The Referral Chain. Is It Broken?

The Referral Chain. Is It Broken?

The phone rings.

“Hello, yes hello yes this is (broker x) how can I help you?”

“Hello, Mr. X this is Mr. Y a broker from (not your town) I would like to talk to you about a possible referral.”

“Yes, certainly sounds great. What kind of referral are we talking about?”

” Well to make a long story short I have a relative from the wife’s side that gave me a call and asked a few questions about a retail property that they may want to put on the market. I told them since I do not work in their specific market area that I could talk to them generally but I might put them in touch with someone in their area that may be able to handle deal. I also mentioned that I would do my best to make sure that they got in front of the right person.”

“Well, I appreciate the call but first how did you find me? Have we met? Are we connected in some way?”

” Not really. We are connected on LinkedIn but we have never met. I looked thru your online resume and also did a search of your company and the deals that they have been involved in. It seemed impressive. I also called an old friend of mine and asked if he had heard of you. He said that he had heard of you but did not really know you. He also mentioned that your company had a good rep in the area.”

” That’s good to hear. So the possible owner of the retail property is wanting to sell or are they looking for tenants?”

” Just from the basic conversations that we have had they seem to be in a good tenant position. I think that they want to sell and move on to another project.”

” Sounds like they are a least a decent sized owner or developer. Do you have their name and contact info? I am sure we have to know who they are and at the very least have them in our database.”

“Sure I have that information. But can we just get the basics put of the way. What type of referral agreement does your firm use and do you have an example of the agreement that I can look at?”

” Oh sure we usually do twenty-five to thirty-five percent depending on the deal. I can have my assistant dig one up for you and send it off. Send me you email and I will forward it to her.”

” How do I know which one it will be?”

” Once we take a look at it we will let you know. We do this fairly often so it’s a pretty standard thing.”

Broker Y gives his and his referral contact information over the phone and then sends an email to get confirmation.

He touches the little red button on his phone and lays it down.

What do you think happens next?

We all know what might has probably will and mostly happens next.

Do me and everyone who reads this a great favor.

Tell us what you do to make sure the referral chain does not get stretched twisted and broken.

Opinions comments and points of view are always encouraged and appreciated.


Photo Credit:


Duke Long


  • Ok, I’ll play along as I am enjoying some Waba Grill in sunny SoCal. Confirming email from Broker Y to X. X takes the referral info of Broker Y and Referral, googles the contact names.

  • What’s wrong with this scenario is that Broker Y should have asked for a percentage and if Broker X agreed, Broker Y should have sent the agreement with an explanatory email/letter referencing the original conversation and verbal agreement to pay a specified percentage. If Broker X didn’t respond and contacted the client directly, assuming the client signed with Broker X, Broker Y would have some standing to sue for the fee.

    Any broker who steals a referral/doesn’t compensate the referring broker only jeopardizes their future. Word gets around fast about who’s unethical. But any broker considering providing a referral needs to take control of the process as best they can.

  • My experience in+20 years of commercial real estate as a broker is that any
    time spent on a referral is usually wasted. There are exceptions to be sure, but
    time is the only commodity we have in this endeavor. What do you really want to
    spend your time on? 35% of $0.00 is still $0.00 in my ledger. My advice is to be
    very selective about any referral coming your way. Most times it’s a high
    maintenance buyer, or a property you need a tetanus shot to get into. And one
    last thing to remember, “Everybody’s business is nobody’s business”. mc