What is a Real Estate Referral Agent?

What is a referral agent?

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.

What is the Difference Between a Real Estate Referral Agent and a Regular Agent?

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.

Real Estate Referral Agent vs Regular Agent side-by-side Comparison:

Referral AgentsRegular 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.

How does a Referral Agent Makes Money?

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:

  1. Talk and connect with people you know and discover their real estate needs and goals.
  2. Find the appropriate agent to assist that client and negotiate your referral fee with a written agreement.
  3. Connect the client with the agent so the agent can assist the client.
  4. Once the client closes on their transaction with the agent you connect them with, the agent (through his/her brokerage) sends your commission to your broker.
  5. Your broker processes and disburse your commission to you.

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:

  1. How many people you know or how big your network is.
  2. How intentional you are in connecting your people with good reputable agents.
  3. How intentional you are growing your network and connecting with new agents across the country.

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.

Does People Really Need a Real Estate Referral Agent?

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. 

Referral Agent - Your Home Plus Referral Brokerage
Join us to keep your license active as a referral agent!

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About the author:

Eliezer Rivera

Eliezer Rivera

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.

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