From compliance to connection, Preferred Properties of Texas gives agents the tools and mentorship to master real estate referrals and thrive in Stephenville and beyond.

In the Texas real estate world, referrals are more than just “word of mouth” — they’re a strategic part of building business, expanding networks, and growing your income. But to do them the right way, you need to understand the legal, ethical, and best-practice side of referrals.

At PPTX, we’re passionate about equipping agents with knowledge, structure, and support. We believe that when our agents thrive, our local communities benefit too. If you’re an agent (or prospective agent) looking for a brokerage that values transparency, teamwork, and growth, read on.

What is a Real Estate Referral — and Why It Matters

A referral in real estate is when someone (a license holder, a past client, or another business) connects a prospective buyer/seller to an agent or broker — often with the expectation of compensation if a transaction results. Because these connections involve introducing business, Texas law regulates how they must be handled.

Understanding the rules is critical — getting them wrong can lead to legal, financial, and reputational risk. At PPTX, we guide every agent through this process so you can maximize opportunity while staying fully compliant.

The Three Main Types of Referrals in Texas

Here’s a breakdown of how Texas law treats different types of referrals — and what you need to know as an agent:

1. License Holder → License Holder

If a real estate licensee (agent or broker) refers business to another licensee and expects compensation, the referring party must hold an active Texas real estate license at the time of referral.

• Inactive licensees cannot legally receive referral fees.
• It’s wise (though not always legally required) to disclose the referral fee to the client to maintain transparency and trust.
• A written referral agreement should outline the identities of both parties, the referral fee (percentage or flat), timing, duration, and when payment is due — so there’s no ambiguity.
• Typical referral fees fall in the 20%–35% range of the gross commission.
• Any commission or referral payments to sales agents must flow through their sponsoring broker — direct agent-to-agent payments are prohibited under TREC rules.

At PPTX, we provide templates and oversight to ensure referral agreements are properly documented, fair, and legally safe.

2. Client → License Holder

A past client or acquaintance may want to refer a friend or family member to you. But if they expect payment for the referral, that might cross into unlicensed brokerage activity.

• Texas rules (specifically TREC Rule §535.20) permit nominal gifts (up to $50 in value) for referrals from unlicensed persons — but these must be non-cash, merchandise-only, and not convertible to cash.
• Incentives like rent discounts, credits, or cash payments are disallowed.
• Be cautious: schemes like raffles or sweepstakes may violate the rule if the winner receives more than $50.

We coach our agents on how to ethically recognize and thank referrers — without risking TREC sanctions.

3. License Holder ↔ Other Businesses

A real estate agent often works with service providers (title companies, inspectors, lenders, contractors). Sometimes these businesses may refer clients to you, or you may refer clients to them. But the rules are strict when referral payments or financial incentives are involved:

• Settlement service providers (e.g., title companies, inspectors) cannot pay or receive referral fees tied to real estate transactions. This protects independence and client interests.
• In 2019, TREC strengthened “pay-to-play” restrictions to prohibit brokerages from charging fees to be included on a referral list for settlement providers.
• If a non-settlement business refers leads to you, any referral fee or rebate must be disclosed to the client in writing, and the client must consent.

Because of these nuances, agents at PreferredPropertiesOfTexas have access to legal guidance and compliance review to ensure any referral arrangement is safe, transparent, and ethical.

How Proper Referrals Strengthen Your Business (and Your Reputation)

When handled correctly, referrals can:

• Expand your lead pipeline without expensive marketing
• Build stronger relationships with other agents and brokers
• Increase your reputation for integrity
• Generate passive income (once a referral closes)
• Lower risk of conflicts or compliance missteps

But if referrals are mismanaged — undisclosed fees, unclear agreements, or noncompliance with TREC — the consequences can be severe: license discipline, reputational damage, or even legal trouble.

How PreferredPropertiesOfTexas Supports Referral Success

At PPTX, we don’t leave referral practices up to chance. We support our agents in multiple ways:

• Training & education: We host regular workshops, legal updates, and mentorship on referral best practices.
• Templates & systems: We provide vetted referral agreement templates and internal processes so paperwork is clear, streamlined, and compliant.
• Legal oversight: Our leadership team and compliance advisors review referral arrangements, disclosures, and documents.
• Culture of integrity: We place clients first. We encourage agents to refer leads only when it genuinely benefits the client, not just the commission.
• Growth mindset: We believe in sharing knowledge — in fact, many of our top agents started with minimal experience and grew under our guidance.

Because we serve counties: Erath, Bosque, Hamilton, Parker, Hood, Tarrant, Palo Pinto, Comanche, Brownwood, Eastland, and the surrounding Cross Timbers area, we also help agents develop strong local networks and referral relationships in these communities.

Why You Should Consider Joining the PreferredPropertiesOfTexas Team

Are you an agent who wants:

• A supportive, collaborative brokerage rather than a silo?
• Access to training, tools, and oversight that protect your license and reputation?
• Opportunities to plug into a growing referral network and get high-quality leads?
• Freedom to build your own business with backing and structure?
• A place where your success is celebrated, and your growth is part of the mission?

If you answered “yes,” you might be a perfect fit for our team. We’re currently looking for a few good agents who are committed to excellence, integrity, and community.

Referrals are a powerful tool — but only when used properly. They require attention to licensing, disclosure, documentation, and ethics. As an agent with PreferredPropertiesOfTexas, you won’t have to navigate this alone: we’ll guide you, support you, and protect you.

If you’re curious to learn more — whether you’re an established agent or new to real estate — we’d love to talk. Reach out to us today, and let’s start building your referral network the right way.

Let’s build something extraordinary — together.

Click here to book an appointment with PPTX Broker, Case Horton

Preferred Properties of Texas Real Estate Agency

The Preferred Way to Buy, Sell, and Manage Real Estate in Texas

254-965-7775  |  2441 Senator Robert J. Glasgow Loop, Stephenville, Texas 76401