Question Details

André,  in South Africa

Referral from SA to US

Asked by André, South Africa Tue Feb 5, 2008

With reference to a referral from South Africa to the US (of a property for sale or a referral of a potential buyer in the US), do I send same referral to a Realtor, broker, listing agent, buyers agent, sellers agent or a real estate agent? We only have agents in SA and our brokers are something completely different. Please assist me with your model.

The way I understand it is that I will have to share 25% to 30% (referral fee) of commission of lets say (initially 6%) divided by 2 = 25% to 30% of (6% divided by 2) = 3%.

Is it correct that this 3% can be divided even further if I am dealing with a real estate agent who would still need to pay his/her broker?

What will be the best business for me? Should I not rather refer directly to a broker then? Please assist.

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Hi Andre,

Here are some definitions that may help you understand our system.

Broker In Charge or Designated Broker - Head broker of the agency - all other agents and brokers report to them. The Seller or Buyer has a contract with the company and broker-in-charge, not the individual sales agent.

Brokers - Licensees who hold a broker's license but work under another broker-in-charge but can open their own brokerage business if they choose to do so. This requires additional education, length of time in the business and testing.

Sales Associates - Licensees who hold a salesman's license and who must work under another broker (broker in charge)

REALTOR - Member of the National Association of REALTORS

Real Estate Agent - Licensee who is not a member of the National Association of Realtors.

Buyer's Agent, Listing Agent, Dual Agent are all licensees - the difference is who they represent.

There are also licensees who, in addition to having a real estate license, hold real estate designations such as ABR, CRS, GRI, CCIM, etc... this designations show that the agent has additional education other than what is required by law and in most cases, must reach a certain level of sales success before the designation is awarded.

All licensees work through their broker-in-charge (company) so all commissions paid go through the broker-in-charge (company). All referral commissions must be paid out by the broker-in-charge (company)

You need to refer you clients to the person you feel can do the best job for your clients and close the transaction. Someone may offer you a very high referral fee but can they do the job - what ever percent they charge but no sale is 0% if they can't get the job done.

The total commission would be split between the listing side of the transaction and the selling side of the transaction. The referral commission would then be paid from the listing side of the sale if you referred the seller or the buying side of the sale if you referred the buyer.

In your example you are referring to a 6% commission, a 50/50 listing/selling split and a 25% referral fee. I will use that as an example since all commissions are negotiable with the client - some will charge more, some will charge less.

Let's take $100,000 sale (using round numbers) - the commission is 6% = $6,000 Split between listing side and selling side - $3,000 each - 25% referral fee = $750.

There are also Federal and State Tax laws that affect compensation being paid to an overseas company so their may be additional withholding involved.

Hope that helps
Web Reference: http://www.toonpawley.com
2 votes Thank Flag Link Tue Feb 5, 2008
Andre,

Lets suppose that you sent me a name of a buyer who bought a $1,000,000 home with me as thier buyer's agent. The listing agent is paying my brokerage firm $30,000 (3%) to bring the buyer and to handle the transaction. I would agree to pay you 25% of the full fee that my firm gets, or $7500. The remainder of the commission, $22,500, would be then split between me and my broker, at my commission split level.

I am not sure how you would handle the $7500, but here in the states, it would be paid to your broker (realty company). Your broker would then pay you out at your commission split level.

If you should refer directly to a broker or refer to an agent: It really would not make any difference since the 25% referral fee to you is taken right off the top. Referring to a broker will only mean that you do not know who your friend will be working with. This is because the broker will assign the referral to one of his agents. If you refer directly to an agent, then you will know with whom your friends will be working with. Now this will vary a little if the broker is also a producing broker, instead of just a managing broker. At my company, the broker does not produce, only manages. If the broker is a producing broker, then he or she may handle the referral/transaction themselves. But, you would still get the 25% off of the top.

I hope that helps. If you have any other questions feel free to post them here or email me if you prefer.
2 votes Thank Flag Link Tue Feb 5, 2008
Andre,

I would like to add that Charleston SC is a very beautiful and charming city to live in. It has been rated in the top three places to live in the United States. It has been voted the most well mannered city for over ten years.

You would do very well by your clients to recommend Charleston to them as a place to move to.
As always, Dan
1 vote Thank Flag Link Tue Feb 5, 2008
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