Referral fees in real estate have become a controversial practice that inflates the value chain, benefiting companies like Zillow while compromising the interests of both consumers and agents.
When an agent refers a lead to another agent, they can earn up to half of the commission, but this comes at the cost of inflated prices for consumers.
Despite providing some benefits like vetted agent lists, referral fees can lead to conflicts of interest as agents may prioritize profits over the best outcomes for clients.
The legal framework surrounding real estate referral fees is inconsistent; while kickbacks to lenders are prohibited, similar fees between agents remain legal and largely hidden from consumers.
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