Is your selling agent getting a referral fee from your buyer’s agent?

Realtors like to boast that they “specialize in residential properties in the city and suburbs,” but that’s a hollow claim, often a silly one. It’s simply impossible for an agent, with rare exceptions, to know city and suburban markets well enough to provide competent representation to a client on both a city sale and a suburban purchase. The professional approach would be to refer the client to an agent who has experience and expertise in the suburban market.

The referring agent typically receives a “referral fee” of 20 to 30 percent of the commission that will be earned by the agent receiving the referral. A professional agent ought to disclose that fee to the client so that the client can evaluate how it might affect the quality of service that will be received.

As you might suspect, this type of fee arrangement often occurs without disclosure. If you’re a seller and your agent is recommending another agent to assist you with a purchase, ask about the amount of any referral fee your agent will receive if that information hasn’t been volunteered. Then give careful consideration to whether you should work with the agent who’s been referred or find one on your own.

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