Secret Referral Fees

Secret Referral Fees

Realtors are stealing billions of dollars from consumers and they’re doing it with the endorsement of the National Association of Realtor’s (NAR) so-called “Code of Ethics.”

So you’re a savvy consumer and you’ve researched and found your ideal Realtor? Perhaps you’ve conducted an exhaustive search and wound up on a non-profit trade association site like that referred you to an exclusive buyer broker. Or maybe you’ve asked a friend or relative who is a Realtor for a little help. Or you found a website promising to connect you with an agent for free. Unfortunately, unlike other professionals, Realtors and online firms secretly make HUGE money by just dropping a name and it is costing you LOTS of money.

Most Realtor referrals are based on one thing – How much is the Realtor willing to pay? Many pay upwards of 45% of their commission with the norm being around 25%. That money could have been yours had you known it was even an option.

Ask your agent if they paid or received a referral fee.

Go back and ask the agents from your last transactions if they paid or received a referral fee (email us your findings). Most Realtors are fiduciaries and that means that they owe you a much higher standard of conduct than anyone else with whom you do business. They cannot collect or pay a referral fee without first disclosing it to you and then obtaining your informed consent to the side transaction. Plus, most licensing laws maintain similar standards. Real estate licensees are duty-bound to answer your question. Actually, they should have asked your permission and accounted to you for the referral fee…

How can you negotiate a fee if your agent is secretly paying a 45% referral fee?

Our website teaches you how to negotiate Realtor fees. However, you’re not going to get very far negotiating those fees if the Realtor you’ve found is paying 25-45% of their commission to the party who referred you. And by just dropping a name, you’ve been unwittingly stripped of your ability to negotiate your Realtor’s fee. Many times it is after you already signed a binding fee agreement. Compare this to lawyers who are ethically prohibited from collecting referral fees unless they are working on the file and they have their client’s consent.

The National Association of Realtors (NAR) admonishes all undisclosed referral fees UNLESS they are paid to Realtors.

Did you read that right? And they call it a Code of Ethics. This is the same Code of Ethics that claims it is ethical for a buyer agent to tell you that they work for free. NAR takes a very obvious self-serving position when it comes to referral fees:

Article 6
REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.

When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation. (Amended 1/99)

So referred you to an Exclusive Buyer Agent? You likely paid a referral fee.

Imagine sitting down with your newly found exclusive buyer agent from a firm that only represents buyers. They talk to you about fiduciary duty and all the problems with dual agency. Seems like a great choice. However, when you try to negotiate their fee they are not interested (or able). They likely owe a big concealed referral fee to NAEBA. This has a direct impact on your ability to negotiate the fee. So much for fiduciary duties. NAEBA is a one fiduciary duty show that claims to be a non-profit trade association that exists to protect consumers. It doesn’t.

Realtor referral fees are everywhere.

There are many other ways you could be tricked into paying a secret referral fee.  Most promise the world:

“No Obligation. No Fees. 100% Free! Fast Personalized Service. Trusted Realtors. Realtor Recommendations. Top Local Agents. Expert Agent Vetting. Experienced Realtors. Great for Buyer or Seller. Only Top Realtors. Unbiased Results.”  Source,

We had to search the entire website of to find this “disclosure” displayed as the last sentence on the bottom of the rarely read “Terms and Conditions:”

“RESPA Disclosure
We are a licensed real estate Brokerage in California with BRE # 01935930, in compliance with the Real Estate Standards and Procedures Act. We connect home buyers and sellers with our partner real estate agents across the country. When one of our partner agents closes a transaction with our home buyers or home seller customers, we collect a standard referral fee from the real estate agent.

Some of the many ways you might end up paying referral fees:

  • You use one of the many online firms and brokers who promise to connect you with a Realtor for free (e.g., HomeLight, AgentPronto,,, etc…)
  • Your relocation company associated with your employer referred you.
  • Your Realtor friend, relative or neighbor who helps you find a Realtor.
  • Your current Realtor who wants to help you find a Realtor in the place you are moving.

So, if your Realtor is willing to pay out 25-45% to a complete stranger for simply dropping a name, shouldn’t they be willing to offer you that same discount if there is no referral?  We think so.

CAARE has lists of Exclusive Buyer Agents, Seller Discount Realtors and Buyer Agents who Rebate and we do not charge referral fees.

Remember, we have free services (NO REFERRAL FEES) that will help you find exclusive buyer brokers, brokers who pay rebates and discount seller brokers. In fact, one of the reasons we set up these free services was to help you avoid paying referral fees.


Say NO to Realtor Arbitration Agreements

It is illegal for a Realtor to advise you to sign an arbitration agreement. Arbitration agreements have significant legal impacts on your rights and it is against the law for Realtors to provide legal advice. There is no good reason to sign a Realtor arbitration agreement. Arbitration typically costs far more than litigation to file and the time to file an arbitration is often far shorter than it is to file a court case. Plus, if you really want arbitration, you can always agree to it later on and pick an arbitration firm that does not have ties to the Realtor Association. You should also be aware that these arbitration agreements often do provide an enormous amount of protection for your Realtor against you. Often Realtor Associations are under contract with the arbitration firm and it should be no surprise how decisions are likely to turn out when you are in a dispute with your Realtor.