Many Illinois brokers want to step back from showings and paperwork but stay in the business. A common path is to place a real estate license on hold with a referral or license-holding company. The key question is simple: can you earn referral income while your real estate license is on hold in Illinois? In most cases, yes—if you keep a sponsoring broker and follow how compensation flows. This guide explains what “on hold” means in Illinois terms, how referral fees work, and how to set it up the right way.
What “license on hold” means in Illinois
“On hold” is an industry phrase, not a formal status in the statute. In practice, you move your license to a referral-only or license-holding sponsoring broker. You remain a licensed broker, but you do not practice. You do not join the MLS, write offers, take listings, or open lockboxes. You may refer buyers and sellers to active brokers and receive a referral fee through your sponsoring broker when the deal closes, where permitted.
This choice fits brokers who want less workload but do not want to cut ties with their sphere. It also helps if you plan to return to production later. You keep your network warm and keep a clear path back to a full-service office under a managing broker.
How referral fees flow in Illinois
All compensation to a broker must come from that broker’s sponsoring broker. A referral fee is part of the commission paid at closing. The receiving office’s sponsoring broker remits the agreed referral fee to your sponsoring broker. Your sponsoring broker then pays you under your independent contractor agreement.
You do not accept a referral fee from a consumer, lender, title company, or another broker directly. Keep every payment inside the sponsoring-broker channel. That protects your license and keeps you in compliance.
Many referral-only firms publish simple splits. Some charge a small annual fee and pay a high split. Others charge no annual fee and pay a lower split. Some use tiers based on volume. Ask for the terms in writing so you can compare the true cost at your expected volume.
When you can earn referrals
You can earn referral income as a non-producing broker when all of the following are true:
• Your real estate license is on hold with a referral or license-holding sponsoring broker.
• You refer a buyer or seller to an active Illinois broker who is in good standing under a managing broker and sponsoring broker.
• Your sponsoring broker and the receiving office’s sponsoring broker sign a referral agreement before the client signs a listing agreement or buyer representation agreement.
• The transaction closes and the receiving sponsoring broker pays your sponsoring broker per the agreement.
This path keeps the file clean and makes funding simple at closing.
When you cannot earn referrals
You cannot earn referral fees if you sit outside the sponsoring-broker channel or act like an active practitioner. Common blockers include:
• Your license is inactive with the state and you have no sponsoring broker.
• The receiving licensee is not a broker in good standing under a sponsoring broker.
• The payment source or method would violate federal or state rules on settlement services.
• The deal sits in a jurisdiction or setting that does not allow the referral as structured.
If your license is inactive, reactivate and affiliate with a sponsoring broker before you make referrals.
Simple habits prevent most issues:
• Use a written referral agreement. Name the client, property type, fee percent or flat amount, both sponsoring brokers’ legal names, and an expiration date.
• Make a clean handoff. Introduce the client, then let the receiving broker and managing broker run the file.
• Do not market yourself as active. Remove MLS logos and stop ads that suggest you list or sell.
• Track CE and renewals as Illinois requires. Set calendar reminders so you do not fall behind.
• Confirm E&O terms with your sponsoring broker. Many referral firms include coverage for referral activity.
• Send the agreement early. Aim for before the listing or buyer rep agreement, not after.
Typical referral fee ranges
Many residential referrals land near 25 percent of the side that closes. Some teams pay more for warm, ready-to-act clients. Others pay less for cold introductions. Luxury and commercial deals may use custom terms or a flat amount. Your sponsoring broker may set minimums or caps. Ask for examples at different price points so you can plan.
Costs and taxes
Expect two categories of cost:
• Sponsoring-broker costs. This may be an annual fee, a per-deal fee, or a split. Compare the total cost at your expected deal count.
• State costs. Renewal fees and any transfer fees to move between sponsoring brokers.
Referral income is business income. Your sponsoring broker will usually issue a year-end 1099. Keep simple records: signed referral agreements, email threads, closing statements that show broker payments, and any W-9s requested by offices. Set aside a portion of each check for taxes. Ask your tax pro about estimates if your volume grows.
How to set up your license on hold and start referring
You can set this up with a short plan:
- Check the Illinois Department of Financial and Professional Regulation (IDFPR) site. Confirm rules for referral activity, CE, renewal, and advertising while your real estate license is on hold.
- Choose a license-holding sponsoring broker. Compare fees, splits, payout timing, and contract terms. Ask how they track deals and handle paperwork.
- Transfer your license. File the sponsoring-broker change with IDFPR and sign the independent contractor agreement with the new sponsoring broker.
- Build a small roster of receiving brokers. Select brokers in your core markets and specialties. Verify their managing broker, sponsoring broker, and preferred referral form.
- Create a short client intake form. Capture name, contact, timing, price range, location, and key needs.
- Track each referral on a simple sheet. Dates, receiving broker, client, property type, and status.
- Check in at milestones. After the first appointment, at contract, and a week before closing.
- Confirm payment details early. Make sure the receiving sponsoring broker has your sponsoring broker’s W-9 and the signed agreement in the file.
- Thank the client after closing. A brief note keeps the relationship strong.
Ways to source referral clients
You already have a good audience:
• Past clients and your sphere
• Simple social posts that explain you can match people with a trusted local broker
• Out-of-area brokers who need a partner in your city
• Local pros who touch the move, like lenders and movers
Keep the message plain: you match clients with the right broker and stay available if they need a quick check-in.
Common mistakes
Avoid these problems and your files will move with less friction:
• Sending the referral agreement after the client signs with the receiving office
• Taking payments directly instead of through sponsoring brokers
• Letting CE or renewals slide
• Promising active-broker services while your real estate license is on hold
• Referring only to one broker without checking service quality
A short checklist and a calendar solve most of this.
Quick FAQ
Can I earn referral fees with my real estate license on hold in Illinois?
Yes, if you stay under a sponsoring broker and route payment sponsoring-broker to sponsoring-broker.
Is “on hold” an official status?
It is a common industry term. Your legal status sits with IDFPR and your sponsorship. The ability to earn referrals depends on your sponsoring broker and the referral agreement.
Do I need MLS access?
No. Referral activity does not require MLS access.
What if my license is inactive?
You need to reactivate and affiliate with a sponsoring broker before you make referrals.
Bottom line
You can earn referral income in Illinois while your real estate license is on hold when you keep a sponsoring broker, use a clear written referral agreement, and follow compensation flow rules. Keep CE and renewal dates on track, build a small network of reliable receiving brokers, and track your files. This approach keeps you connected to the business and makes a return to production smooth when the time is right.