Can realtors legally accept referral fees from contractors?

The short answer is yes — with the right disclosures. But most agents don't know where the line is, and that confusion is costing them real money.

Every agent has done it: a client closes on a house, asks for a good plumber, and you send over the number for the guy you've used a hundred times. He gets the job. You get nothing.

Now multiply that by every client you've ever worked with. Every landscaper referral, every HVAC recommendation, every power washing company you've vouched for. That's a lot of value you've handed out with zero return.

Here's what many real estate professionals don't realize: getting paid for those referrals is completely legal in most cases, as long as you understand which types of businesses are covered by federal law and which ones aren't.

Let's break it down clearly.

The Law That Confuses Everyone: RESPA

When realtors hear "referral fee," the first thing that usually comes to mind is RESPA — the Real Estate Settlement Procedures Act. And for good reason. RESPA is a federal law that carries serious teeth: violations can mean fines up to $10,000 per incident, potential criminal charges, and even being banned from working in the industry.

So it's understandable why agents get nervous. But RESPA is more targeted than most people think.

RESPA Section 8 prohibits real estate professionals from giving or receiving fees, kickbacks, or anything of value in exchange for referring business to a "settlement service provider." Settlement services are specifically defined as services tied to the real estate closing process. Things like:

• Mortgage lenders and loan originators
• Title companies and escrow services
• Home inspectors (when required as part of the transaction)
• Appraisers
• Real estate attorneys
• Homeowner's insurance providers
• Home warranty companies

If you refer a client to a mortgage broker and that broker pays you $200 for the referral, that's a RESPA violation. Same goes for kickbacks from title companies, insurance agents, or appraisers. The law is clear there.

The Part Most Agents Get Wrong

Here's where most agents leave money on the table.

RESPA does not apply to businesses that provide services after the closing and are not part of the settlement process. According to guidance from the Massachusetts Association of REALTORS® and confirmed by multiple state real estate commissions, businesses like the following are generally not considered settlement service providers under RESPA:

• Plumbers
• HVAC technicians
• Electricians
• Painters and decorators
• Landscapers and lawn care companies
• Power washing companies
• General contractors
• Moving companies
• Handymen
• Cleaning services
• Pest control (when not required as a condition of the transaction)

One legal guidance example that's been widely cited in the industry: a $200 gift card from an oil company to a realtor in exchange for referrals was reviewed and deemed not a RESPA violation, specifically because the oil company was not a settlement service provider.

The bottom line: if the business operates after the closing and isn't part of the transaction itself, RESPA generally doesn't apply.

What the Code of Ethics Does Require

RESPA being off the table doesn't mean there are zero rules. The REALTOR® Code of Ethics fills in the gap.

Under Article 6, REALTORS® "shall not accept any commission, rebate, or profit on expenditures made for their client, without the client's knowledge and consent."

This means one thing clearly: you must disclose it. If you're getting paid by a contractor for referring your client to them, your client needs to know. Disclose the relationship in writing, have the client acknowledge it, and you're in the clear. Skip the disclosure and you're in ethics violation territory, even if RESPA doesn't technically apply.

Some state real estate commissions go a step further. Texas, for example, has a specific disclosure requirement for referral fee arrangements with non-settlement service providers. Always check your state's rules, the federal floor is just that, a floor.

The Gray Areas to Watch

A few situations that deserve extra caution:

Pest control and home inspectors. If the transaction requires a pest inspection or a home inspection as a condition of the loan or sale, those providers can fall under RESPA's umbrella. If the inspection is optional or happens post-closing, the rules are different. Context matters.

The "preferred provider" label. Even when RESPA technically doesn't apply, real estate commissions advise against presenting any business as your "preferred provider." That language signals an endorsement and can imply a kickback arrangement. Stick to neutral language — "a contractor I've worked with" is safer than "my preferred HVAC company."

State-specific rules. RESPA is the federal baseline, but states can layer additional requirements on top. What's permissible in one state may require additional disclosures or licensing steps in another. When in doubt, check with your broker or your state's real estate commission.

So What Does This Mean in Practice?

The opportunity here is significant. As a realtor, you have a warm, trusted relationship with every client you work with. When they buy a home, they need contractors… immediately and repeatedly. New roof. HVAC tune-up. Landscaping. Power washing before they list again five years later.

You're already making those recommendations. The question is whether you're getting compensated for them.

Platforms like ReferToday are built specifically for this. ReferToday is a referral marketplace that connects vetted local service businesses with paid referrers — including real estate agents who want to monetize the contractor recommendations they're already making. Service businesses list on the platform, set a referral commission, and you earn when your referral converts to a paying customer.

Because the service businesses on the platform provide post-closing home services — not settlement services — getting paid through a platform like ReferToday falls cleanly outside RESPA's restrictions. You still disclose the relationship to your clients per the Code of Ethics, but there's no federal law standing in the way.

A Quick Reference: What's Covered vs. What's Not

Type of Business

RESPA Applies?

Can You Accept a Referral Fee?

Mortgage lender / loan officer

✅ Yes

❌ No

Title company / escrow

✅ Yes

❌ No

Appraiser

✅ Yes

❌ No

Home inspector (transaction-required)

✅ Yes

❌ No

Homeowner's insurance

✅ Yes

❌ No

Plumber / HVAC / electrician

❌ No

✅ Yes (with disclosure)

Landscaper / lawn care

❌ No

✅ Yes (with disclosure)

Painter / contractor

❌ No

✅ Yes (with disclosure)

Moving company

❌ No

✅ Yes (with disclosure)

Cleaning service

❌ No

✅ Yes (with disclosure)

Power washing

❌ No

✅ Yes (with disclosure)

Note: This table reflects general federal RESPA guidance. State-specific rules may vary. Always consult your broker or a licensed attorney in your state.

The Takeaway

Most realtors are leaving a meaningful income stream untouched because they assume all referral fees are legally off-limits. They're not. The key distinction is whether the business you're referring is a settlement service provider (RESPA applies) or a post-closing home service provider (RESPA doesn't apply, disclosure still required).

If you're already vouching for plumbers, landscapers, cleaners, and contractors to your clients, which you should be, because it creates loyalty and repeat business. You might as well get paid for it.

That's exactly what ReferToday makes possible.

This article is for informational purposes only and does not constitute legal advice. Referral fee rules vary by state and circumstance. Always consult with your broker and a licensed real estate attorney before entering into any referral fee arrangement.

Ready to start earning from the referrals you're already making?

Learn how ReferToday works for real estate agents → https://refertoday.io/get-started