Is my real estate agent allowed to collect a referral fee when they recommend a home inspector to me?
I always recommend that buyers get a home inspection, so I’m glad to hear that you’re looking for the right inspector for you.
Your broker or salesperson is allowed to receive a referral fee when they connect you with a home inspector, but they are required to disclose their referral arrangement to you in writing before you contract the inspector’s services.
In fact, this disclosure applies to all types of service providers, not just home inspectors — for example, a mortgage broker. And when you’re selling, you might look to a home stager, painter, or photographer to help your property look its best.
If your broker or salesperson is receiving any direct or indirect benefit from a service provider for a referral, they are required to let you know before you hire their recommended provider. The disclosure doesn’t just apply if there’s money changing hands. It could even include a bottle of wine they receive as a “thank you.” In addition, your representative has to tell you in writing if they have any type of personal relationship with the service provider. For example, if they’re family members or personal friends.
With that in mind, should you use the service provider that your representative is recommending? At the end of the day, it’s your choice.
Finding the right providers for your needs can sometimes be a challenge. Because of their history with previous clients and service providers, your representative will have useful insights on who to work with.
But if your representative discloses that they would get a benefit from the referral, and you’re uncomfortable with that arrangement, there are certainly other ways to find these services. Friends and family can also be a good resource for referrals.
But no matter what source you’re using to find service providers, it’s always good to shop around, do some research and interview more than one before you choose who to work with.
Finding the right service provider can make a big difference in the buying and selling process. A reference from your broker or salesperson can be useful, but it’s important to know whether there’s any benefit they’ll receive for it. As with all aspects of a real estate trade, it’s important to make an informed choice.Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.