How Realtor® Referral Fees Work (2025 Update)

Real estate referrals are a cornerstone of professional collaboration, yet many agents misunderstand how the compensation process works. As markets shift and compliance expectations tighten, clarity about referral fees is more important than ever.

What Is a Referral Fee?

A referral fee is a commission paid from one licensed real estate agent or brokerage to another for introducing a client who completes a successful transaction. This allows agents to serve clients beyond their local expertise while maintaining professional continuity.

Typical Fee Ranges

The most common referral fee is 25% of the gross commission, though percentages can vary based on the deal type or region.

• Residential sales: 20–30% range

• Luxury or niche markets: 15–20% if high-value or complex

• Rentals or leases: Often a flat dollar amount or 10–20%

Legal and Compliance Considerations

Referral fees are only valid between licensed real estate professionals. Both brokers must approve and sign the referral agreement in writing before the referral takes effect.
Unlicensed individuals cannot receive or advertise referral compensation under DRE regulations.

Payment Flow

Once the transaction closes, the receiving broker pays the referring broker directly, not the individual agent. This maintains compliance and ensures proper recordkeeping for both sides.

Documentation Best Practices

Include:

• Names and license numbers of both brokers

• Client’s name and basic transaction details

• Referral fee percentage

• Agreement date and expiration

Maintain copies in both brokers’ files for a minimum of three years.

Key Takeaway

Referral fees reward professionalism and client care across markets. Understanding the structure — and documenting it properly — protects relationships and ensures smooth payments for everyone involved.