A referral is made by recommending the services of another party, person, company, or service.
If a Broker or any Licensee refers a client or customer to another Broker or Licensee and expects to be paid a referral fee, or something of value, then the client or customer must be given written disclosure of the referral fee. However, the amount of the referral is not required to be disclosed. That information should be documented between the two Brokers involved in the transaction.
The required disclosure applies even if the referral is made to a Broker in another state, or country.
Referrals for products or services other than brokerage services, such as mortgage brokers, warranty services, etc. must also be disclosed.
The following are Unfair Trade Practices (UTP) that can result in disciplinary action from the Georgia Real Estate Commission as detailed in 43-40-25. Violations by Licensees, Schools, and Instructors; sanctions; unfair trade practices.
(b) Licensees shall not engage in any of the following unfair trade practices:
(6) Failing to disclose in writing to a principal in a real estate transaction any of the following:
(A) The receipt of a fee, rebate, or other thing of value on expenditures made on behalf of the principal for which the principal is reimbursing the licensee;
(B) The payment to another broker of a commission, fee, or other thing of value for the referral of the principal for brokerage or relocation services; or
(C) The receipt of anything of value for the referral of any service or product in a real estate transaction to a principal; (36) Failing to obtain a person’s written agreement to refer that person to another licensed Broker for brokerage or relocation services and to inform such person being referred whether or not the Licensee will receive a valuable consideration for such referral.
Article from GREC Newsletter January 2024
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