Do Referral Fees Add Cost to the Consumer?

Referral Fees

Lately, there have been a few online postings that referral fees should be illegal because they add cost to the consumer. I’ve read all the arguments, yet I’m not sure how they arrive at that conclusion.

I could see the argument, if I were to raise my cost to the consumer on transactions where I have agreed to pay a referral fee. While this may happen from time to time, I believe the vast majority of brokers see it as the cost of doing business. I either pay to advertise, farm, or some other means of acquiring new clients or I pay a referral fee to an out of area broker who has a client needing to buy or sell a property in my area.

While I don’t work relocation business, relocation companies collect referral fees from brokers who accept their relocation clients. Why is a broker-to-broker referral any different?

The bottom line is that unless brokers raise prices on transactions involving a referral fee, there is no additional cost to the consumer.

Tom Branch

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About Tom Branch

Tom Branch has written 597 posts in this blog.

Have you ever just met someone, but felt you like you'd known him for years? That's what most people experience with Tom. He has a knack for making folks feel right at home. After 21 years in the Air Force, loyalty and honesty are the foundation of everything Tom does. In addition to being a Texas Real Estate Broker, Tom is a Certified Distressed Property Expert (CDPE) and a Short Sales & Foreclosure Resource (SFR).