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What is a referral fee when buying a house?
A referral fee is a payment between real estate brokerages when one brokerage sends a client to another and that client’s deal closes. In the Realtor Referral Hub the standard referral fee is 25% of the commission, paid by the brokerages out of the commission at closing. The buyer or seller never pays it directly, and if the deal never closes, no referral fee is owed by anyone.
A concrete example
Say you are moving to a city where your current realtor does not work. Your realtor refers you to a local partner there. You buy a house with that partner, and at closing the partner’s brokerage sends 25% of its commission to your original realtor’s brokerage, per the signed referral agreement. Your price, your loan, and your closing costs do not change — the fee moves inside the commission, between the two brokerages.
What to watch for
- It should be on paper. A real referral runs on a signed agreement between brokerages — that is what makes a closing collectable and everyone’s expectations clear.
- It should only exist at closing. Up-front or monthly "referral" charges to a homeowner are not a referral fee — in this network a homeowner never pays one at all.
- It should not change your agent’s effort. Your local partner agreed to the standard 25% when they took the match; it is the normal cost of receiving a client the right way.