If you’re a licensed real estate broker in Illinois but not actively working with clients, earning income through referrals can be a smart and efficient way to stay involved in the industry without the full-time commitment. One of the most common questions asked by new and seasoned agents alike is, “How much is the average referral fee?” Understanding how referral fees work—and how to maximize them through an Illinois real estate license holding company—can help you build a steady stream of passive income.
What Is a Referral Fee in Real Estate?
A real estate referral fee is a commission paid to a licensed agent or broker who refers a buyer, seller, tenant, or landlord to another agent who completes the transaction. The referring agent does not represent the client directly but makes the connection and is compensated for their network and lead generation efforts.
Referral fees are governed by both Illinois real estate law and brokerage policies, and they can only be paid between actively licensed real estate professionals through their sponsoring brokers. That’s where license holding companies come in—they allow referral-only agents to maintain their license in good standing without joining a traditional full-service brokerage.
The Average Referral Fee in Real Estate
Referral fees are negotiable between the brokers, but in most cases, the average referral fee is 25% of the commission earned by the agent who closes the deal. For example, if a referred client results in a $10,000 commission to the receiving agent, the referring agent would typically receive $2,500. However, this percentage can vary depending on:
- The type of property (residential vs. commercial)
- The strength of the relationship between the referring and receiving agents
- The complexity or value of the transaction
- Whether the client is a buyer or seller
In some high-value or highly competitive transactions, referral fees might go as high as 30% or more. On the flip side, if the lead is less qualified or requires significant nurturing, the fee might drop to 20% or lower. Is some circumstances the referral fee may even be a fixed fee, such as $2,000.
Why Use an Illinois Real Estate License Holding Company?
If you’re not actively practicing real estate but still want to collect referral fees, joining an Illinois real estate license holding company is a practical option. These companies exist solely to hold your license while allowing you to legally earn referral income without engaging in active brokerage duties like listing homes, hosting open houses, or managing contracts.
License holding companies are ideal for:
- Retired or semi-retired agents
- Agents transitioning careers
- Brokers who prefer networking over transaction management
- Those who want to keep their license active without paying dues
How Referral Fees Work in a Holding Company
When you hang your license with an Illinois real estate license holding company, you are still a licensed broker in the eyes of the Illinois Department of Financial and Professional Regulation (IDFPR), but you are typically not allowed to conduct transactions by your license holding company. This means you’re not representing clients directly—but you can still earn money from referring clients to active, full-service agents.
Final Thoughts
Understanding the average referral fee can help you set realistic expectations and make smart decisions about how to maintain and leverage your real estate license. Whether you’re looking to slow down your real estate activity or build a flexible side income, joining an Illinois real estate license holding company can give you the structure you need to legally and effectively earn money through referrals.
If you’re ready to keep your license active while stepping back from day-to-day real estate transactions, consider partnering with a reputable license holding company in Illinois, like NextPath Realty. The right company will make it easy for you to earn referral income and stay connected to the industry—on your own terms.