I am working for a company that just got it's CA broker's license. Before this, we were providing financial services and currently have clients in and out of CA. When one of our current clients calls us for real estate services outside of CA, we find an agent or a broker in that state and refer the deal out to them. Because of the services we provide, and because we originated the deal, we have been able to strike agreements with brokers in other states to take 30% of the listing commission, and our company gets 70%. The agreement between agent and broker in company is a 50/50 split. However, if we refer a deal out of state and the company gets 70%, my broker says that the agent is the one who is giving his/her commission to that other broker, whereas our brokerage is still entitled to it's 50% of the original total commission. In other words, if I am an agent, and I am to get 50% on anything I originate and close, and I refer a deal out of state to someone for 30%, that entire 30% comes out of my end. So, Out of the gross money that comes into the company I work for on that deal, I would get 20%, and my company would get 80%.

I told him that was not fair, and we should do 50/50 on whatever gross money comes into the house. He said "no, that's not how it's done. Since the brokerage is not doing anything different, they shouldn't get a less cut on the deal, wheras the agent is just referring it out, and does have to do any work on the file after that point. Since the brokerage provided the lead, they need to get the fill 50% off of the original gross commission of 2.5%, or 3%."

Does this seem fair? Isn't the fact that the deal would be going to another brokerage take all liability out of my brokerage's hands? Is typically done like this? Or is it usually a set split between the agent and the broker on whatever gross money comes INTO THE HOUSE after a deal? Finally, my broker says that since what our company is doing is not changing, their cut should not change. Is this also true?

I don't think you're going to have too many takers on that 70% Referral Plan !

In you enthusiasm, I think maybe you've just got the Percentages reversed.

Good Luck and Don't Fry your Chickens before they're Hatched !

the 70% is already in place on many deals. Once the sales go thorouhg, my company gets 70%m not 30%. I am not asking if THAT is fair, I am asking if the broker agent split is fair

What split is in your Independent Contractor Agreement? If it says 50/50 of whatever comes in, then that defines "fair"; but you would have signed on with whatever split is stated there . . . . which places you at a disadvantage now.

Is your I.C. Agreement in writing ?

I still can't get over the idea that your new Broker found some takers for the 70/30 split on Referrals. They must really be working hard on those ! Have any closed ?

Anyway, I see a distinct pattern in what you described; and the scenario is one that will not take very long to play out. Good Luck !

financialpro: You indicated you were providing financial services before your company got a broker's license. Does that mean you were working as an employee of the financial services company and don't have your own real estate license? If so, you should get your own real estate license and move to another company (either selling real estate or doing loans or both). Your current "newly licensed" broker sounds like a greedy leech. He can propose any outrageous commission split he wants and as long as someone is foolish enough to go along and work under those terms, it's all money in his pocket.

dont do referrals anymore, but definitely would never take one for only 30% on my side...I would leave that company

the 70 / 30 split is not what you guys think. We have a ton of clients and is only given and accepted by another broker when we give 3 or 4 deals at once to them. It works in volume, and we handle all processing, etc.

I agree on the greedy leech side.

Are you selling Real Estate ? . . . . on this Planet ?

Since you spoke of piecing up the "Listing Commission" above, I assumed you were referring out potential Real Estate Sellers ? . . . . or is it "Deals" as you called them, where the Purchase and Sale Agreement has already been consumated in another State, and they are bundled in batches of 3 or 4 at a time ?

If it's the latter, then 30% might be just fine . . . . because the Marketing and Sales activity is already done. There's no work left to do except cash the 30% Commission Check. So, I guess I'd be okay with that.

referral arrangements are made and approved broker to broker

if your broker is telling an agent in your company that it is the agent that is giving away a portion of the agent's commission by referring something elsewhere, that is a bunch of nonsense -- it is all under the broker's control

Any referrals we pay come out of the gross commission before any split.

So if we get 12,000 and agree to a 30% referral fee, the 3,600 goes out then the split between me and my broker is based on the 8,400...on a 50/50 plan that would by 4,200 each.

So are you saying that your broker wants to take the 50% of the full commission and then YOU pay the 30% out of your split - leaving him with 6,000 and you with 2,400?

That's bogus, if so. I would never agree to that.