Can a Real Estate Agent Earn Referral Fees in Another State?

Are out-of-state referrals just a nice favor between agents? Not necessarily. For a licensed real estate professional, a client moving across the country can become a legitimate source of referral income, a stronger client relationship, and a more sustainable real estate business.

The short answer

Yes, a real estate agent can usually earn a referral fee when sending a client to an agent in another state. The referral generally must be handled through the agents' brokerages, documented in writing, and structured according to the laws of both states.

The referring agent usually does not need to hold a real estate license in the destination state if they are only making the referral. However, they typically cannot practice real estate in that state without the required license or legal authorization.

That distinction is the key:

• Referring a client to another state may be permitted.
• Representing the client in another state usually requires a license there.
• Receiving compensation generally requires an active license and payment through the appropriate brokerage channels.

State laws vary, so agents should always confirm the details with their broker and the applicable state real estate commissions.

How do real estate agent referrals across state lines work?

An interstate referral usually begins when your client tells you they are moving, buying an investment property, selling a second home, or relocating for work.

For example, imagine a client in Colorado is moving to North Carolina. You may not be licensed in North Carolina, but you can introduce the client to a qualified North Carolina agent. That local agent handles the destination transaction while your brokerage and the receiving brokerage document the referral arrangement.

A typical process looks like this:

1. Identify the client's needs and destination market.
2. Select a qualified agent in the destination state.
3. Discuss the referral terms with the receiving agent and both brokers.
4. Complete a written broker-to-broker referral agreement.
5. Make the introduction and transfer the relevant client information.
6. Allow the receiving agent to handle the transaction under their state's rules.
7. Receive the referral fee through your brokerage if the transaction closes.

The referral agreement should identify the client, the participating brokerages, the referral percentage or fee, the transaction type, and when the fee becomes payable.

Most referral fees are earned only after the referred transaction closes.

What is a typical real estate referral fee percentage?

There is no single national referral fee percentage required by law. The fee is generally negotiated between the brokerages.

In common industry practice, interstate real estate referrals often fall between 20% and 35% of the receiving agent's gross commission, with 25% frequently used as a benchmark.

Here is a simple example:

• Receiving agent's gross commission: $10,000
• Referral fee at 20%: $2,000
• Referral fee at 25%: $2,500
• Referral fee at 30%: $3,000

These numbers are examples, not guarantees. The final amount may depend on the market, the quality of the lead, the expected transaction value, the brokerages' policies, and the agreement between the parties.

The referral fee is not normally paid directly from one salesperson to another. In many states, the money must move from the receiving brokerage to the referring brokerage. The referring brokerage then pays the agent according to the agent's independent contractor agreement or compensation plan. For a deeper look at how those percentages are calculated and paid, see our guide on how real estate referral fees work between agents.

Can a real estate agent refer a client without being licensed in the other state?

Often, yes, if the agent is making a referral rather than practicing real estate.

Real estate licenses are issued by states, and they are not universally portable. Even states with license reciprocity may have specific requirements, applications, or limitations.

An agent who is not licensed in the destination state should generally avoid:

• Negotiating the purchase or sale of property there
• Writing or interpreting contracts for that transaction
• Advising the client on state-specific legal or transaction matters
• Advertising themselves as the destination-market representative
• Performing activities that require an active license in that state

The referring agent's role should be limited to the introduction and appropriate follow-up. The receiving agent becomes responsible for local representation, compliance, negotiations, contracts, and transaction management.

What licensing rules apply to interstate referral fees?

Licensing rules differ by state, but several common principles appear across many jurisdictions.

1. The referring agent generally needs an active license

Many states restrict referral compensation to licensed real estate professionals or properly licensed brokerages. An unlicensed person may not be allowed to receive a fee for activities that require a real estate license.

If your license is inactive, expired, or suspended, you may not be eligible to receive a referral fee. Confirm your status before making the referral.

2. Both brokerages may need to approve the agreement

Your broker may require a specific referral form, internal submission process, or compliance review. The receiving agent's broker may have additional requirements.

Do not rely on a casual text message or verbal promise. A written agreement protects everyone involved.

3. The destination state may have its own restrictions

The destination state may regulate:

• Whether an out-of-state agent can receive compensation
• Whether compensation must be paid broker to broker
• Whether the referral must be made before the client is contacted
• What activities count as licensed practice
• Whether specific disclosure language is required

When in doubt, ask both brokers before introducing the client.

4. Federal law still matters

The Real Estate Settlement Procedures Act, commonly called RESPA, generally does not prohibit referral fees between properly licensed real estate professionals when the payment relates to a bona fide real estate referral.

However, RESPA can prohibit kickbacks or unearned fees connected to settlement services such as mortgage lending, title, escrow, and other covered services.

That means an agent should not treat a payment from a lender, title company, or settlement provider as equivalent to a broker-to-broker real estate referral fee. The legal analysis may be different.

Relevant guidance includes the Colorado Division of Real Estate's position on RESPA and referral fees and Virginia REALTORS® guidance on referral income.

What is the difference between referring and practicing in another state?

This is the question agents should take most seriously.

A referral is an introduction. Practicing real estate is providing services that require a license in the state where the property is located.

Consider this example:

A former buyer tells you they are moving from Arizona to Tennessee. You introduce them to a trusted Tennessee agent and provide basic background information with the client's permission. The Tennessee agent takes over the local relationship and handles the transaction.

That is materially different from:

• Advising the client on Tennessee contract terms
• Negotiating with the Tennessee seller or listing agent
• Preparing Tennessee transaction documents
• Showing property in Tennessee
• Giving detailed advice about Tennessee disclosures or regulations

If you want to actively represent clients in another state, investigate that state's licensing requirements before performing licensed activities.

How can an agent build a national referral network for realtors?

A national referral network is not built by collecting hundreds of names and never contacting them. It is built through trust, consistency, and useful relationships.

Start with these steps:

1. Choose a few target markets. Begin with places your clients commonly move to or from.
2. Meet agents through real estate networking events. Look for professionals who communicate clearly and understand their local market.
3. Ask about their specialties. Some agents focus on relocation, investors, luxury property, military moves, or first-time buyers.
4. Create a simple referral standard. Decide what information you will provide and how quickly you expect follow-up.
5. Track every introduction. Use your CRM, spreadsheet, or brokerage referral platform.
6. Stay in touch after the referral. The client experience affects your reputation, even when another agent handles the transaction.
7. Give before you ask. Share market information, introductions, and opportunities with other agents.

Agent Impact Network is built around this relationship-first approach. It functions as a referral network for realtors who want to connect across markets, learn practical business strategies, and build a sustainable real estate business without relying entirely on constant prospecting. For a full eight-step process, see our guide on how to build a national real estate referral network.

Interstate referral checklist

Before sending a client to another state, confirm:

• Your license is active.
• Your broker approves the referral.
• The receiving agent is properly licensed.
• Both brokerages accept the arrangement.
• The referral agreement is in writing.
• The fee and payment timing are clear.
• The referral will be paid through the brokerages.
• You are not performing licensed activities in the destination state.
• The arrangement does not involve an improper settlement-service kickback.
• The client understands who will represent them locally.

Final answer: Can a real estate agent earn referral fees in another state?

Yes, in many situations, a licensed real estate agent can earn a referral fee for sending a client to an agent in another state. The referral should be documented through a broker-to-broker agreement, and the agent must follow the laws of both states.

The referring agent does not automatically need a license in the destination state, but they must avoid practicing real estate there without proper authorization. For agents who want to create sustainable real estate income streams, interstate referrals can be a valuable part of a relationship-based business model.

Want to connect with agents in other markets and learn more about real estate networking? Join the Agent Impact Network Facebook community and subscribe at REARNSubscribe.com.

This article is for general educational purposes only and is not legal advice. Referral rules vary by state and brokerage. Confirm your specific situation with your broker, attorney, and applicable state real estate commission.

Sources and further reading

• Virginia REALTORS®: What You Need to Know About Referral Income
• Pennsylvania REALTORS®: Referral Fees and Common Scenarios
• Minnesota Statute Section 82.70
• Wisconsin REALTORS® Association: Referral Fee Guidance
• Texas Real Estate Research Center: Understanding Real Estate Referrals in Texas
• North Carolina Real Estate Commission: Can I Get Paid?