A year and a half ago, a real estate agent outside our MLS called me and wanted to refer a buyer to me. I agreed and we signed a referral agreement between me and my broker and her and her broker to pay her a referral fee at 25% of the selling commission. I worked with these buyers for 2 months and then they told me they had decided not to buy anything at this time. A year later, the buyer contacted me again to help her find a home. No mention was made of the agent that had originally referred this buyer to me. I have worked with this buyer and we finally found a home, put an offer on it and are a few days from closing. NOW this agent from the past calls me asking if I have found this buyer a home yet. I am at a loss as to what to say to this agent. Since she and I signed that referral agreement, I have changed brokers, I no longer work for that broker, so does that referral agreement of a year and a half ago bind my new broker and me to this referral fee? And since there was no mention of this other agent when the buyer came back to me a year later, do I still owe this agent part of my commission when we close in a few days? HELP

I don't think you are bound by it legally, but ethically, what do you think?

Did the agent from the past send you a good lead? I think it would behoove you to pay her the fee and keep her as a colleague and possible source of more leads.

thanks so much for you input. My problem is that my current broker is not happy about this. He doesnt like referrals and is unhappy about having to honor this one. I am not happy about it either. These buyers were extremely hard to work with, and I am not getting much commission on this as is. I guess I am at the point that I feel I need to be compensated for the 100's of hours I worked with these people. Plus, when the buyer came back to me a year later, there was no mention of a referral or this other agent. Am I wrong to feel this way?

I don't know. Personally, I would feel obligated to honor my original agreement unless there was a time limit in the original agreement.

Others will probably disagree with me. But that is what I would do.

I wonder if it was just a coincidence that the other agent called you? Perhaps they have been in touch with the buyers?

I think you are wrong to feel that way. After the fact you are basically looking for a way to get out of the agreement. Buyers are work, period.

The referral fee has nothing to do with the amount of work you put in. It is a courtesy fee to the referrer as this is someone you would not have ordinarily met.

If these buyers were such a pain, you should have declined working with them one year later.

It makes sense to honor the agreement. As far as your broker is concerned, while he might be upset, he is mostly feeding off of your frustration on the matter. If you were very matter of fact about needing to pay the referral fee, he would move onto something else.

Plus, I think you are being short sighted. If you get addtional referrals from this new client then you get to keep all of that but this contact was given to you by someone else.

Pay the referral fee and move on.

Call your DRE or legal hotline, or have your broker do it to see if the agreement is still binding.

I'm guessing though, that if you don't give the referal fee to the agent, you and your broker may very well find yourselves in front of a local BOR.

Legally, probely not. It then comes down to what you feel is right. On such agreements, I agree with Perky.

Well thank you ALL so much. I really wasn't feeling like I still had an agreement with this agent. So I was literally shocked when she called me out of the blue. Every one here is saying to do the right thing, and if paying her commission is what is right then I will do that. I just never had this come up before, so I was really upset when I got her call. I have only been a realtor for 5 years now and this was a new one for me. I looked to my broker for guidance and he told me to do what I thought was best, so that is why I came here to get some advice. Again I certainly do appreciate all you helping in this.

I would not pay the fee. My referral agreements have a 12 month expiration.

Hi Paul
After looking back over this agreement, I found that there is no expiration date on it. So I guess I am stuck. But I will be extremely hesitant to take another referral. I sell vacation property on a lake, that is still reasonably priced. And I don't need referrals to keep me busy. So a referral only benefits the other agent in my situation. I do all the work, and they get a share of my paycheck. I know referrals are important to many agents, but in my case, even when the market is poor, I still have been able to stay busy. It seems it is just a means for other agents, outside our MLS, to rake in some of the profits. Hope I haven't offended anyone, but that is just the way it is here. Agents selling property on this lake do well enough, without referrals.

I would still consider that a dead referral because this client disappeared for 12 months before appearing again. During that time the referring agent did not check in with you about his referral.

No time frame on the referral doc?

Leighlee,

If you didn't want or need the referral then why did you accept in the first place? I think that you should do whatever makes you sleep better at night. Money comes and goes but reputation stays with you

Disagree with Paul on this one, such a position shows no class to me, sure the buyer disappeared for a lengthy amount of time but the only reason they reappeared was due to the initial referral.

Secondly, where I do agree with Paul is I put a time limit in the referral agreement, it is not a lifetime commitment, so the poster should be sure to make that change for future business.

Last, I may never get a referral from that agent again but often I do, and I cannot tell you the amount of help such agents have provided me over the years when I needed a favor, etc. or had a referral going in their direction.

I would say that if you changed brokers, you are not technically obligated to pay a referral. Client referrals are paid through brokers and it is up to the broker to allow them.

I would definitely still feel right to pay the referral anyways. I would convince your broker to be ok with it. This buyer would have never gone to you otherwise. You should feel lucky to have the other agent referring you business. Next time, just throw an expiration on the referral agreement if that keeps you happy.