SCR has heard reports that some REALTORS® making referrals to service providers were sometimes accused of making negligent referrals when the service provider did not perform to the consumer’s satisfaction (e.g., litigation communicated, ethics complaints, license law complaints, upset people leading to loss of referrals and loss of future business and receipt of bad reviews).
Some risk management thoughts:
Many buyers do not have local contacts for service providers and rely upon their buyer agent for referrals to service providers.
If you make a referral, have some level of trust and or knowledge about that service provider, because if the service provider fails to perform, the consumer may blame the REALTOR® making the referral as well as the service provider.
Some REALTORS® may provide short lists of service providers, perhaps with a link to the service provider’s information. So, the consumer has some service provider information to research and make their own choices.
Broker to Broker referrals require knowledge and consent by the consumer. SCR600 is the standard form for broker to broker referral.
Federal RESPA laws restrict referral to closing service providers in a quid pro quo manner for compensation except real estate broker to real estate broker.
The SCR forms have some risk management language on this topic
(e.g., https://screaltors.org/wp-content/uploads/Forms/130.pdf).
REALTORS® often provide disclosure for informed consent when the REALTOR® or their brokerage/team/corporate has a relationship with the service provider (e.g., personal relationship, ownership interest, financial interest, corporate relationship, joint venture relationship, self-dealing).
This information is only accurate as of 4/9/25. You must contact SCR for updates and changes to this information after 4/9/25 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)
This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.