What is a Licensed Real Estate Referral Agent?

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Topics Covered

  1. What is a Real Estate Referral Agent

  2. Why become a Real Estate Referral Agent?

  3. Why use a Real Estate Referral Agent?

  4. What does it cost to use a Real Estate Referral Agent?

  5. What does it take to succeed as a Referral Agent?

  6. How do I Become a Real Estate Referral Agent?


What is a Real Estate Referral Agent?

Rather than acting as a full service real estate agent for a client, a licensed real estate referral agent is someone who focuses on guiding clients to the best licensed salesperson to assist them as a buyer or seller in a real estate transaction. If the client successfully closes a transaction, the referral agent collects a part of the commission earned.

Real estate referral agent requirements and obligations vary by State. In all cases, activities of a real estate referral agent will be limited to ensure that an agency relationship is not created with the client. Here are two state examples:

New Jersey

  • License Type: Referral Agent (as of 2019, New Jersey is implementing a law that changes the name of this classification to Salesperson Licensed with a Real Estate Referral Company, SLWRERC).

  • Subject to activity restrictions based on Real Estate commission regulations and agreement with employing broker.

New York

  • License Type: Salesperson or Broker-Salesperson (not special classification)

  • Subject to activity restrictions based on agreement with employing broker.

N.B. Although some states have their own restrictions, real estate brokerages typically have a separate set of requirements in place that a referral agent must abide by. All real estate referral agents must place their license with a real estate broker and are subject to their oversight.


Why become a Real Estate Referral Agent?

There are many to go the referral agent direction. You are able to maintain your real estate license without minimum activity requirements, meaning you can earn extra income in your spare time, rather than making a full-time commitment.

On the risk spectrum of real estate license types, a real estate referral agent is typically the lowest. While a full service agent will typically spend anywhere from 40 to 120 hours on a transaction/client, a real estate referral agent may spend only 10 to 25 hours. Further lowering the risk, a real estate referral agent has dramatically lower costs to do business versus a full service agent, including: MLS dues, Board fees and transaction marketing costs.


Why use a Real Estate Referral Agent?

From the client perspective, working with a referral agent is something like having your own personal human resources department. Someone who pre-screens full service real estate agents, to ensure those you spend time with are a good fit. Since it’s always a good idea to perform your own due diligence, a real estate referral agent can be a front line, helping to focus the limited time you have on the best prospects.

When a client has their first conversation with a real estate referral agent, they work to understand your needs, your priorities and your timeline. That information is then used to match you with a professional full service agent to meet your needs.

From the full service agent perspective, lead generation is always source of angst. By partnering with a real estate referral agent, you not only generate more leads, but most importantly, you generate high quality leads.


What does it cost to use a Real Estate Referral Agent?

Similar to a full service agent, there is no out-of-pocket cost for a client to enjoy the benefits of working with a real estate referral agent. Real estate referral agents are paid a portion of the commission earned by full service agent, only as a result of a successful transaction closing. Sellers and buyers should understand that this commission is not in addition to the listing agreement commission rate, it’s deducted out of the commission earned by agent receiving the client referral.

For full service agents, expect to share a portion of the commission you earn. This varies by market and by the characteristics of the particular referral, but these fees typically range from 25 to 35% of the gross commission earned on the transaction where the referred client is participating. It should also be noted that a standard referral agreement is in effect for a predetermined period of time, so it’s possible that more than one transaction would be subject to the referral fee.


What does it take to succeed as a Referral Agent?

Successful real estate referral agents have a few things in common, but perhaps the most important is that they have learned to overcome any fear or hesitancy associated with pitching what they offer. Connecting clients with qualified full service real estate agents is a high value service, so a good place to start would be to develop your own personal messaging on how you offer this to clients.

It’s not magic, like John Wayne says, feel the fear and saddle up anyway. As you progress in your real estate referral career each conversation will flow more naturally than the one before and with each conversation, you will learn to refine your message for each type of audience.

Another crucial factor in succeeding as a real estate referral agent is teamwork. Specifically, make it a habit to have consistent conversations and meetings with full service agents that work in your market. Each point of contact will help you get to know and understand the local real estate agent network, which in turn will allow you to provide better service to your clients. As your full service real estate agent network develops, you will eventually enter into referral commission agreements with the agents who best serve the client you bring.

The last thing I will point out is that follow up is key. You’ve successfully referred a client to a full service real estate agent. At this point, you should be receiving regular updates from the full service agent on their progress. It’s equally important to ensure the client is satisfied throughout the process. If, at any time, the client raises an issue or is unsatisfied with the service they are receiving, you need to make a decision. Is it time to raise the concern with the full service agent or to move forward by working to setup up introductions between the client alternative agents?


How do I Become a Real Estate Referral Agent?

First, understand the state requirements and fees for obtaining your real estate license from the state. This typically includes a minimum number of hours of classroom study and passing a state administered exam. During this process, you should also begin researching your brokerage options, as all licensees are required to hang their license under a licensed real estate brokerage.

The best way to research is to start online. Look for “New Jersey Real Estate Referral Company” (or whichever state you’re licensed in). In today’s market, the actual proximity of the real estate referral company won’t matter much, as most processes should be completed online. While researching on the brokerage website, here are a few key questions to keep in mind:

  • How much is the commission split with my broker?

  • Does the annual membership fee fit within my budget?

  • How do I pay my fees to the brokerage?

  • Can I submit referrals to my broker online?

  • Will I be able to choose which agent receives the referral?

  • How will I get paid my commission?

Finding a real estate referral company that takes the stress and paperwork out of maintaining your license and processing your referrals will be a substantial benefit. People have busy lives and joining a referral brokerage shouldn’t add lots of complication to your routine.


Referral agents have invested the time and money to understand the legal requirements and processes necessary to complete a real estate transaction, but choose to facilitate relationships for others, rather than stay directly involved.

At General Referral, we then combine the information gathered from the client with powerful technology and deep industry experience to match client with highly qualified professionals.