker in exchange for a fee. As an agreement, it is generally used when a client is looking to buy, sell, or lease a property outside the jurisdiction of a broker or is requesting a service that a broker does not offer. Some instances include a real estate broker whose client is moving out of state or neighborhood that he or she is not familiar with and an agent who focuses on residential properties whose existing client intends to purchase a commercial property that he or she is not an expert at.

A broker or agent may use the referral agreement form and enter into a commission-based transaction with another broker or agent if he or she, among other relevant reasons, wants to work with a professional who has contacts and manages properties in a state or neighborhood that he or she is unfamiliar with, and understands that his or her expertise about a sector in real estate is limited and another professional could provide supplementary service to his or her client.

In real estate, referral fees are given when an agent or broker refers a client to another agent or broker depending on the commission when the sales transaction closes. In most cases, referral fees range from 20% to 35% of the earned commission, the standard being around 25%. In addition, while most broker-to-broker or agent-to-agent referral fees are straightforward, conditions such as referring to an agent who is in another state and referring commercial real estate could affect the percentage of the fees. Therefore, the Referral Agreement should clearly state all discussed arrangements and provisions for transparency.

Take note that a real estate agent or broker cannot pay referral fees to non-agents or non-brokers. In most states, it is illegal to pay referral fees or “finder’s fees” unless the receiving party is a licensed real estate professional or attorney.

How to fill out a Referral Agreement Form?

A Referral Agreement Form is straightforward, only requiring necessary information about the people who are entering into an agreement, including the agents or brokers and the client, client particulars, and the referral fee agreement.

Before filling out the document, it is a prerequisite that you thoroughly understand the needs of your clients and have assessed that you need the assistance of another real estate professional. Prior to contacting other agents or brokers, make sure that your client knows and accepts the arrangement.

Follow the guide below to complete the referral agreement form accurately.

The Referring Broker/Agent section asks for the information of the primary broker or agent; the one who has a client and needs the assistance of another professional. For this section, provide the following:

• Agent Name
• Company Name
• Company Address
• Company Website
• FAX Number
• Cellphone/Telephone Number
• Email Address

The Receiving Broker/Agent section asks for the information of the secondary broker or agent who will assist the primary broker or agent. For this section, provide the following:

• Agent Name
• Company Name
• Company Address
• Company Website
• FAX Number
• Cellphone/Telephone Number
• Email Address

The Client Information section asks for the information of the client. For this section provide the following:

• Name
• Address
• Cellphone/Telephone Number
• Email Address

The Client Particulars section asks for the referring broker or agent’s experience in dealing with the client. By providing the required details, the receiving broker or agent will get an idea of how to manage the client as they proceed with the transaction.

The Referral Fee Agreement section details the fees to be paid to the receiving broker or agent. Aside from listing the basis of the referral fee, it also includes payment terms and date.

Both brokers or agents need to sign the agreement for validation.

Lastly, write the referral agreement creation and expiration dates.

Frequently Asked Questions About A Referral Agreement Form

What is a real estate referral agent?

A Referral Agent is a real estate professional that has a contractual agreement with a Referral Partner, or another real estate agent, to refer potential buyers or sellers in a real estate transaction. Referral Agents receive compensation from Referral Partners when they refer a deal to them.

A referral agent can be either active or passive in his or her work. An active referral agent will find people to refer and leave it up to the referral realtor to sell their services. A passive referral agent simply sends leads for realtors to follow up on.

A referral agent works with another real estate agent or realtor to help home buyers and sellers achieve their goals. It makes the referral agent invaluable to real estate professionals, as they provide new leads for each other. This way, they expand the number of homes on the market that can be sold or found.

What is a realtor?

A realtor is a person in the real estate industry who assists people in finding and purchasing properties. They can also be called brokers, sales associates, or agents. Some realtors work independently while others work for brokerage companies with other licensed professionals to help out their customers. Referral agents are also referred to as referral partners when they act as real estate agents.

How does a Referral Agreement work?

A Referral Agreement is a signed agreement between two or more real estate agents that outlines the expectations and conditions of working together. Referral agents receive compensation for referrals, while referral partners pay referral fees to Referral Agents who refer them business.

When a Referral Agreement is signed, the real estate referral agent finds motivated people who need his or her service and refer them to the referral partner or other realtors. The referral agent will let the referral partner do the rest of the work by selling his or her services to potential home buyers and sellers. With this, the referral agent receives a referral fee when the referral partner closes a deal.

How do referral agents benefit?

Referral agents work with realtors to form an agreement, where they refer buyers and sellers to a referral partner or another realtor in exchange for compensation.

Referral agents can earn commissions ranging from two to ten percent. They share the same tasks as Referral Partners, who are responsible for marketing their services to potential home buyers and sellers.

Who can be referral partners?

Referral agents look for motivated referral partners by searching for active real estate agents in their area of specialization. Referral agents use a referral partner's listings to find people who need their realtor services.

Referral agents set referral partners up with a Referral Agreement Form, which outlines the terms and conditions of their working relationship. Referral agents then get to work sending referral partners new clients.

Can I file a Referral Agreement Form electronically?

Yes, you can file a Referral Agreement Form electronically. You can provide the realtor with an electronic Referral Agreement Form, which he or she can fill out and sign easily.

Filing Referral Agreements electronically makes the process of working together more accessible for all parties involved.

However, if the realtor prefers a hard copy of the Referral Agreement Form, you may provide him or her with a Referral Agreement Form in hard copy.

Do I need to sign a Referral Agreement Form?

Yes, you need to sign a Referral Agreement Form when you transact with a realtor.

A Referral Agreement is an important document that outlines the terms and conditions of working with referral partners. It explains what will happen to deals that come from referrals, how referral agents are paid, and the Referral Agreement's termination. If you and the realtor do not sign the Referral Agreement, there is no guarantee that anything will happen as agreed upon.

Take note that a Referral Agreement becomes legally valid if it is signed by all parties involved in the real estate transaction.

What should I include in a Referral Agreement?

A Referral Agreement should clearly state the responsibilities of a referral agent and a realtor. A Referral Agreement must be detailed enough to provide both parties with a clear understanding of the relationship they will have.

In addition, a Referral Agreement may include:

• the amount of referral fees paid by referral agents to referral partners;
• the percentage referral agents receive when referral partners close deals;
• how the referral agents and referral partners will be paid;
• what happens in the event of a dispute between referral agents and referral partners;
• how long the Referral Agreement is valid for;
• whether one party can terminate the agreement without notice; and
• insurance.

When should a Referral Agreement Form be signed?

A Referral Agreement should be signed once you find a client for the realtor. Ask the realtor to sign your Referral Agreement Form.

If the realtor signs the Referral Agreement, he or she agrees to work with you for a certain period of time in exchange for referral fees. The realtor also confirms that he or she is willing to share their business with you.

Once the Referral Agreement is signed, continue to market your realtor services to potential clients. Refer business to your referral partners and pay referral fees as agreed upon.

How long is a Referral Agreement valid?

A Referral Agreement can be signed for an infinite amount of time or with a certain date when it will expire. A Referral Agreement must include in writing how long it will last and whether there is an expiration date on it.

How long is a Referral Agreement valid?

A Referral Agreement can be signed for an infinite amount of time or with a certain date when it will expire. A Referral Agreement must include in writing how long it will last and whether there is an expiration date on it.

What is a referral fee?

When referral agents find a client and the realtor closes the deal, the referral agents get a referral fee. A referral fee is the percentage referral agents charge when they find a new customer for another real estate agent.

The Referral Agreement outlines how referral fee percentages are calculated. By figuring out how referral fees will be paid, realtors and referral agents can determine their cut in a real estate transaction.

A Referral Agreement is essential when realtors find potential customers through referrals and work with referral partners to close the deal. Referral fees are given to referral agents as a percentage of the sales commission after realtors receive their portion of the money from sellers.

A Referral Agreement should clearly state that referral partners will be paid out when realtors close deals. Referral agents do not receive referral fees until they have closed a deal with potential clients. They are entitled to referral fees after they close a deal and hand over the client to realtors on Referral Agreements.

What is the standard referral fee for realtors?

Generally, referral fee percentages for realtors are between one and two percent of the sales commission.

The referral fee depends on the sale price, how many referral agents are involved in the transaction, and how much work is required. Referral fees can be as low as one percent or as high as three percent of the sales commission.

As a realtor's business grows, referral fees naturally increase. Referral Agreements may be negotiated depending on the situation at hand. It is important to outline the referral fee in writing to avoid any confusion among the parties involved.

How do I ask for a referral fee?

Referral fees have to be asked for in writing. Referral agents do not receive referral fees until they have closed a deal with potential clients and handed over the client to realtors on Referral Agreements.

If a Referral Agreement states that referrals fees are payable upon closing, referral agents cannot ask for a referral fee until after the realtors closing. Referral agents can only negotiate referral fees after they have closed a deal and handed over the clients to realtors on Referral Agreements.

Referral fees are not necessarily the same for every real estate transaction, so Referral Agreements must be specific depending on each specific case.

Is a Referral Agreement legally binding?

A Referral Agreement is legally binding when realtors and referral agents sign it.

A Referral Agreement helps protect the interest of all parties involved in the sale transaction. Once signed, it becomes a legally enforceable contract between the realtor and the referral agent.

A Referral Agreement provides a clear understanding of the agreement the realtor and referral agent came up with. If disputes arise, they can use the Referral Agreement as valid evidence. If the disputes need to be taken to court, the Referral Agreements can provide legal protection based on the circumstance.

Are referral fees negotiable?

Referral fees are primarily negotiated based on the real estate transaction at hand. Referral agents may negotiate for higher rates depending on the situation, but Referral Agreements must be specific depending on each case.

If referral agents are not satisfied with the Referral Agreement they reached with their realtor clients, they can cancel it and find another realtor to work with. Referral agents can contact referral partners and realtors on Referral Agreements to negotiate better rates.

What are the benefits of a Referral Agreement?

A Referral Agreement benefits both realtors and referral agents. Referral fees are negotiated based on the Referral Agreements, which helps protect the interest of all parties involved in the sale transaction.

After Referral Agreements are signed, they become legally enforceable contracts that offer a clear understanding of what each party is entitled to receive once the sale of the property is complete. Referral Agreements help avoid miscommunication among parties involved in real estate transactions.

A Referral Agreement can only benefit the realtor and referral agent if they are clear on what it states. Referral agents will not receive referral fees until they have closed a deal with potential clients and handed over the client to realtors on Referral Agreements.

Is a referral fee a commission?

Yes, a referral fee is a commission payable to referral agents for introducing clients to realtors on Referral Agreements. Referral agents are not entitled to referral fees until the Referral Agreement is in place and they have closed a deal with potential clients and handed over the client to realtors on Referral Agreements.

A referral fee is also called the "finder's fee." It means when referral agents find a potential client for the realtor, the realtor must compensate the referral agent for bringing in a potential client. Referral agents can negotiate a higher referral fee depending on how valuable their referral was, but Referral Agreements must be specific depending on each case.

Are referral agreements legal?

Yes, referral agreements are legal. The referral system is highly recognized across the real estate industry. It helps real estate brokers or professionals market for their services and works with referral agents who bring in potential clients for them. It helps them grow their business as more and more people are becoming aware of the referral system.

Referral agents work hand in hand with their fellow real estate agents and referral partners on Referral Agreements to find potential clients and make a sale. Referral agreements are not only beneficial for them, but this strategy helps real estate buyers and sellers achieve their goals faster.

Can referral agents work without Referral Agreements?

Yes, referral agents can work without Referral Agreements. This type of transaction can be done verbally. However, without Referral Agreements, referral agents can be taken advantage of for having brought in a potential client.

Referral agents must not sign Referral Agreement forms without clearly understanding what they entail and how it benefits them before working with realtors on Referral Agreements. Referral agents are encouraged to ask realtors about Referral Agreement forms before signing them.

Can a Referral Agreement be terminated?

Yes, a Referral Agreement can be terminated if the referral agent and the realtor mutually agree on it. If both parties want to terminate the Referral Agreement they must provide advance notice of termination.

A Referral Agreement may also be terminated if the realtor or referral agent does not honor the terms and conditions in the Referral Agreement.

Do referral fees have to be disclosed in Referral Agreements?

Yes, referral fees must always be disclosed in Referral Agreements. Doing so prevents confusion and disputes regarding the referral agreement later on.

Referral agents must not sign Referral Agreements without clearly understanding what it entails and how it benefits them. They are encouraged to negotiate with realtors about the referral fees before signing the Referral Agreement.

Is a referral fee a marketing expense in a Referral Agreement?

Yes, referral fees are considered as marketing expenses in Referral Agreements. Marketing expenses simply mean the realtor is paying the referral fee for services rendered by a referral agent.

Marketing expenses refer to costs incurred by real estate companies in advertising their services. A referral fee can be considered a marketing expense for realtors since they use Referral Agreements and referral agents to find additional potential clients.

How many Referral Agreements can a referral agent have?

Referral agents can have multiple Referral Agreements. Referral Agreements are not exclusive to one realtor, referral agent, or brokerage firm. However, referral agents must be responsible enough to prioritize their Referral Agreements and keep up with all the demands of being a referral agent.

How do real estate referral agents generate leads?

Referral agents can refer potential clients to realtors through Referral Agreements. Referring clients to real estate companies is one of the ways referral agents generate leads, but this is not the only way referral agents can do so.

Referral agents may also generate leads by being in direct contact with homeowners who are planning on selling their properties. They can also generate leads by borrowing or hiring technology that helps them find potential clients through business matching, online ads, and email campaigns.

Referral agents are constantly looking for ways to make their lead generation efforts more efficient, including using social media platforms like Facebook, Twitter, and LinkedIn. Such platforms are great resources for referral agents to find potential clients because they enable them to engage in conversations with vast networks of people.

Do Referral Agents have to be licensed?

Referral agents do not necessarily need to be licensed, depending on the state laws. However, they must at least meet the minimum qualifications required by state laws if they plan on marketing and operating as referral agents. Referral agents should always check with licensing regulations in their states to understand what they need to do before getting into the real estate business.

Although referral agents are not required to be licensed, realtors should require referral agents who work for them to get state-issued licenses.

What should a referral agent consider when creating a Referral Agreement?

Here are the things a referral agent must consider when creating a Referral Agreement.

1. Referral fees and referral split — Referral agents must decide on which basis to divide referral fees with realtors before drafting their Referral Agreements, either a fixed percentage or flat rate split. Referral Agents must also consider if they get referral fees from both referring and acting as a dual agent for the transaction, such as when a Referral Agreement is used for a property listed by another brokerage firm.
2. Referral limit — Referral agents must set referral limits, so they do not refer more clients to realtors than their minimum service requirements are. Referral agents should also keep in mind referral fees and splits before setting or agreeing on referral limits with realtors.
3. Referred client communication — Referral agents must make sure realtors are not communicating with the clients they referred to them without their prior knowledge and consent. Referral agents should also be aware of communication rules mandated by state laws, like mandatory arbitration agreements.

Can Referral Agreements be used in other industries?

Yes, Referral Agreements can be used for various businesses, including those within non-real estate industries. Referral Agreements are great for any business that wants to partner with another business in order to expand its client pool.

However, such transactions require a more general Referral Agreement form depending on its purpose.

Is being a real estate referral agent worth it?

Referral agents have a wide array of benefits, including the freedom to choose their own clients. Referring realtors also enjoy being able to market themselves as experts through Referral Agreements and referral fees. Referral agents can also increase their client base by referring them to real estate companies or other industries.

However, referral agents must be aware of the amount of work that goes into building, maintaining, and managing networks. The process may be tedious and strenuous, especially at first when networks and connections are not yet established. They must also manage their Referral Agreements with realtors to ensure smooth transactions between them.

Related Articles:

• Finder's Fee
• Commission
• Strategic Use of Referral Agreements
• How Do Real Estate Agent Referrals Work?
• Real Estate Agents vs. Realtors: What's the Difference?