What to offer referring agent?

threepinktreesMarch 6, 2014

So, the agent who did up market analysis originally and who suggested we try FSBO recently gave my number to someone she knew was looking for a house in my neighborhood.

The couple is very interested in our home. Of course, it's too early to know if anything will come of it, but as this agent and another in her office have both said they knew of people who may be interested it has raised a question in my mind. She is not involved in the transaction as a buyer or seller's agent and has given no indication that she wants or expects a comission. However, I feel like we should offer her something for referring a potential client to us. What would that be?

(As an aside, for the curious, she also said due to our currently super hot market that she would adjust up her initial valuation of our house, so my instincts to price it higher were good, which is encouraging.)

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mpinto

Give her at least 1-1.5% if she isn't representing the buyer. If she is, then 3%.

    Bookmark   March 7, 2014 at 11:42AM
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nosoccermom

Uh, depending on the house price, 3% may be a bit too generous IMO, especially if she's not involved in the transaction at all.
I'd wait and see. Once the buyers become more serious, they may work with a buyer's agent, who then could contact you.

    Bookmark   March 7, 2014 at 4:38PM
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mpinto

You could also list the house with her and have a "named exclusion" in the contract. This way if your friend buys it you wouldn't owe commission (or a smaller agreed upon percentage-have agent check what is done in your area). If the friend doesn't buy it, then you have a listing in place.

    Bookmark   March 9, 2014 at 8:42PM
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linda117117

IF the person she refers doesnt buy it, a gift card would be sufficient if you really feel you want to give her something. If the person does buy it, typically in the real estate market, "a referral fee" is 25% of one side of the commission. So if 6 percent is customary in your area, give her 25% of 3%.

    Bookmark   March 10, 2014 at 9:48AM
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nosoccermom

In my area, this would amount to something like 10K. Would that really be expected without any kind of agreement?

    Bookmark   March 10, 2014 at 12:02PM
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threepinktrees

We plan on asking 315,000. Comission here is 5% split between the buying and selling agent. The cut you suggest would be just under 2k.

To be clear, this realtor has in no way suggested that she should receive any compensation whatsoever. She originally suggested we try FSBO, she asked if she could provide my number to a buyer she was working with to have him call me. The buyer contacted me directly and we've set up a showing on our own. She's one of the top sellers in our town and told me she always recommends FSBO when she thinks the sellers are capable and their house will be easy to sell. She has not once asked for any kind of compensation or agreement. All I can guess is that she's so busy with all her clients right now she doesn't really care if she sends one off to FSBO without getting a full cut.

That being said, I do very much appreciate the referral of someone actively looking for a home, and would be very happy to cut her a check for that service. I just don't know what that looks like.

    Bookmark   March 10, 2014 at 1:21PM
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nosoccermom

In that case, I'd feel strange cutting her a check. I would send her a nice thank you note with a small gift, stating that you will highly recommend her to your friends and acquaintances if they need any real estate services.Who knows, it may be possible that she actually has an agreement with the buyer.

    Bookmark   March 10, 2014 at 1:50PM
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Sophie Wheeler

''A buyer she was working with'' sure sounds like she is representing them as buyer's agent. You should be prepared to offer her the traditional buyer's agent's half of the usual commission. She brought you a buyer, after all.

    Bookmark   March 11, 2014 at 7:52AM
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threepinktrees

Hollysprings-- as far as I understand she was working with the buyer as a buyers agent. However, I don't understand why she would have told them to contact me directly, set up their own showings, etc, if she actually expected or wanted to pull a full comission from the deal. She made no mention at any time of any kind of compensation for sending me the buyer. I had always understood that realtors were super proactive in terms of communicating their financial expectations to a FSBO and getting things signed.

Part of the reason it's important to me is that we have a showing scheduled with these people and have only told them we'd be asking in the low 300 thousand range, not a firm number yet. If we will need to give 2.5 % to the agent, I will add some of that into our price. If not, I won't.

This post was edited by threepinktrees on Tue, Mar 11, 14 at 12:04

    Bookmark   March 11, 2014 at 11:41AM
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nosoccermom

If you are directly dealing with the buyers throughout the transaction, I would not expect to pay any 2.5% commission or "token of appreciation." IMO, there's more to earning such a fee than giving someone a phone number.

    Bookmark   March 11, 2014 at 12:29PM
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ncrealestateguy

Nosoccermom... finding a buyer that matches a seller for a successful closing is the most difficult part of the selling job. Finding able, willing and ready buyers on a routine basis, and finding a good seller for them, is time consuming, expensive, frustrating, and is how agents spend much of their time.
Having said that, a licensed Realtor can not accept a referral fee from anyone except a licensed agent or firm. No Bird - Dogging allowed here. The agent would have to have a signed commission agreement form in place with you to collect a fee.

    Bookmark   March 11, 2014 at 1:21PM
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nosoccermom

"Finding able, willing and ready buyers on a routine basis, and finding a good seller for them, is time consuming, expensive, frustrating, and is how agents spend much of their time. "

Exactly. It's more than giving someone a phone number, saying, "Hey, call that person. You may like their house."

    Bookmark   March 11, 2014 at 3:34PM
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threepinktrees

Nc-- so you're saying I don't even have the option of giving her money? If so, what would you suggest? Generous gift certificate?

    Bookmark   March 11, 2014 at 6:22PM
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linda117117

Threepinks. It must be in the form of a gift. An agent cannot take "cash".

    Bookmark   March 11, 2014 at 7:45PM
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cmarlin20

I suggest a nice card and generous gift card.

If the agent wants/expects more she should communicate it to you directly and reach agreement with you before sending someone your way.

    Bookmark   March 12, 2014 at 2:27PM
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nosoccermom

One has to assume that she recommended FSBO because she probably will get your listing if the FSBO doesn't work out.
I'd send a nice card, telling her that you will recommend her as a professional RA. I don't even think a generous gift (certificate) would be appropriate since you don't have a personal but a professional relationship. Either way, I'd wait until you know what comes of it. Then, send a thank you note, even if the sale doesn't pan out.

    Bookmark   March 12, 2014 at 2:43PM
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threepinktrees

Thanks all, I'm so glad I asked! I had no idea agents weren't allowed to accept cash without a contract. If we do get an offer from the showing next week I'll let you know. Thanks again!

    Bookmark   March 13, 2014 at 1:04AM
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