Benchmark Realty Takes A Stand For Referral Fee Transparency

Another brokerage is taking a step toward increased transparency related to referral fees paid by agents. On Wednesday, Tennessee-based Benchmark Realty announced a new policy related to referral fee transparency and client disclosures. 

The firm said that the policy is designed “to preserve trust, protect consumers and strengthen professionalism in the industry.”

Per the policy, all agents brokered by Benchmark Realty must disclose any and all referral fees, incentive payments or financial benefits expected to be paid to or received from any party as part of the real estate transaction. These disclosures must be made in writing, facilitated by updated language in the firm’s affiliate business disclosure form and the forms must be completed as soon as a referral agreement is created or known and no later than the moment a client signs any representation or transaction documents. Agents must upload the signed disclosure form into the transaction file. 

The policy covers referral fees related to agent-to-agent referrals, relocation networks, lead generation platforms, broker-to-broker referrals, marketing or advertising networks that compensate agents or any third-party service provider tied to compensation or incentives. According to Benchmark, clients must understand who is paying the referral fee, who is receiving it, the amount or how the fee is calculated and that the fee is not going to increase their costs or reduce the quality of service they receive from their agent.

Agents are not allowed to withhold disclosures, delay disclosures, minimize or obscure the nature or amount of the referral fee or participate in any referral arraignment that cannot be fully disclosed to the client. Those who do not comply with the policy will be subject to disciplinary action, including potential termination of affiliation with Benchmark Realty.

Benchmark Realty’s announcement comes one day after eXp Realty announced it was implementing enhanced disclosure standards and launching a new section of its seller and buyer agreements to provide greater clarity for consumers surrounding referral fees. 

These announcements come a little over a week after the National Association of Realtors’ Delegate Body overturned a vote by its board of directors to amend Article 6 of the trade group’s code of ethics. The amendment would have required Realtors to obtain a client’s consent any time they receive any money, rebate or profit from referrals. 

“While the national Realtor association, as well as most state and local associations have declined to adopt mandatory transparency policies, Benchmark Realty believes our clients deserve complete clarity regarding how real estate professionals are compensated,” a statement from the brokerage read.