If a real estate agent asks for a referral fee, he's probably either unethical or uninformed. And if he truly needs referral fees to make a living ... well, he's probably not very good at his job
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Part II: I really don't understand why I can't legally give a referral fee to a real estate agent that gives me a deal. It seems like it would be a perfect way to lock up the agent's business. Why is the state tying our hands?
-- Monte from Louisiana
Last week we talked about why a referral fee violates the law. This week we will talk about what to say to an agent that asks for a referral fee for a transaction. To us, the agent is either unethical or misinformed. You would be surprised at how many agents believe that this practice is within the law. If they are unethical, then it is best not to work with them at all. If they are uninformed, you must try to educate them and the explanation we offered last week should help you in this regard.
There is another issue here. If an agent truly needs referral fees to make a living, then that is telling us that they are not very successful. You want agents that are more than supporting themselves by the commissions they generate. A successful agent not only generates enough income, they understand that great vendor/partners are essential in many ways and they value these relationships. If you are getting the impression that we believe in most cases requests for referral fees should be spurned, but also that they are indicative of relationships we don't want to further -- you are correct in this regard. Next week we will answer the question about being a loan officer and a Realtor on the same transaction.
--Dave Hershman
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at [email protected].
-- Monte from Louisiana
Last week we talked about why a referral fee violates the law. This week we will talk about what to say to an agent that asks for a referral fee for a transaction. To us, the agent is either unethical or misinformed. You would be surprised at how many agents believe that this practice is within the law. If they are unethical, then it is best not to work with them at all. If they are uninformed, you must try to educate them and the explanation we offered last week should help you in this regard.
There is another issue here. If an agent truly needs referral fees to make a living, then that is telling us that they are not very successful. You want agents that are more than supporting themselves by the commissions they generate. A successful agent not only generates enough income, they understand that great vendor/partners are essential in many ways and they value these relationships. If you are getting the impression that we believe in most cases requests for referral fees should be spurned, but also that they are indicative of relationships we don't want to further -- you are correct in this regard. Next week we will answer the question about being a loan officer and a Realtor on the same transaction.
--Dave Hershman
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at [email protected].
