A Real Estate Referral Agent is a licensed agent who focus on connecting clients with good reputable agents to assist them with the transaction and is compensated a portion of the commission received by the other licensed agent. While almost all licensed real estate agents send and receive referrals, some agents focus only on sending referrals. To clarify, on this article we will be using the term “Real Estate Referral Agents” or “Referral Agents” to those who focus only on sending referrals.
In reality, they are not very different from each other. However, the main difference between a Real Estate Referral Agent and a regular agent is that the referral agent focuses only on referring clients to the regular agents. With this in mind, the referral agent doesn’t take an active role in the transaction representing buyers and sellers. As a result, referral agents can join a referral brokerage and save thousands.
To illustrate the differences, the table below shows a side-by-side comparison between referral agents and regular agents.
| Referral Agents | Regular Agents | |
|---|---|---|
| Agent's License remains active as Licensed Professionals | ||
| Agents can refer clients to others and get paid. | ||
| Associates must complete the required Post-Licensing and CE Education | ||
| Agents can later become Brokers or Broker-Associate | ||
| Is usually a member of the Realtor® Association | ||
| Broker carries E&O Insurance for transactions with buyers and sellers. | ||
| Have expensive costs for CRM, lead-generation, marketing and other systems | ||
| Goes on showings and listing appointments | ||
| Prepares contracts and assist clients with all transaction's tasks. |
In short, Referral Agents collect a referral fee or commission from the agent or broker they connect a client with. In order to be able to collect these referral fees, the person acting as a referral agent must have an active real estate license. Since it is illegal to pay an unlicensed person for real estate activities and referrals, real estate referral agents must be registered under a broker.
To summarize, here are the steps on how real estate referral agents make money:
The income potential of referral only agents, in short is unlimited. The range can go from zero to a very lucrative amount depending on these 3 main factors:
Think about all those companies that sell “leads” to real estate agents. Like Zillow, realtor.com, Homelight, and many others. One of their main source of revenue comes from connecting clients with real estate agents Some charge the active agents an upfront fee to receive lead or clients, and others charge a referral fee at closing. That’s how big the potential is.
Absolutely yes! In fact, people are always in search for service providers and their main factor for choosing is the referral of others. According to the research of the National Association of Realtors®, most buyers and sellers found their agent through the people they knew. In other words, most clients selected an agent who was either someone they knew or referred by someone they knew. Similarly, regular agents also benefit from referral agents as they can bring them new clients.
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Real Estate Broker, Instructor and Founder of the Your Home Plus Companies with the vision of positively transforming the real estate industry so that the consumer have more trust and loyalty in real estate professionals and that real estate professionals have a higher success rate in the industry.
