Last week, a man I had met through a past client called me on the phone and said, “We need to have a sit down.” We drank coffee in the boardroom at my office and he told me that he has a friend with five or six properties in downtown Toronto who is looking to divest himself of his holdings, he asked me if I would be interested in working with his friend of and assisting him with the sale of his assets.
Of course I would! Then this man asked me if I would give him a percentage of my commission as a “referral fee” when I successfully sold some of these properties.
The Real Estate Council of Ontario has rules and regulations concerning referrals, under the Real Estate & Business Broker’s Act (REBBA), RECO’s Code of Ethics, Section 18 specifically states:
A registrant must disclose any direct or indirect financial benefit received from another person arising from services provided to the client, e.g., a finder’s fee or referral fee.
So technically, I could have paid a “referral fee” to the gentleman in the example above, but I would have to disclose this in the Agreement of Purchase & Sale and receive a signed notice of understanding from my seller.
In conclusion, as long as it is fully disclosed to both parties (Buyer and Seller), paying referral fee should be allowed in Ontario when dealing with real estate transactions.
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