Is the referral fee a percentage of the sale price?

No. It is normally a percentage of the commission earned by the receiving side at closing, not of the purchase price. Your own brokerage split then applies to what remains, so the net to you is smaller than the headline number suggests. Confirm whether the fee touches business and real property components separately.

Why must the agreement be signed before I get the client's name?

Because the introduction is the referring agent's only leverage, and it cannot be withdrawn once made. Signing first is standard practice rather than distrust. Turnaround is usually same-day by email. An agent who sends you a client's details and asks you to paper it afterwards is telling you something about how they operate.

What if the client comes back after the term expires?

If the term has genuinely lapsed and the referring agent had no further involvement, the fee usually does not apply. Read the clause anyway: some agreements extend when a client is actively working with you at expiry, and some address a second transaction by the same client. Raise it directly rather than assuming.

What a Real Estate Referral Agreement Actually Covers

In this guide

What the referral agreement is actually for, clause by clause
Why it gets signed before you speak to the client, not after
What the fee is calculated on, and when it is earned
Why both brokers appear on the document
What the term does if the client resurfaces a year later
The three things worth checking before you sign

Key takeaways

The agreement defines four things: the client, the fee, the term, and who pays whom. Everything else in it is detail hanging off those four.
It is signed first because the introduction is the consideration. Once you have the client's name and contact details, there is nothing left to bargain with.
Referral fees are paid broker to broker. The client does not pay it, and in most states it cannot legally move between licensees directly.
The fee is normally a percentage of the receiving side's commission, not of the sale price, and it is earned at closing.
Terms vary by agreement and by brokerage. Read the actual document rather than assuming your last one applies.

Two working-age real estate professionals in smart-casual business attire at a bright conference table reviewing a two-page referral agreement, one pointing at a clause while the other takes notes on a laptop

What does a referral agreement actually do?

It converts an introduction into an enforceable claim on part of a commission.

Without one, a referral is a favour. With one, it is a contract between two brokerages: this named person came from us, and if they transact with you inside this window, our brokerage is owed this share of what you earn.

The document is usually one or two pages. Look for five things:

The client's full name and contact details, sometimes with the property or property type.
The fee, expressed as a percentage of the receiving agent's commission.
The term — the period during which a closing triggers the fee.
The trigger event, almost always a successful closing rather than a signed listing or an accepted offer.
Both brokerages named as the contracting parties, with the individual agents identified.

If you are new to this side of the work, the broader mechanics are laid out in how assisted living referrals work.

Why is it signed before you get the client's name?

Because the introduction is the only leverage the referring agent has, and once it is made it cannot be taken back.

This trips up agents new to referral business. You will get a call that runs: "I have an owner in your county selling a sixteen-bed home, send me an agreement and I'll pass on the details." That order is correct — not distrust of you, simply how the deal is priced.

Sign first, then receive the client. If a referring agent hands over a name before paperwork exists and asks you to sign later, that is a warning about how they run everything else, not a favour.

Turnaround is usually fast: an emailed agreement signed the same day. Delay costs you the lead, because referring agents keep a shortlist of specialists who actually close these deals.

What is the referral fee calculated on?

On the commission your side earns at closing, not on the sale price.

If the referral fee is twenty-five per cent and your side's commission on the transaction is sixty thousand dollars, the referring brokerage is owed fifteen thousand. Your split with your own brokerage then applies to what remains, which is why the net to you is smaller than the headline percentage suggests.

Two details matter more than the number itself:

Whether the fee applies to the whole commission or only the sale side. In deals where the business and the real property are handled under different fee structures, spell out which components the referral touches.
When it is payable. Standard practice is at closing, paid from the receiving brokerage to the referring brokerage. It is not deducted from the client's proceeds.

Fee levels are negotiated per relationship. How referral fees sit inside the wider commission picture is covered in assisted living agent commission.

Two working-age business professionals in business-casual clothing at a desk with a laptop and calculator, working through a commission split diagram drawn on paper in a bright office

Why are both brokers on the agreement?

Because in most states the fee legally moves between brokerages, not between agents.

Your licence is held by your broker; so is theirs. The compensation flows broker to broker, and each brokerage then pays its own agent under its own split. This is why your broker needs to see the agreement before you sign it, and why brokerage-level referral terms sometimes override what you personally agreed.

Practical consequences: your broker may have a standing referral policy, a cap, or a required form — use theirs when it exists. And if you change brokerages mid-term, ask what happens to open agreements. The answer sits in your independent contractor agreement, not the referral document.

What happens if the client comes back a year later?

That is exactly what the term clause is for, and it is the clause most people skim.

Terms in this niche are commonly six to twenty-four months, because assisted living transactions move slowly. Licence transfer timelines, financing and buyer diligence stretch deals well past the pace of a residential sale, and a referral that looks dead in month four can close in month fourteen.

Read for three things: the length, whether it renews or extends if the client is actively working with you when it expires, and how it treats a second transaction by the same client. A referral that produces a sale and then a purchase may or may not owe two fees, depending on the wording.

If a client returns after the term has genuinely lapsed and the referring agent had no further involvement, the fee usually does not apply. Raise it anyway rather than assuming. This business runs on repeat relationships, and the fee you save once can cost you the next five introductions.

Get referrals worth signing for

Referral work in this niche compounds. Agents who handle their first care home transaction cleanly get the next one, and the flow comes from a small number of people who track who closes.

Get matched with a Buy Sell Assisted Living expert to join the network on either side of the introduction. If you are building this practice from scratch, start with becoming an assisted living real estate agent.

Informational only — not legal, financial, or tax advice. Referral terms vary by agreement and brokerage, and licensing rules governing compensation between licensees are state-specific. Have your broker and a qualified attorney review any agreement before you sign.