Realtors may take a fee for recommending service people


Can my real estate agent earn a referral fee when they recommend a building inspector?

The answer to your question is, in general, yes. Your agent is entitled to earn a referral commission when they put you in touch with a home inspector or other service provider, such as a mortgage broker, staging agent, painter, or photographer.

Referral fees – paid to the person who provides you with a lead – are common in real estate and other business transactions.

Importantly, however, the law requires your agent to tell you the details of any referral agreement in writing. This will let you know if the agent is getting any direct or indirect benefit from the service provider for the referral so you can decide how to proceed.

Written disclosure is required even if your agent receives gifts or favors in lieu of money from the service provider for making the referral. The agent should also tell you if they have a personal relationship with the service provider they are recommending, such as family members.

Here is what the written disclosure must include:

  • whether any compensation or benefit will be received;
  • payment terms;

  • the amount or range of compensation;
  • whether someone else, such as a family member, will receive the compensation. The disclosure obligations still apply in this case.

Also, the referral fee must be paid to the agent’s brokerage and not directly to the agent. The brokerage is responsible for ensuring compliance with legal requirements under the Real Estate and Business Brokers Act (REBBA). Brokerages may also establish their own additional policies and rules for their employees regarding the receipt of referral commissions.

In summary, it is not illegal for your agent to have a recommendation, but there are rules in place that they must follow.

Of course, there may be advantages to using a home inspector or another provider recommended by your agent. Your agent may have good information about certain providers and their skills, as well as their knowledge of the type of properties or areas you are considering, and whether or not previous clients have been satisfied with their work.

However, if your agent tells you they would benefit from a referral they make and you feel uncomfortable doing so, there are other ways to find these services, including online searches and referrals. friends, neighbors and family.

No matter what sources you use to find service providers, it’s always a good idea to shop around, do some research, and compare them to one another.

Finding good service providers can make a big difference in the buying and selling process – and beyond. A recommendation from your broker or salesperson can be helpful, but you should be aware of any benefit they will gain. As with all aspects of a real estate business, it is important to make informed choices.

If you have a question for Joe about the process of buying or selling a home, please email

Joe Richer is Registrar of the Real Estate Council of Ontario (RECO). This column is for general informational purposes only and is not intended to provide legal or professional advice on real estate transactions. Follow RECO on Twitter: @RECOhelps


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