ReferralBeep

A referral agreement protects both agents when one sends a client to another. Without a written agreement, you risk disputes over fees, confusion about terms, and damaged relationships with agents you may want to work with again.

Whether you're referring a relocating buyer to an agent across the country or receiving a referral from a retiring agent in your market, a clear agreement ensures everyone knows exactly what they're owed and when they'll get paid.

This guide covers everything that belongs in a real estate referral agreement, common mistakes that lead to disputes, and how the 2024 NAR settlement changes affect referral practices going forward.

What Is a Real Estate Referral Agreement?

A real estate referral agreement is a contract between two brokerages that establishes the terms for compensating a referring agent when they send a client to a receiving agent.

The key distinction: referral agreements are technically between brokers of record, not individual agents. Even if you're a solo agent who found the referral opportunity, your broker must be party to the agreement because commissions flow through brokerages.

The agreement documents who is being referred, what fee the referring party will receive, and when that payment is due. It creates a paper trail that protects everyone involved and prevents the "he said, she said" disputes that can damage professional relationships.

Most referral agreements follow a standard structure, but the details matter. A vague agreement that skips critical terms can cause more problems than having no agreement at all.

When Do You Need a Referral Agreement?

Referral agreements aren't just for large brokerages with formal referral programs. Solo agents encounter situations requiring written agreements more often than you might expect.

Out-of-area referrals are the most common scenario. Your buyer client gets a job transfer to Phoenix, but you're licensed in Chicago. You can't help them directly, so you refer them to an agent in their new city.

Specialty mismatches happen when a client needs expertise you don't have. A residential agent might refer a client looking for commercial space. A general agent might refer someone seeking a luxury specialist or land expert.

Capacity overflow occurs during busy seasons. If you're managing too many transactions to give a new client proper attention, referring them to a trusted colleague (with a referral fee) beats providing subpar service.

Career transitions create referral opportunities too. Agents moving to referral-only status, retiring, or temporarily stepping back often refer their existing pipeline to active agents.

For solo agents especially, having a template ready to go saves time. When you spot an opportunity to refer—or receive a referral—you can move quickly instead of scrambling to draft terms from scratch.

What to Include in a Real Estate Referral Agreement

A comprehensive referral agreement leaves no room for ambiguity. Here's what every agreement should contain.

Party Information (Brokerages)

The agreement is between brokerages, so start with complete information for both:

Brokerage name (referring and receiving)
Broker of record name
Real estate license number
Office address
Phone and email

This establishes who is legally bound by the agreement. Even if you work independently, your supervising broker's information must appear here.

Agent Information

While the agreement is between brokerages, the individual agents doing the work need to be identified:

Referring agent name and license number
Referring agent contact information
Receiving agent name and license number
Receiving agent contact information

This clarifies who found the client, who will service them, and who to contact with questions.

Client Details

Document everything you know about the referred client:

Client name and contact information
Whether they're buying, selling, or both
Property type and location preferences
Price range and timeline
Any special circumstances or requirements
Reason for referral

The more detail you include, the fewer disputes you'll have. If the receiving agent claims they didn't have enough information to close the deal, detailed client documentation protects the referring agent's fee.

Referral Fee Terms

This section is where most disputes originate. Be specific about:

Fee percentage: Usually 20-35%, with 25% being standard
Calculation basis: Is the fee based on gross commission or net commission? This matters significantly if the receiving agent has splits with their brokerage.
What triggers the fee: Does the client need to close a transaction, or is the fee owed even if the deal falls through?

Most agreements calculate the referral fee as a percentage of the gross commission received by the receiving brokerage. Clarify this explicitly to avoid arguments later.

Client Protection Period

The protection period defines how long the referring agent remains entitled to a fee if the client transacts.

A typical protection period is 6-12 months from the agreement date. If the referred client closes a transaction with the receiving agent within that window, the referral fee is owed regardless of whether the receiving agent was actively working with them.

This protects referring agents from receiving agents who might delay a transaction to wait out the agreement, then close without paying the fee.

Payment Terms

Specify exactly how and when the fee will be paid:

Payment due within X days of closing (10-14 days is common)
Payment method (check, wire transfer, etc.)
Where payment should be sent
Required documentation (W-9, copy of referring broker's license)

Some agreements also address what happens if the transaction falls through after the fee is paid, though this is less common.

Signatures and Date

Both brokers of record must sign the agreement for it to be enforceable. Include:

Signature lines for both brokers
Printed name and title
Date of signature
Space for witness signatures if required in your state

The agreement becomes binding once both parties sign. Make sure both sides retain a copy.

Standard Referral Fee Percentages

The national standard referral fee is 25% of the gross commission earned by the receiving agent. However, fees can range from 20% to 35% depending on several factors.

Higher fees (30-35%) may be appropriate when:

The client is highly qualified and motivated
The referring agent did significant pre-qualification work
The market is competitive and the lead is valuable
The receiving agent reached out requesting referrals

Lower fees (20-25%) are more common when:

The referral is "cold" with minimal information
The property value is on the lower end
The receiving agent will need to invest significant time nurturing the lead
There's an existing reciprocal relationship with equal exchange

For a detailed breakdown of how referral fees work and when to negotiate, see our complete guide to real estate referral fees.

Common Referral Agreement Mistakes to Avoid

Even experienced agents make these errors. Avoid them to protect your fees and relationships.

Vague client information leads to disputes about whether a client was "really" referred or found independently. Include full contact details, property preferences, and timeline so there's no question.

Missing protection period leaves you vulnerable. Without a defined timeframe, the receiving agent could argue the referral "expired" after a few weeks. Always specify 6-12 months minimum.

Wrong commission basis causes math disagreements. If you agree to 25% but don't specify whether it's gross or net, you might expect $2,500 while the receiving agent calculates $1,875. Clarify "25% of gross commission received by receiving brokerage."

Unsigned agreements aren't enforceable. Verbal agreements and handshake deals work until they don't. Get signatures before the referring agent does any work with the client.

No payment timeline creates collection headaches. Without a specified due date, receiving agents may delay payment indefinitely. "Within 10 business days of closing" gives you clear grounds to follow up.

Referral Agreements After the NAR Settlement

The 2024 NAR settlement changed how buyer agent compensation works, and these changes affect referral practices too.

Under the new rules, buyer agents must have written agreements with their clients before showing homes. This means receiving agents who get buyer referrals need to secure their own buyer representation agreement with the referred client.

For referral agreements, this adds a consideration: confirm the receiving agent understands they'll need to establish their own compensation arrangement with the referred buyer. The referral fee is still calculated on whatever commission the receiving agent ultimately earns.

Some agents now include language in referral agreements acknowledging that compensation structures may vary and that the referral fee applies to whatever the receiving agent receives, regardless of how that compensation is structured.

The core mechanics of referral agreements remain the same. You're still entitled to a percentage of what the receiving agent earns. The settlement just changed how that earning gets negotiated between the receiving agent and the client.

How Solo Agents Can Win More Referrals

Referral agreements matter most when you actually have referrals to document. For many solo agents, the bigger challenge is finding opportunities in the first place.

Agent-to-agent referrals typically appear in Facebook groups, online communities, and professional networks. An agent in Seattle posts that their client is relocating to Austin. An agent in Miami asks who can help with a buyer moving to Denver. These opportunities appear constantly—and disappear just as fast.

The agents who respond first usually win the referral. But solo agents can't monitor dozens of groups around the clock while also running showings, writing offers, and managing transactions.

This is exactly why we built ReferralBeep. Instead of manually scanning groups hoping to catch opportunities, you select your cities and get instant alerts when referral requests appear in your markets.

When an opportunity shows up, you'll have a referral agreement ready. The speed advantage of being first to respond, combined with a professional agreement that protects both parties, positions you to win more referral business.

Start your 7-day free trial and get alerts for your markets today.

Conclusion

A written referral agreement protects your fee, prevents disputes, and maintains professional relationships with agents you may work with repeatedly.

Include complete party information, detailed client documentation, clear fee terms, a defined protection period, and specific payment timelines. Get signatures before any work begins with the referred client.

Most importantly, have a template ready so you can move quickly when opportunities arise. The agents who respond first with professional documentation win more referrals than those scrambling to draft terms after the fact.