![]() However, a referral fee agreement can be used anytime one party gives or refers a lead to another party. Phone Price: $500 Referral Fee: 8% (8% of $500 dollars = $40) Net Profit to Seller: $460 Referral Fee AgreementĪ referral fee agreement is most known for being used between real estate brokers when referring potential clients to each other. According to Amazon’s Referral Fee Schedule, Amazon would collect an 8% referral fee on the sale of the cell phone. Let’s say a seller lists a cell phone for $500 in the hopes of finding a buyer. All items are categorized, and the referral fee is based on the category they fall into. Because Amazon provides the traffic, they on average charge a 15% referral fee when a seller decides to sell a product on their marketplace. From their computer or smartphone, a user can go directly to Amazon (direct traffic) to find products from sellers all over the world. With Amazon, its platform provides all the traffic. Listing Price of Home: $250,000 Listing Agent’s Commission Percentage: 6% (6% of $250,000 = $15,000) Bob’s Referral Fee Percentage: 25% of Jim’s 6% Commission (25% of $15,000 = $3,750) AmazonĪmazon works in the opposite of how the traditional referral process works. Bob’s brokerage then needs to pay Bob his referral fee. The brokerage that Jim works for needs to send a referral payment of $3,750 to the brokerage that Bob works for. Once sold, Bob is due a referral fee from Jim. Jim then lists the house for $250,000 at a commission fee of 6%. Upon hearing the offer, Jim agrees to pay Bob a 25% referral fee for the listing. However, Bob’s old colleague, Jim, is still a residential real estate broker that could help. The homeowner asks Bob for advice, but Bob only specializes in commercial real estate and no longer sells homes. For example, a licensed real estate agent named Bob knows a homeowner who wants to sell their home but doesn’t know how. ![]() A referral payment must be made by an agent’s brokerage directly to the referral agent’s brokerage. Since this type of transaction often occurs, there are industry standards to abide by. Real estate agents are not allowed to sell real estate out-of-state but are allowed to collect a referral fee on a property that’s not in their licensed state. To receive a referral fee on a real estate transaction, the person collecting the referral fee must have a valid real estate license issued by their state’s real estate commission. With analytics and affiliate software, websites can track sales from referral traffic and pay the referral/affiliate fee. Most websites will reward a person if a product is sold due to the traffic brought by that person. The most important thing for a website is its traffic. Referral fees are a way of getting paid by sending traffic (customers) to a sale.
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