Question Details

Mike Kelly &…, Real Estate Pro in Santa Rosa, CA

Escalating Referral Fees! 35%,40%,50%! Why Give away the store!!?

Asked by Mike Kelly & Allison Norman, Santa Rosa, CA Sat Apr 5, 2008

Seems during a market such as this we have Realtor/Licensees willing to give away HUGE referral fees. I know the cost of generating a client but still, 50%!? I wonder, if they are willing to give such a huge piece of their Brokerage Fee, how will they negotiate my referred client's home price? Will they quickly dispose of them? Not fight as hard? So do you choose a referring agent for biggest fee or COMPETENCE? Your Criteria?

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My feelings are that it is always better to be doing business with an agent who is not giving the farm away because their business is having such difficult times. I also believe that when I am asked to give what I think is an excessively large referral fee that I am better off passing on that referral. My time, knowledge and negotiation skills are worth a lot to my clients (the other broker’s current client).

If the other broker is just looking out for his/her own personal gain more so than the clients gain, I guess I am the wrong agent. I ask the other broker if they want someone who is exceptional at negotiating working with their client or if they just want any agent willing to grasp at the opportunity, regardless of what they will realize for their efforts working with their client. I explain that I would only want my clients working with a proven Realtor who does not need to buy the business. Overly motivated agents working for a substantially reduced fee will most likely be looking for the fast closing – not the best interest of the client.

I also explain that whenever I have a real low end referral like a $125,000 buyer, I still take the time to interview agents and then I tell them that since I really want them to take care of my clients that I will not be asking for ANY referral fee.

I guess the point is that in is a free market place and brokers can charge or give away any amount of money they want to. We as brokers just need to individually figure out what is reasonable and prudent for our own situation. When I refer a client, I want them working with a proven seasoned professional who thinks the same way as I do. I then know they will be well taken care of and that the agent is not short changing them because their fee has been so drastically reduced.
0 votes Thank Flag Link Sun Apr 6, 2008
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