Referral programs, how does it work?
I'm in California (I know that every state is different)
Is it only for agent to agent? Or can anyone can do it?
Referrals are paid once it is closed, how do I know once it is closed?
What if the agent bi-passes me and goes directly to the person I am referring in order to avoid the referral fee?
I tried reading about it online but it didn't make sense to me.
What context are you talking about referrals? Are you just talking one-on-one where you refer a friend to an agent, or are you talking about a structured referral program, or.....?
Depending on what you are talking about....
Legally someone can only accept a referral fee if they are a licensed real estate agent and the fee goes broker-to-broker. I know people justify getting around this in wholesaling and bird-dogging type of arenas, but if you want avoid teetering the legal side of referral fees, be a licensed agent.
The scenario you are talking about where you get bypassed is called circumvention. Unfortunately, it's one of the most infamous challenges of the real estate industry. I'd like to think people are more honest out there, but people will circumvent you until the cows come home if you aren't careful. It's up to you to figure out ways to ensure it doesn't happen.
I believe as long as the referral is not based on a percent commission and the referrer does not perform any duties/tasks that require licensing you are ok with compensation.
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