The Problem With Referral Fees

Referrals are key, but why do so many agents keep away? It is because of a lot of different reasons but it all boils down to the same thing. Want to learn more? Read on and see the solution to this age old problem.

The Problem With Referral Fees
Photo by Jp Valery / Unsplash

According to the National Association of Realtors 2018 Profile of a Home Buyer and Home Seller report 64% of Sellers and 53% of Buyers find their Real Estate Agent through a referral by a friend, neighbor, relative, or they use the same Agent they had in the past.

In short, Friends, Neighbors, Relatives & Past Clients are the four pillars of any Real Estate Agents business.

These groups combined with referral fees are the key for growth in the industry. But we all know how chaotic referral fees can be but lets talk about some interesting insights.

What Are Referral Fees?

Ok, we are sure you know what a real estate referral fee is. But for fun and to make sure everyone is on the same page lets talk about it. A referral fee is the percentage you take from the interaction between a client you recommend to a certain agent. We talked about each step of that interaction in our blog going deep into referral fees. Make sure to check that one out here.  

But these fees are what fuels a large part of the industry without them lots of clients would be left in the dust. Speaking of which what are some reasons that you would refer someone? Since the goal is to do all you can for your cilent, doesn't sending them away sound a bit backwards?

Sometimes the best thing you can do is send them away to someone better suited to help them. And that is a hard thing to admit.

The Why For Referring

two people going over and signing a document
Photo by Gabrielle Henderson / Unsplash

There are loads of reasons to send away clients in a referral. But for our purpose we will look at the most important, or most likely reasons.

  • Not The Best Fit For The Client: Like we mentioned sometimes you feel you can't best help your client. Maybe you are amazing in residential sales but they need help with something in the commercial market. But you know someone who is an expert in this type business and send them off.
  • Out of State: Borders can be rough and each state has its own laws on real estate. If they leave your area its best to give them to a agent in the state the person is going.
  • Referral Real Estate Agents: Lastly and ironically enough there is a entire subsection of real estate all about sending clients off and cashing in on referral fees. Commonly called Referral Agents they specialize in pairing clients with a agent that is perfect for them.  

There are many more but these are the more common reasons to refer. Finally, NuOp helps with all of this on a large B2B scale. With NuOp you can find high quality referrals in your area quickly and send your own referrals out using three different methods. Who said doing your job needs to be hard and require hours or days worth of phone calls with no guarantee that you will get that fee.  

With NuOp you can be a Pro.

The Effect Of Moving And The Power Of Real Estate Agents

So, what about the other 36% of Sellers and 47% of Buyers? How do they find their Real Estate Agent? As one could imagine there is a myriad of other sources, but the simple fact is that Zillow and capture the vast majority of those Buyers and Sellers.

Using simple logic one could deduce that humans prefer a personal connection when selecting a Real Estate Agent. Why? It’s simple, buying or selling real property is a massively important transaction in one’s life. It’s also complex.

So, if a personal connection to find one’s Real Estate Agent is so important why do such a large portion of Buyers (47%) seek an alternate method to one of the four pillars noted above? Well, it’s actually quite simple. Many Buyers are moving to an area where they don’t yet have many personal relationships established. And this is where Real Estate Agents have always dropped the ball.

Real Estate Agents have the unique ability to help their clients transition from one marketplace to the next due to a well established and unwritten rule. It’s the rule of the referral fee. For generations, Real Estate Agents have been referring their clients to one another and for doing so a referral fee is exchanged.

If the Number Is So High, Why aren't More Agents Referring?

Placing red push pins into city street map.
Photo by GeoJango Maps / Unsplash

So, if a Real Estate Agent can earn thousands of dollars for simply referring their client to another Real Estate Agent why isn’t it done more often? Here are the top three answers we often hear when we talk with Real Estate Agents about it:

  • It’s not easy to find the right Agent.
  • Clients want the info right away, so I guess going to Zillow is faster for them.
  • I have been burned in the past by another Agent so I am hesitant to refer my clients anymore.

The inspiration to build NuOp came from this question: “why isn’t there a tool which allows Professionals who serve the Real Estate Industry to connect, communicate, and securely exchange referrals with speed and ease?”

NuOp is a game-changer for not just real estate agents but for all kinds of professionals.

The Problems NuOp Solves

Ok so NuOp spawns from a key issue in any referral based industry but what does it solve specifically? Glad you asked, here is some of what NuOp does for its Members:

  • Members of NuOp simply send their client referral through the system and candidates come to them.
  • Using any of the three kinds of referral methods takes minutes, and replaces old processes which took days or even weeks.
  • Members of REALLY hold one another accountable with the power of community. A Member of the community who breaks the trust of another is certain to tarnish their reputation.

It may seem to good to be true, but countless agents have found sucess on NuOp. Just check the live feed that gets updated with new high quality referrals every day and see for yourself.


Referral fees are important but so many agents do not engage in them purely because they can be more trouble then they are worth. This is a sad reality as the popular referral fee makes up a large percentage of revanue earned by agents. And if its not worth referring there are countless of people that will be effected and maybe end up in a bad deal or make a poor purchase. Simply because there was no one to really help them.

NuOp can help everyone win.

PS: If you like this blog make sure to check out our others. We suggest checking out "Lead Generation Companies" after this one!

Make sure you sign up for free today to try it out and see how far you can take your referral game.