Before you make the introduction, use this referral agreement checklist to make sure you understand what you're agreeing to. A private-money referral arrangement can involve more than simply connecting a borrower and a lender.
Use this checklist before you sign anything. It pairs well with our deeper guide to referral agreements and compensation.
1. What Deal the Agreement Covers
Be specific about which deal, borrower, or type of transaction the agreement applies to. An agreement that is vague about scope is an agreement that's easy to dispute later.
2. How Compensation Is Structured
Understand how any compensation is calculated and when it is earned. If you can't explain it in a sentence, it isn't clear enough yet.
3. Who Is Included in the Arrangement
Know every party involved, and who is entitled to what. Surprises about who else is in the arrangement are best found before you sign.
4. When Payment Occurs
Timing matters as much as amount. Confirm at which point in the transaction payment is due, and what has to happen first.
5. What Happens If the Deal Doesn't Close
Not every deal closes. Make sure the agreement says what happens to the arrangement and to any compensation if the deal falls through or changes.
6. What State and Brokerage Requirements Apply
Rules differ by state, and licensed professionals often face additional requirements through their brokerage or employer. Confirm what's permitted before accepting or arranging compensation. If you are weighing whether referring or originating fits you best, see refer vs. originate.
7. How the Agreement Is Documented
Put it in writing, keep a copy, and make sure everyone involved has the same version. A documented agreement protects every party and your working relationships.
Use This Referral Agreement Checklist Before You Sign
If you are making private-money introductions regularly, a process matters more than a good memory. PMB Network members get a vetted lender directory, live Scenario Desk calls, Support Desk Q&A, and the Brokering Fundamentals track. Membership is $79/month, cancel anytime, no contracts. Save this checklist for your next referral conversation.
Key Takeaways
- Before signing, confirm what the agreement covers, how compensation works, who is included, when payment occurs, and what happens if the deal doesn't close.
- Always verify what your state and your brokerage or employer allow before accepting or arranging compensation.
- Put the arrangement in writing and make sure everyone has the same version.
- This checklist is educational and is not legal advice. Consult a qualified professional about your situation.
Frequently Asked Questions
Do I need a written agreement for a private money referral?
A written agreement is strongly advisable because it clarifies scope, compensation, and timing. Whether one is required depends on your state and your brokerage or employer, so confirm what applies to you.
What should I check first before signing a referral agreement?
Start with what the agreement covers and how compensation is structured, then confirm what your state and your brokerage or employer permit.
What if the referred deal doesn't close?
The agreement should say what happens to the arrangement and any compensation if the deal falls through or changes. If it doesn't, ask for that to be added before you sign.
Is this checklist legal advice?
No. It is educational only. Consult a qualified professional about your specific situation and state requirements.
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Results are not guaranteed. Compensation for referrals or brokered deals is not guaranteed and depends on the transaction, the lender, your brokerage or employer, and applicable state requirements. This article is educational and is not legal advice.