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Methods of Compensating Real Estate Agents

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Referral Fees from One Brokerage to Another and Agent Split
Referrals come "off the top" before commission is split. The referral is a negotiated percentage paid to another company for sending a client, either as a seller or a buyer. Here's an example of a typical buyer referral:

1. Brokerage A has a client selling their home and leaving the area. They refer the buyer client to Brokerage B in another state with a written referral agreement at a certain percentage of the final commission earned by Brokerage B.

2. Using the $12,000 gross commission from above, and an agreed referral fee of 25% would give Brokerage A $3000 for the referral, and Brokerage B's agent and broker would split the remaining $9000.

3. Using the 50/50 split from the first example would yield $4500 for the agent in Brokerage B.

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