Becoming Real Estate Referral Agent

3 Replies

Dear bigger pockets community,

I am trying to decide whether it is worth it to me to get a real estate license in order to become a real estate referral agent mainly for my own purchases that I plan to make in the next few years. From my research, it looks like the upfront cost to become a real estate agent is quite minimal: under $700 for the precertification classes and the exam itself. But this seems too good to be true...

1. I know that I have to be part of a brokerage to be able to practice my license. What are the fees associated with it? Do all brokerage charges the same amount? If not, how do you decide which to go with? 

2. There are legal liabilities associated with being a real estate agent, for example an agent can be sued when a buyer sued the seller for misrepresentation or anything really. Does a real estate referral agent share the liabilities? In other words, if I refer a client to a realtor, am I liable for whatever happens during the sale? 

3. Would it work if I am both the buyer and the real estate referral agent? Is there anything I should be wary about/aware of in this scenario? 

I guess what I am trying to research is all of the pros and cons of getting my own license to recoup some of the fees associated with buying a home. Thanks in advance for all your knowledge. Any advice, esp ones I have not thought of, would be much appreciated. 

Welcome @Chris Spespy ! Where are you located? In the states with online courses, you can get pretty good deals and have the flexibility to crush it on your own time. I got licensed in 6 weeks for about $350 total, class, fingerprints, registration, etc. But then you will usually pay for MLS/NAR and you'll need to hang your license with a brokerage with fees as well (which are dependent entirely on the broker).

  1. Fees vary by brokerage, but can find many that you'll pay under $100 a monthly. Some may charge E&O or others fees up front, some may not. After that, most brokerage associated fees are per transaction. You'll pay a commission split up to a cap and with some brokerages, desk/royalty fees.
  2. There is always that rare case where someone was held liable for something that they were barely a party to.  However, I've never directly heard of that happening.  That agent will have liability protection though their broker, so I couldn't see that being the case.  But a more experienced agent should chime in.  
  3. Some agents/brokers will allow you to be the buyer and referral, some will not.  Unless you are doing huge deals, I'm not sure that's really a beneficial scenario anyway.  If buying out of state (my investments are), I'd just let that agent get their full commission.

Just some thoughts.  Best of luck!

Chris - I think this largely depends on what state you are trying to get licensed in. There are also additional fees if you hang your license with a brokerage that is a REALTOR member and a member of the MLS.

Not all brokerages charge the same amount - some have monthly desk fees, some require you to pay your association/mls dues and a percentage of your commissions. When I talk with brokers I tell them to interview with a minimum of 5 brokerages. Ask them what they offer you, what are all fees associated with hanging your license at their office and general questions to know if you are a right fit in their brokerage.

If you are an agent, referral or otherwise, you carry a liability of being sued. 

Thanks guys. I'm in Philadelphia. It sounds like my upfront fees will be about $500 or less and yearly fees at about $1000-1500 plus whatever commission cut the broker charges so this would only be worth it if I become my own agent (not just referral agent). Would becoming my own agent make things complicated? Would you recommend me doing so?