Real Estate Agent Referral Fees: Conflict of Interest?

I just returned from my vacation to an Inbox loaded with thousands of emails.  The following is just one of the many mass emails that I receive regularly recommending services in exchange for a referral fee.

hi everyone ..
i just wanted to pass this on to all brokers . i have had such great raves from my clients when they have used "blah blah" MOVING ANd STORAGE.. they are fabulous!!! .. they are pleasant and work fast and are quite helpful with all the moving needs.. i recomend them highly !!!!!!.. my family used them as well and were sooooo happy with their efficancy and help all along the way … call so and so at 212-555-5555 and tell her i sent you .. she is very helpful ..
my best..  

Seems like a helpful gesture for this agents colleagues but upon reading the email string that she sent along with this, I realized that she is getting paid (no problem with that except from whose pocket is the payment coming):

Hi so and so (the agent who sent the above email),

I was very glad to hear that another one of your referrals was happy with our services. We really appreciate your confidence in us and will continue to insure your clients are well taken care of. You should receive your check in a day or two. (hmmmm?)

As you know, we pay commissions/referral fees for all moves referred to us by agents and have enjoyed a mutually beneficial relationship with many …of your… agents for years already.

As a suggestion, email me or call our office if you want us to call someone directly, or if possible, keep a list of who you referred so we can insure all are credited to your name… Commission checks go out to the agents within a week of the completion of the move.

As you know, we don’t advertise a lot. Most of our customers are referred to us or are repeat clients. We are proud of and emphasize our Better Business Bureau record which continues to be excellent.

Check out our website or our discount packing supplies site which will give you some additional information. As FYI, I also provide referral fees to agents who bring in other agents!! It’s an easy way to make extra money.

Please don’t hesitate to contact me with any questions you may have or special requests your clients may have.

I have a huge problem with referral fees being paid for such services, particularly because most clients are absolutely unaware that such fees are being paid.  And let’s face it, the money has to come from somewhere and I speculate that it is coming indirectly from the client’s pocket.  Unfortunate to say the least.  This particular agent is also receiving referral fees from this moving company for each agent that she refers to them.  She may very well believe that this company is the best moving and storage company in New York, but the fact that she receives payment for saying so makes her "testimonial" much less meaningful. 

Advice to Buyers and Sellers receiving referrals from their real estate agents:

  • ask the agent if they are compensated by referring your business
  • if so, how much and why?
  • ask the agent if they have used the services of the company to which they are referring you?
  • I would steer clear of any referral that would generate financial gain for your agent
  • ask them if they are willing to pass the "kickback" to you in the form of savings

And finally, as far as moving and storage companies go in the greater New York Metropolitan area, there is none better in my humble opinion than Steinway Moving and Storage and I get ABSOLUTELY nothing for saying so except the comfort that those who use Steinway are very well taking care of.

Comments are closed.