Gray Area with Referrals

[William Hochstedler]

Hi,

I'm looking for some guidance as to what constitutes a referral. Recently, I've been approached by licenses asking for referral fees after I (or my agents) have been working with a client.

Here are a few examples:

1. An agent refers a prospect (who he has never met, but knows through a third party) to a property management company as a tenant because they are not currently qualified to buy and must rent. After a year, the tenant thinks they can qualify for a mortgage and chooses to work with the agents at the pm co. Despite the tenant not even recognizing the name of the referring agent and responding "no" to the are you working with a Realtor question, the referring agent demands a referral fee.

2. An agent is sitting in the waiting room of his insurance agent and starts talking with another customer. The agent learns that the customer is looking to buy a house and sets up an appointment. The agent is then contacted by the insurance agent's wife who is an active license demanding a referral fee because the contact was made in an office of which she is a part owner.

3. An agent has been soliciting her sphere of influence which includes contacts from her former place of employment including employees and clients. It turns out that the agent's former boss has an active license, but is not using it to conduct real estate transactions. He is now demanding referral fees from all transactions conducted with contacts met while the agent was employed at his company.

I have been unable to find any clear language specifying what constitutes a referral outside of an agreement made at the front end. I want to maintain good relationships with professionals in my market, but when do these requests become ridiculous?

Thanks for any advice.

Wm