Q. Why haven’t I heard about referral fees before?

A. Agents are currently not required to disclose referral fees. This is not because agents are being sneaky, but because referral fees do not cost consumers more. Since the referral fee comes out of an agent’s commissions as a marketing cost, referral fees do not affect the consumer’s ability to freely negotiate a commission rate with an agent. The use of referral fees has grown tremendously as more buyers and sellers turn to the internet for real estate services. But most consumers are still unaware the practice exists.

Q. Are Referral Fees legal?

A. Yes. Real estate companies can and do charge anywhere from 25 to 40 percent of an agent’s commission as a referral fee. Only licensed real estate companies, however, can collect referral fees.

Q. Why do I need to know about referral fees?

A. While they do not cost you more, you should be aware of them if you are using the internet to view listings or search for a good agent. A lot of real estate web sites capture your name as a “lead” or offer to “find you a real estate agent.” When you register on these sites, the internet real estate company that connects you to an agent offen collects a referral fee from that agent. Most companies simply keep the referral fees. A few, like HomeGift, will share some of the referral fee in the form of a cash rebate.