Can a realtor refer a contractor and get paid?

Yes - Realtors can legally earn referral fees from contractors for standalone home service jobs like roofing, plumbing, and cleaning. What’s prohibited under RESPA are referral fees tied to mortgage settlement services. A contractor referral that happens outside of an active real estate transaction is a completely different thing.

What RESPA Actually Prohibits

RESPA — the Real Estate Settlement Procedures Act — was designed to protect homebuyers from hidden kickbacks during the mortgage process. It prohibits paying or accepting fees in exchange for referring settlement services tied to a federally backed mortgage loan.

Settlement services are the specific services involved in closing a real estate transaction:

• Title insurance and title searches
• Mortgage lending and loan origination
• Property appraisals
• Home inspections conducted as part of the transaction
• Escrow and closing services
• Hazard insurance arranged at closing

If a referral fee is connected to any of those services during an active transaction, RESPA applies and the fee is not permitted. Full stop.

PRO TIP: When in doubt, ask your broker. RESPA rules can vary in application by state, and your broker is the right person to confirm what’s permitted in your market. This guide covers the federal framework — local rules may add additional considerations.

Think about what this looks like in practice: a past client calls you eight months after closing asking who to call about their roof. You recommend a roofer you trust. That roofer gets a $15,000 job. There’s no mortgage, no transaction, no closing — just a homeowner who needed a contractor and called the person they trust most. That referral arrangement is perfectly legal to compensate.

Contractors and Services You CAN Refer for a Fee

Any standalone home service that isn’t tied to a mortgage closing falls outside of RESPA. That covers the vast majority of what your clients ask you about:

✅ LEGAL TO REFER FOR A FEE

• Roofing and roof repair
• Plumbing
• HVAC installation and repair
• Electrical work
• General contracting and remodeling
• Painting (interior and exterior)
• Landscaping and lawn care
• House cleaning and maid services
• Moving companies
• Pest control
• Flooring installation
• Handyman services
• Window and door installation
• Pool services and maintenance
• Security system installation
• Junk removal
• Pressure washing
• Solar panel installation

These are all services your clients ask about constantly — before listing, after closing, and throughout the years they own their home. Every one of them is a legitimate referral opportunity.

Services You CANNOT Refer for a Fee

When a referral is tied to an active real estate transaction and involves a settlement service, RESPA applies. These arrangements are off-limits:

❌ NOT LEGAL TO REFER FOR A FEE (RESPA-COVERED)

• Mortgage lenders and loan officers (tied to a transaction)
• Title companies and title insurance providers
• Home inspectors when part of a transaction
• Appraisers conducting a transaction appraisal
• Escrow and closing agents
• Hazard or homeowner’s insurance arranged at closing

Note that home inspectors and insurance providers outside of a transaction — a homeowner hiring an inspector for general peace of mind, or shopping for insurance renewal on their own — may not be covered by RESPA in the same way. The key factor is always whether an active mortgage transaction is involved. When in doubt, check with your broker.

How Much Can a Realtor Actually Earn From Referring a Contractor?

Referral fees for home service jobs are typically 5–15% of the total job value, agreed upon upfront between the realtor and the contractor. There’s no industry-mandated rate — it’s a private arrangement.

Here’s what that looks like on real job sizes:

Job value = $5,000 (5-15%)

5% - $250

10% - $500

15% - $750

Job value = $10,000 (5-15%)

5% - $500

10% - $1,000

15% - $1,500

Job value = $20,000 (5-15%)

5% - $1,000

10% - $2,000

15% - $3,000

Job value = $30,000 (5-15%)

5% - $1,500

10% - $3,000

15% - $4,500

Job value = $50,000 (5-15%)

5% - $2,500

10% - $5,000

15% - $7,500

A realtor with an active client base who refers two or three roofing or remodeling jobs a year can add $3,000–$10,000+ in income without any extra work beyond the recommendations they were already making.

How to Set It Up the Right Way

The arrangement being legal is the starting point. For it to actually work long-term, a few things need to be in place:

• Put it in writing. A simple agreement that names the commission rate and the payment trigger. It doesn’t need to be complicated, but it needs to exist.
• Disclose it to your client. Being transparent with your client that you have a referral arrangement with a vendor is the professional standard. It protects you and maintains trust.
• Use a platform that tracks it. Chasing contractors for payment gets old fast. A platform that handles the tracking and commission automatically — so you refer, the job closes, and the payment comes without any follow-up on your end.
• Check with your broker. Some brokerages have internal policies around outside income. A quick conversation with your broker before you set anything up is always worth it.

Thankfully that's exactly what ReferToday is built for. Your referral arrangement is documented on the platform, your client sees it transparently, every job is tracked, and your commission comes automatically when it closes. No paperwork, no follow-up, no gray areas.

→ Create Your Free ReferToday Account ←

Frequently Asked Questions

Q: Is it legal for a realtor to accept a referral fee from a contractor?

Yes, for standalone home service referrals. RESPA prohibits referral fees tied to mortgage settlement services like title, appraisal, or lending. It does not prohibit a realtor from earning a commission for referring a homeowner to a roofer, plumber, or other contractor outside of an active real estate transaction.

Q: Does RESPA apply to contractor referrals?

Not for most home service contractors. RESPA applies to settlement services involved in a federally backed mortgage transaction — title, appraisal, escrow, lending. Roofing, plumbing, HVAC, painting, cleaning, and most other home service trades are not settlement services and are not covered by RESPA when referred outside of a transaction.

Q: Does a realtor’s referral fee need to go through their broker?

For agent-to-agent real estate referrals, yes — the fee typically flows through the broker. For contractor referral fees outside of a real estate transaction, the answer depends on your brokerage’s internal policies. Some brokerages have rules about outside income. Check with your broker before setting up any formal arrangement.

Q: How much can a realtor earn referring a contractor?

Referral fees for home service jobs typically range from 5–15% of the total job value, agreed upon upfront. On a $20,000 roofing job, that’s $1,000–$3,000 for a single introduction. Realtors with active client bases who formalize a few of these arrangements can add meaningful income without any extra work.

Q: What’s the easiest way for a realtor to earn referral fees from contractors?

The easiest way is through a referral marketplace like ReferToday, where contractors list their businesses with a pre-set commission rate. Realtors browse, refer clients through a personal link, and earn automatically when a job closes — no individual negotiations, no tracking spreadsheets, no chasing payments.