The Referral Fee and the Unlicensed Marketing Partner
Jordan is a newly registered salesperson with Prairie Sky Realty in Saskatoon, four months into practice. A former coworker, Maya, runs a home-staging and social-media business but is not licensed in real estate. Maya introduces Jordan to a buyer who is ready to purchase a $415,000 townhouse. Maya asks for 20% of Jordan’s commission, paid directly to her marketing company, for the introduction. She also offers to write Instagram posts describing Jordan as ‘Saskatchewan’s top luxury agent’ and promising that Jordan will ‘guarantee the best price.’ Jordan’s broker is on vacation, the buyer has not signed any agency agreement, and Jordan needs the deal to meet this month’s office target. Jordan wonders whether to accept Maya’s help, pay the fee after closing, and use the posts because Maya is ‘only marketing.’
1. Can Jordan pay Maya 20% of the commission for the introduction? Explain the licensing and professional-conduct issues and what Jordan should do instead.
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Jordan should not pay Maya a commission-based referral fee. In Saskatchewan, trading in real estate and receiving compensation for it are licensed activities; a salesperson’s commission is earned by and paid through the brokerage, and the brokerage may not share commission with an unlicensed person for a real estate transaction. Calling the payment ‘marketing’ does not cure the problem if it is really contingent on the introduction and closing. Paying after closing is still a referral fee and can expose Jordan and the brokerage to discipline, restitution, and licence risk. If Maya provides genuine staging or social-media services, those should be documented as separate services with a fair fee that is not contingent on the real estate sale, and the broker should approve the arrangement. Jordan should tell Maya that any real estate referral must go through the brokerage and that no compensation can be paid to an unlicensed person for the referral. Jordan should also notify the broker before proceeding.
2. What is wrong with Maya’s proposed Instagram posts, and what advertising rules should Jordan apply?
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The posts are misleading advertising. ‘Saskatchewan’s top luxury agent’ is an unverifiable superiority claim, and ‘guarantee the best price’ promises an outcome Jordan cannot control. Saskatchewan advertising rules require advertising to be accurate, not false or misleading, to identify the brokerage, and to be approved or supervised by the brokerage. Social-media posts are advertising even if they are informal. Jordan should not publish the proposed wording. Any post should use factual claims that can be supported, include the brokerage name as required, avoid guarantees, and be reviewed under the brokerage’s advertising policy. Jordan should also keep a record of the approved version. If Maya posts independently, Jordan must ensure Jordan’s name and licence are not used in a way that suggests an unlicensed person is providing real estate services.
3. The buyer has not signed an agency agreement. What should Jordan do before providing services, and how does that affect the deal?
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Jordan should not slip into an implied agency relationship. Before advising or acting for the buyer, Jordan should have the brokerage enter into the appropriate written agency or service agreement, disclose the brokerage relationship in writing, and explain who the brokerage represents. If the buyer remains unrepresented, Jordan must be careful not to give buyer-side advice while acting for another party, and must disclose the brokerage’s role. The buyer should also understand that confidential information will not be protected in the same way without an agency relationship. Jordan should involve the broker because the buyer is unrepresented and the proposed referral fee creates a conflict. The deal can proceed only after the relationship is documented and the advertising and referral issues are resolved.