So get this guys, I am about to recieve a $10,000 commission check (well, $8500 after my broker takes his cut) from a deal I am doing for a REALTOR IN MY OFFICE!! I do not mean he referred me the business, I mean he is my business. I live in an area where having 2, 3, or even 4 licenses is not uncommon (well 4 is a little uncommon), I personally have 3 state licenses, but he only has 1 and he needed to buy a house quickly in one of the states where I am licensed and he is not. He is a part-time 1st year rookie agent who has a very good 'real job'. He has never mentioned me giving him a cut of the commission.. but I almost feel like I should give him 25% or 30% anyways just for not running out and grabbing the extra license and doing the deal himself... or as a way of picking me over the other 50 agents in my office with a license in that jurisdiction... maybe he does not know he could do that in about a week or so... what do you think should I pay him or just get him a super nice closing gift?

I do not feel like h he seem very enthusiastic or serious about real estate so he probably will not be in it forever.. so I almost feel like I should pay him a referral fee and then encourage him to refer me any business in the 2 states he is not licensed rather than going out and getting his licenses (which he says is on his 'to-do' list)...very good guy from what I can tell.. plant a seed for a personal referral agent?

You're a good man for even thinking it! That's a healthy burden to have.

Whatever you do will be appreciated; but don't be skimpy.

I once accepted a listing referral from an Appraiser who was also a non-practicing Real Estate Broker. No fancy Referral Agreement; just an "understanding" or handshake.

That was ten (10) years earlier. The property was over-priced for the market and didn't sell, so the Seller kept it . . . . for another 10 years.

Then the Seller called me up and re-listed it, and this time it SOLD.

I automatically sent a Referral Fee to my Appraiser Friend. He called me up and said that he "didn't even remember making the referral !" This Fee came as a complete, but welcome, surprise.

I told him that "it shouldn't be his job to remember these referrals . . . . that's my job! I understand that IF I ever fail to remember, that puts all future referrals in jeopardy." Money can't buy the good feeling that I got out of that experience.

Your current situation is similar, and I can't tell you what will be the best thing to do . . . . but you will never regret it! Trust that whatever good you set in motion will, in its own time, come back around to reward you. And do it because it's the right thing to do; not because you're expecting an immediate reward . . . . it's just a bi-product and it will appear. That's just the way the universe is organized.

Thank you for the reminder.

Excellent advice from Vermont. This agent (unless he is a cold-hearted [censored]) will remember what you did. Passing on a referral fee to him will only make him more willing to think of you FIRST if a similar situation ever arises again. If you are working on the cusp of a tri-state area, odds seem pretty good that it will.

I agree in all aspects with everyone above!

I agree with the others. I would (and Have) paid referral fees that were unexpected. I have also not recieved referral fees that I thought were due, but with no legal agreement, I guess they were not due to me.

Good will and integrity goes a long way though.

We always remember those who forgot us.

What percentage would be an appropriate referral fee?

10 to 30% of the side, or 5 to 15% of the total Commission; but local industry customs have to prevail.

Because this one is strictly voluntary, I think I'd give 10% of what I got. No one is going to complain.

As an aside, it's always easier to talk about commissions in the abstract, BEFORE there's an actual Sale or Commission.

It just seems so simple to talk about percentages when the event is just potential and hasn't occurred yet.

For some sub-conscious reason, once we have a real deal in front of us, the money becomes less abstract and more valuable . . . . like it's really worth something.

But I digress.

I think it's totally cool you want to pay a ref to your fellow agent on this one. My only concern would be, (since I don't know how the whole multi-state license thing works, legally speaking) as to the OK-ness of paying a ref on this particular deal, since he is both the buyer, and not licensed in the state where he's buying.

Hmmmm, missed that point. If their broker is also licensed in the same state as where the house was purchased, it would seem that would be the deciding factor because the commission goes to the broker. Maybe this OP will come back and say if his broker is also licensed in that same state because I think the state and the broker may be the deciding factors.

Must have been nodding off when I first read this one.

I've paid out-of-state referrals for Licensees who purchased here in Vermont for their own account; but I pay it to the Broker in the State or Commonwealth where they are Licensed.

For example, I paid a Philadelphia Broker a Referral Fee for one of his Agents "who referred himself to me".

I think that was within the law. I think the individual Agent was expecting to receive the Referral fee directly . . . . but that's not how we do things.

Now that would make sense, Vermont. Having an additional licensed broker, not just an office operating in another state. It would have to be set up that way, wouldn't it?

I think it would be a pretty good idea, just as Vermont has said.

Plus, with him being new to the business, it could be a good idea to give him something back (referral or nice gift) because as he is new to the business it could be a great way to have some sort of reciprocal mentality toward each other. For example what if he is out of town and cannot handle a client, who will he give it to? Probably someone he knows can handle it and will probably think of the person who helped him out when he started.

I'm a believer in karma... plant the seed, and watch your referral business grow!

If he is not asking for referral fee, then no point of giving him because he probably don't need it!!!

In this business, we do a lot of things that are not absolutely necessary.

In the case of paying a Referral Fee . . . . if you'd like the Referring Party to consider repeating that behavior, then I'd encourage it. If you don't want him to repeat, don't pay anything. Just do what's right.

It's just like watching a dog or a horse behaviorist . . . . and choosing between a carrot and stick approach. The carrot usually wins.