Profile picture for inquisitor2

Should a 5 minute phone call be worth $3000.00 dollars?

A friend of  mine found out we were selling our vacation property. Being a friend I thought he was being nice. Even though he doesn't have a clue about the area or the person he told me to use. 
Does this person deserve about $3000 dollars ($600 dollars a minute)?
When he just saw opportunity against a naive person. 
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October 28 2013 - US
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Answers (23)

If the deal is good enough for you, then I think you should take it. There is no way for US to know what the "deal" is on this property.

BTW. I recently had a phone call that lasted about five minutes that changed the contract price by more than three thousand dollars. My client probably thinks those five minutes of my time were worth their while!

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October 31 2013
Profile picture for Dunes ..
Bump...cause I think it's a good thread and discussion for the most part
Plus.....cause I can ;)
Plus.....cause I think the public/consumers should be aware of the Practice & amount paid to get a client so they can decide for themselves if it's no big deal

As long as they are aware of it then whatever they decide/whatever opinion they form is fine with me...


Thank you imquisitor for the discussion and your participation
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October 31 2013
Profile picture for inquisitor2
@ Call the sisters you ladies seem to get it and Thank you.

If you don't mind may I ask you a question. It went from selling agent to dual agent contract which I have not signed anything.
 I don't very much about the real estate business but I think figuring this one out isn't to hard. They have a buyer and they want both sides. Do you think that is the case? And in your opinion how should I play it?
Thanks 

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October 30 2013
Inqusitor2

I agree a Realtor should not pick a name out of a hat to make a few bucks.

When I refer one of my clients out of the area I research and speak to agents I'm considering before making the referral.  I google them first to see how active they are.  I ask them specific questions.  I want to find someone who is experienced and will handle my client the way I do.

Now that takes more than a 5 minute phone call on my part.  Don't assume that as an industry we all throw things at the wall hoping they will stick.

On the flip side I've gotten referrals from other agents out of state and mortgage brokers.  They have all interviewed me.  They have all followed up with the client they referred AFTER the client met me to see if I met their expectations. 

Dual agency - you do not have to agree to dual agency.  My personal recommendation is that you refuse dual agency.  Other agents may jump on me for saying that BUT I personally cannot serve two masters.  I don't know many people who can.

It is better for you to keep your relationship exclusive with the selling agent.
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October 30 2013
A good agent won't just google realtors and give a blind referrals. If the deal goes south there could be a friendship at stake. If I refer one of my friends to another agent, I am going to be asking a lot of well thought out questions and interview this agent and make sure he is not a part-timer. Some deals go well and we make some good money and other deals go badly and you end up working with a buyer for 2 years because of unrealistic expectations and you pray for at best a break even. I don't understand how a doctor can make 250k for an hours worth of work, but there is a lot I don't know about the medical field. As long as you have good results and sell your house, what does it matter if your friend makes a little extra money? He hasn't broken any laws that I am aware of.
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October 29 2013
"Some see this practice as perfectly acceptable. But most agents find it a bit despicable."

Yeah. "There is controversy over this issue."

So, here's the deal. No closing, no referral fee, five minutes pays nothing. If inquisitor doesn't like the agent s/he was referred to, s/he gets another, and there is no referral fee. If s/he does, and there's a closing . . . what business is it of ours how much anybody got paid?
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October 29 2013
Profile picture for Pasadenan
I know it is off topic.... but I think home owners that get cold calls from Realtors should charge the Realtor $5k per minute for the phone call, especially if their phone number is on the Federal "do not call" list.

That would make a 5 minute phone call worth $25k.

That is still exceptionally low compared to the salaries of some CEO's in the U.S.
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October 29 2013
Profile picture for SoCal Engr
"BTW I haven't signed yet because the realtor asked my to sign a dual agreement at full percentage. Now I think that 25% commission comes into play."

In my personal experience as a seller, I was able to negotiate a 30% discount in commissions in the event of dual agency.

Since you haven't signed yet...
#1 - It sounds like the REA has a ready buyer (i.e., they are already asking you to sign an acknowledgement for dual agency).
#2 - If #1 is correct, you need to first decide what you need to clear in order to make the deal work (i.e., don't get too wrapped up around who-gets-what-slice...as long as you get yours).

However, as a consumer, it is good to know  that there is at least 25% excess slop built into the average commission structure.
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October 29 2013
Profile picture for Dunes ..
@ The Sisters

Nope it's the "scenario" I posted that was written in this article
Methods of Compensating Real Estate Agents - Commissions and Splits which was written by an Agent/Broker James Kimmons

The other opinions/scenarios like I posted were written by Elizabeth Weintraub i
in her article The Real Estate Referral Agent

I know..picky picky petty petty lol ;)

Rather than make this discussion..them non-agents say that or they don't know but I do cause I'm a Realtor I figured I'd keep it Realtor said Realtor said ;)

The only personal opinions I've really expressed is "A subject/topic/practice that imho the consumer should be much more aware of...."
and "Seems there is a difference of opinion among Realtors about Referral Fees"

I'm fine if the response from Agents is..no big deal, whatsa matter U, we do it all the time

So ok with it I hope every consumer/potential client has a chance to be aware of the practice, cost/split/fee whatever and response/explanations for the "expense"
If they don't care...fine

But I hope and think they should become aware of the practice and have the chance to make a decision for themselves
It's all good, the consumer is lucky you're willing to discuss it so civilly, honestly and completely
TU fer U
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October 29 2013
@Dunes

It was the scenario you wrote at that time I was responding to you just to clarify the splits.

Technically it can be any agreement between the agents.  25% is customary but I've seen them at 20% - 35%. 

If you deal with a RELO company they want the listing agent to pay them 40%.  That is highway robbery and more aggravation than it is worth.

I've given a referral to another agent and asked for lunch in return.  It was not a huge referral and it helps build relationships.  Really - any thing goes.
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October 29 2013
Profile picture for inquisitor2
Amy Smits Team, what I am asking is it ethical to pick up in a conversation and say I can help you with that knowing I lack knowledge in the real estate area.
All along he didn't know anymore realtors in that city than your team does. Right now you are thinking "What city"? That is my point exactly. In short he choose from a hat the same thing I could have done but I would have had many more styles of hats to choose from not just the style he wears.
BTW I haven't signed yet because the realtor asked my to sign a dual agreement at full percentage. Now I think that 25% commission comes into play.

Call the Sisters, So far you have explained the inner workings the best. My friend never told me about the referral fee. I saw something in the contract about compensating others....etc. Therefore I asked the realtor he referred to me, the one he picked out of the hat. From Amy Smits Team post "Out of a hat".

I am going to call this the Blind Referral clause Realtors should not be aloud  to refer anyone to a complete stranger they. The referral should be solicited.
Not paying attention where and when people are buying/selling houses and saying "I have just the right person for me"..."I mean You" typo
In my case I think it was $$ but in a legitimate referral I can understand the commission.


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October 29 2013
If this friend who is an agent referred you to an agent that sells the home, then the referring agent is entitled to a fee. However that doesn't increase the negotiated commission you agreed to pay the Realtor you hired. That is between the two agents. I question why you were even put in this position to be concerned about the referral fee? Unless you listed the home with a Realtor who didn't know about this Realtor friend and this Realtor friend is asking you to tell the listing agent that they should get a referral fee, you can say sorry but I am not sure that is something I want to do. Then don't do it. Good luck.
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October 29 2013
If this is a referral fee, it would be between your friend and the agent you referred them to, you are under no obligation to take a referral. 
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October 29 2013
Profile picture for Dunes ..
@The Sisters
It's not my "scenario"
The "scenario" difference of opinion, explanation or how things are done/split is with other Realtors to whose quotes, explanations & articles I linked to

Plenty of yadda about the topic by Realtors (not non-agents) if any of the public wish to pursue/check out the practice this further
Google Searches
real estate agent referral fee

real estate commission referral fee

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October 29 2013
@Dunes
2. Using the $12,000 gross commission from above, and an agreed referral fee of 25% would give Co. A $3000, and Co. B agent and broker would split the remaining $9000."

Your scenario is for dual agency.  Most deals are not dual agency.  Therefore my example is more realistic with both a buyer and seller agent involved in the transaction.

Selling company $6,000 Broker/agent split
Listing Company $6,000 less 25%= $4500 broker/agent split
Referring Agents $1500 less 50% broker /agent split.  = 750

This poster is making the assumption that:- 25% comes off the top no matter what and goes directly to the referring agent.  That is not the way the pie gets split up.
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October 29 2013
You can, and should, still negotiate the commission. You can, and should, still talk to other Agents about selling your vacation home. You can, and should, still try to sell the vacation house yourself.

Your friend did you a service, that has no bearing on your future actions, unless you voluntarily choose to accept the benefit of his referral.

You're sensationalizing the issue.

Did you even list your house with the referred REA? If so, how's it going? That's what matters. The fact that your friend did what REA's do is not news. It's not even a problem. It is just a fact that may or may not have any bearing on anything ever. Unless you choose to allow it to.

The answer to your question is yes, if it results in a listing, and a sale.
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October 29 2013
Profile picture for Dunes ..
Seems there is a difference of opinion among Realtors about Referral Fees

Realtor Elizabeth Weintraub in the about.com article I linked to previously states
"Some see this practice as perfectly acceptable. But most agents find it a bit despicable."


Another agent/broker in a different article states "The referral practice only introduces a middleman into the process, and the payment received is grossly out of proportion to the value added."
The Real Estate Referral Agent

Bottom line imo is what the consumer thinks...especially to the ones selling services
If they are thinking...
I can't get a 25% discount cause of expenses but they can pay?
I walk in without a referral don't I create a situation where they don't need to pay that expense they say is necessary/ok to pay?

Anyway...here's another view/explanation of the cost/split

"Referrals come "off the top" before commission is split. The referral is a negotiated percentage paid to another company for sending a client, either as a seller or a buyer. Here's an example of a typical buyer referral:
1. Brokerage A refers a buyer to Brokerage B in another state.
2. Using the $12,000 gross commission from above, and an agreed referral fee of 25% would give Co. A $3000, and Co. B agent and broker would split the remaining $9000."
Methods of Compensating Real Estate Agents - Commissions and Splits




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October 29 2013
Among professionals referrals are common.. If you seek advice from an attorney and he refers you to another attorney - does he tell you he will receive a referral fee?  He does.

You said " he will receive 25% of the realtors commission".The referring agent does not receive 25% of the total commission.

If the homes sells for 200K and the commission is 6% then the total commission is 12,000.  If another agent sells the property the agent who listed it and the agent who sold it split the 12,000 and each get 6,000.

Now your listings agent is obligated to send a referral fee to your friend 25% of 6,000.  or 1500.  The agent who gave the referral has to split with his broker - usually 50/50.  So for passing the referral the friend only gets $750.



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October 29 2013
I believe your friend did you a favor. We send and receive referrals all the time, all over the country. I never just pick an agent out of a hat, I always find a top producing agent to receive my referral and ensure my client has the best representation possible. 

Do I get paid? Yes. Do I deserve the amount I receive? Yes. It sounds like your friend found someone to get your place sold and that was your and his intent. Would I have shared that I get paid? Not necessarily. Your friend would still have gotten 25% of the agents commission even if you had pushed on the listing commission. It would have no bearing on what you paid to get your home sold.

Congratulations on your impending sale!
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October 29 2013
Profile picture for inquisitor2
Hamp, a friend should divulge what his intentions are knowing I was clueless of how the real estate market worked. I thought he was doing me a favor, not looking at me as $$$ signs.
With that being said I believe that $3000 dollars could have helped me negotiating the commission the realtor would accept. 

Tim and Rachel
My question had to do with using an opportunity from a casual conversation to profit. In this situation should a friend act like he is doing you a favor or should he communicate  what his objective is. 
Yes, I admit the question was vague.
The phone call was about 5 minutes and if the house sells for what has been suggested,he will receive 25% of the realtors commission. Which would be about $3000 dollars. I was asking if a phone call to a different city without knowing who he is referring  be worth $3000 dollars. 
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October 29 2013
Profile picture for Dunes ..
"A friend of  mine found out we were selling our vacation property. Being a friend I thought he was being nice. Even though he doesn't have a clue about the area or the person he told me to use."

Are you talking about how Agents/Agencies pay each other Referral Fees?
If so this is how a Realtor (Elizabeth Weintraub) who posts at Zillow explains referral fees on about.com

"Real estate is a business in which about 80% of the agents do not make enough money to live on. The odds that you will end up with an agent in a major metropolitan area who has little experience and who doesn't make any money are actually pretty high. It's even higher when it's a referral agent.

Some real estate agents will refer only to the agent who offers the highest referral fee. Agents who need to outbid each other by competing in the referral market might not be your best bet for representation. Whether you know it or not, you are a commodity that the agent is selling to another agent. The truth is even your best friend, if that friend is an agent, might sell you to another agent."

Agents Refer Agents - When Real Estate Agents Refer Agents
Worth reading and taking a look at the other links to articles on the subject imo...

A subject/topic/practice that imho the consumer should be much more aware of....
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October 28 2013
Did your friend refer you to an Agent in the area? If you end up using the Agent, and the Agent sells the property for a price you agree to, what difference does it make to you if your friend gets a referral fee from the Agent's commission? None, that I can calculate.
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October 28 2013
Your post makes no sense at all. What does, "Being a friend I thought he was being nice." mean? What did he do? Or what does, "Even though he doesn't have a clue about the area or the person he told me to use." mean? Who did you use for what?

You need to explain more and not assume we understand the situation.
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October 28 2013
 
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