Referral Fee Policy

Q: I have a real estate-related business and want to offer referral fees to professionals for sending me business. I want to create a disclaimer stating that they will not receive referral fees until the final financial transactions are completed. What is the best way to do this, and should I promote it on my marketing materials?

A: You don’t need a formal disclaimer. And you shouldn’t publish specific information about your referral program in your marketing collateral.

Licensed real estate professionals should check their state regulations before making any type of referral payments. But if you’re not a licensed real estate agent, Realtor or broker, you can offer just about anything you want for referred business.

You do need a clear in-house policy about eligibility for receiving the referral fees as well as how and when those fees will be paid. But, you don’t want to make that information public. The reason is that you might change the policy or even offer different referral fees for different types of business. You want to be able to be versatile for each transaction.

Instead, develop a basic overview of your referral program that you can provide to individuals who refer business to you. This could be a short letter outlining how you calculate and pay referral fees. You would also want to state that you reserve the right to change the policy at your discretion.