OK, here is the situation:

My Realtor friend is referring a Realtor who may have a cash buyer for one of my houses, of which I am a principle Seller. My Realtor friend asked if I wanted him to represent me. This property is not listed yet and still being rehabbed. We had no plans on listing it with anyone other than ourselves.

I am a licensed Salesperson and my business partner is a Broker, so why would I want my friend to represent me! (rhetorical question) We typically represent our own properties and are able to retain half the typical commission.

Usually, we find our own buyers, or are not asked for a referral fee. So, my question is, what would a reasonable referral fee be to my friend and what do you think the best way is to explain it to my friend, while trying to have him understand that although, I do very much appreciate the referral, it isn't customary to pay a full commission? Or, do you think we should try and raise the price to incorporate a commission for him?

Thanks in advance.

Sounds like too many REALTORSŪ !

It's like the Chinese laundries doing one another's wash to keep busy.

20% to 35% of the side depending on the quality of the Referral.

If it is listed on the MLS, why can't your friend could bring a buyer and get a commission? What am I missing?

I think the friend is referring a 3rd REALTOR and the buyer.

Personally I don't think you owe your "friend" anything more than a beer the next time your both out. The REALTOR with the buyer should be able to find your place on MLS without your friend.

As for a referral fee ... I both pay and offer 25% for a serious client referral.

Fees paid in exchange for delivering a qualified sales lead or purchase inquiry.

So if he is asking for fee, then you have to pay him some amount if you think that he will be benefit for your business in future. And if you think he is of no use, can not bring more than this customer, then you say him to directly ask for fee from customer that it will be exclusive of price of house.

IMHO the other realtor should give your friend a referral fee from his commission. I'm assuming the property is not on th eMLS and the reason the guy knows about your property is the fact that you are friends?

Yes, he is bringing in a 3rd Realtor and I do agree that this 3rd Realtor may be able to find it on MLS, when it gets listed. But, I do think my friend can be a valuable business resource in the future, so I am just trying to gather facts and professional opinions, in case I need to deal with the situation.

Thank you for your reply

Ideally it should be based on the amount of effort you have done to get the account in. Though Introduction is the starting point but in the entire sales cycle, there could have been a lot of additional effort which you might not have realized.

Not sure why he would think that you might want to be represented by him. That would have initially signaled (at least to me) that my friend is more about getting money than about bringing me a qualified buyer. I would do 20% at best just to keep the friendship intact but also see the argument how the buyer's broker may be the one who should be paying him the referral fee (provided that the property never gets listed).

This sounds like a type of blackmail to me. The third agent, who is not directly involved, expects something from you in order to preserve your future relationship? That is bogus. Agent 3 is using you and insider information that will not be insider information for very long.

List the property and let the buyer's agent find it on his/her own.

So why aren't you just putting it on the MLS with the rest of the market, and the other Realtor can see it and make an offer with his buyer if he's interested, your still saving half the commission aren't you if you partner is a broker.

As for your "friend Realtor" I would tell him to get lost, just a moocher. The people I work with would just tell the other Realtor, hey there's a property your buyer may be interested in being rehabbed by so and so, why don't you give him a call before they put it on the MLS. Then they would call you and tell you about the other Realtor and say if you put it together you owe me a steak dinner, not negotiate a fee.

sounds sketchy- 10% on rentals, 20-30% on sales depending on the urgency, quality, relationship, etc..