Do you pay a referral for a prior client ? Tough question.

Here is the scenario: Another agent calls you to discuss a prospect, you agree to 25% referral. Upon receiving the referral agreement you realize you have done business with the prospect in the past. Do you still sign and honor the referral ?

Most of the times it is insider information that gets you the deal. When I take a referral I indicate to the other agent that the only time I will not pay is if I am currently negotiating the listing or have already talked to the buyer.

Otherwise, I happily pay 25-30% and know that this agent will refer more business and other agents to me in the future.

If you did not know about the intent of the Seller, despite having a prior relationship, then the right thing to do is still pay a referral. Anyone can claim prior contact or dealings with a referred prospect.

What you need to ask yourself is: what if this agent never called you and gave that information to someone else and they got the listing/buyer ? Now I bet you would gladly pay the 25-30% referral to get a shot at it...

Please don't be greedy. What is valuable is the insider information. This is why spies get paid....