A referral fee is a payment one real estate professional makes to another for referring a client who results in a closed transaction. It is typically expressed as a percentage of the referred agent's commission and is paid at closing.
Referral fees are common when an agent sends a client to another agent, for instance in a different city or specialty. Under U.S. real estate law, referral fees for a real estate transaction generally must be paid between licensed brokers, not to unlicensed individuals.
Referral arrangements are usually documented in a written referral agreement specifying the percentage. They let agents monetize connections outside their market and help clients get connected with qualified local representation.