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Is it common for a referral fee to be paid to the buyer out of escrow who then pays it to the agent.

A friend who is a licensed agent for whom I arranged to receive a referral fee on a Real Estate transaction in which I am the buyer is now requesting that I ask the primary agent/broker who is representing me in the transacation that I receive the referral fee out of escrow into my name and then pay my agent friend the fee. He says this is common practice. I say it's not, it's cutting out his Broker out of a share of the referral fee and therefore its illegal. Who's right?
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November 14 2013 - Los Angeles
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Answers (7)

The referral fee should go directly from escrow to your friends broker. It's NOT common practice for any buyer or seller to pay a referral fee to any agent out of their pocket. That's cutting the broker out of their % .
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January 02
Technically, referral fees are paid through escrow from one broker to another broker and then to the agent.  
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December 06 2013
Simple answer. You are right. Any referral fee must go to the agent's broker, not to the agent.
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November 15 2013
An agent can give some of their commission as a concession back to THEIR buyer, but not outside of the transaction. Agents cannot pay someone or give a kickback for a referral to anyone that is not an agent or recieve a fee from another affiliate for the business. Agents can send another agent a referral and get the "referral fee" IF they complete a transaction.
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November 15 2013
I believe that finders fees can be included in the HUD-1 and as long as this fee is not going to the borrowers name.  Everything should be legal, as long as it is disclosed and shown in the HUD-1.
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November 15 2013
If you don't have a RE license I don't think that you can receive any fee at all --- please check the BRE website.
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November 15 2013
All Commissions (referral fees) must go to the Agents Broker.
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November 15 2013
 
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