Key takeaways
- A real estate referral agreement is a written contract between two brokerages that sets the referral fee, the client, the duration and how payment is made.
- Sign it before you introduce the client — verbal promises are hard to enforce.
- Most agreements set a fee of 20–35% of the receiving side’s commission and last 6–12 months.
- Use your brokerage’s or state association’s approved form and have your broker review it.
A real estate referral agreement is a signed contract between the referring and receiving brokerages that documents who the client is, what referral fee is owed, for how long and how it will be paid. For new agents sending or receiving their first referrals, it is the single most important document for getting paid. This guide lists what to include and the mistakes to avoid.
Why you need a written referral agreement
- It proves the referral happened and when
- It sets the fee before anyone does work
- It protects both agents if the client changes plans or agents
- It is often required by brokerages and state rules for paying fees
What to include in a real estate referral agreement
| Section | What it covers |
|---|---|
| Parties | Both agents, both brokerages, license numbers and contact details |
| Client | Client name(s) and contact details; buyer, seller or both |
| Property or area | Target market, price range or specific property |
| Referral fee | Percentage and what it is calculated on (e.g. gross side commission) |
| Term | How long the agreement lasts (commonly 6–12 months) and whether it covers future transactions |
| Payment | Paid broker to broker at or after closing; how and when |
| Disclosure | Any required disclosure to the client of the referral relationship |
| Signatures | Both brokers (or authorized agents) and the date |
Referral agreement example
A referral agreement is the contract; the referral fee is the payment named inside it. Here is how the two fit together in a simple example.
Agent A refers a buyer to Agent B, who works in another city. Both brokers sign an agreement that says, in plain terms:
- Parties: Agent A and Agent A’s brokerage (referring) and Agent B and Agent B’s brokerage (receiving), with license numbers.
- Client: the buyer’s name and that the referral covers a purchase.
- Fee: 25% of the receiving brokerage’s commission on any purchase by the client.
- Term: 12 months from the date of introduction.
- Payment: due from broker to broker within 10 business days after closing and receipt of commission.
- No close, no fee: nothing is owed if the client does not close within the term.
The buyer purchases a $400,000 home and Agent B earns a 3% commission of $12,000. Agent B’s brokerage pays $3,000 to Agent A’s brokerage, which then pays Agent A under their own split. These figures are an illustration only, since fee rates are negotiated. See real estate referral fees explained for typical percentages by deal type.
How much should the referral fee be?
The common starting point is 25%, with most agreements between 20% and 35%. A higher fee can make sense for a pre-qualified, ready-to-act client; a lower fee for a cold lead. Read real estate referral fees explained for worked examples.
Step by step: setting up a referral agreement
- Confirm the client agrees to be introduced to the other agent.
- Agree on the fee and term with the receiving agent.
- Complete your brokerage’s or state association’s referral form.
- Get both brokers’ signatures before the introduction.
- Send the signed copy to both agents and log it in your CRM.
- At closing, ask the receiving broker to include the referral on the settlement statement or pay promptly after funding.
Common referral agreement mistakes
- Relying on a text or verbal “deal”
- Leaving the fee base unclear (gross vs net commission)
- No expiration date, or one so short the client hasn’t moved yet
- Paying or receiving fees agent to agent instead of broker to broker
- Paying referral fees to unlicensed people, which most states restrict
Are referral agreements legal?
Referral fees between licensed real estate brokers are common and generally allowed. The federal Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks for referring settlement services but exempts cooperative brokerage and referral arrangements between real estate brokers and agents. State rules differ, so have your broker or a real estate attorney review your agreement form.
The agreement is one step in a wider realtor referral workflow that runs from qualifying the client to paying the fee.
Referral agreements on a referral network
When you join a real estate referral network, the network’s terms usually define the fee and how it is paid. Read them as carefully as you would a one-off agreement — see our 10-point checklist for choosing a network.
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Referrals with clear terms
PropReferrals plans spell out pricing and policies up front, with every referral tracked in your CRM.
Frequently asked questions
What is a real estate referral agreement?
A written contract between two brokerages that sets the client, the referral fee, the duration and how the fee is paid.
How long does a referral agreement last?
Commonly 6–12 months, though the term is negotiable and should fit the client’s timeline.
Who signs a referral agreement?
Both brokers, or agents authorized by their brokers, before the client is introduced.
Is there a standard referral agreement form?
Many brokerages and state REALTOR® associations provide approved forms. Use those rather than writing your own.
Is a referral agreement legally binding?
Generally yes, when both parties sign it and the terms are clear and lawful. Rules on referral fees differ by state, so have your broker or a local attorney review it.
Can a referral agreement be verbal?
A verbal agreement is risky because it is hard to prove. A written agreement signed by both brokers is the safe option.
Do I need a lawyer to write a referral agreement?
Not always. Many brokerages have a standard form, but a broker or attorney should review any custom terms because referral fee laws vary by location.
Sources: General information only, not legal, tax or financial advice.
Real estate referral agreement: key takeaways
A real estate referral agreement should name both agents, fix the fee, set the payment trigger and state the deadline in writing. Because rules differ by state, ask your broker to review it and read the National Association of Realtors Code of Ethics.