Could referral fees be real estate’s next legal flashpoint?
A new Consumer Policy Center report says referral fees charged by companies like Zillow and Realtor.com reinforce high commissions.
Key points:
- CPC researchers say 30-40% referral fees keep commission rates high since agents have less incentive to negotiate when referrers take such a large cut.
- Among referral companies, Zillow is the biggest player, according to the report, facilitating more than 1.4 million buyer connections through its Premier Agent network.
- Zillow disputes the CPC’s claims, citing an internal analysis that found referral fees have little to no effect on commissions.
- While NAR rejected a referral fee disclosure proposal, some brokerages have implemented their own disclosures to increase transparency and minimize legal risk.
As the real estate industry continues rewriting policies around pre-marketing, AI disclosures and compensation transparency to reduce legal exposure, a new report suggests another practice may draw scrutiny: referral fees.
The study from the Consumer Policy Center (CPC) argues that commission-based referral companies — including Zillow and Realtor.com — are helping to maintain inflated fees by charging agents 30% to 40% of their earnings when transactions close. Those high fees, authors Stephen Brobeck and Wendy Gilch suggest, "reinforce high commission rates, jeopardize the quality of consumer service, and are associated with deceptive practices."
Less incentive to negotiate?
When a buyer agent pays a third or more of their commission to a referral company — and then splits the remainder with a broker — they may have little room to reduce their fee without materially cutting into their earnings, the report suggests. That changes the economics of the transaction, the researchers argue, and helps sustain 3% buyer agent commissions at a time when the industry is under pressure to demonstrate that fees are negotiable.
The scale of the practice amplifies the concern, according to the report, which cited data estimating that up to 80% of home sales involve some form of referral. Among commission-based referral platforms, the report identifies Zillow as the dominant player, noting that the company says it facilitates more than 1.4 million buyer connections annually through its Premier Agent network and 400,000 transactions — roughly 10% of all home sales — through its platform.
Because referral companies like Zillow are paid only when deals close and often prioritize high-converting agents, the model inherently favors speed and volume, the report argues — and may discourage fee flexibility.
That structure is already drawing legal attention. The CPC pointed to a class-action lawsuit filed against Zillow in Sept. 2025 alleging that referral payments illegally maintain "high and inflexible commissions" and are not disclosed to buyers or sellers, as well as other referral-related litigation involving Rocket Mortgage and Veterans United Home Loans.
Transparency debate intensifies
To better serve consumers, the report calls for mandatory, upfront disclosure of referral fees. The CPC researchers noted that some portal "contact" buttons route consumers to buyer agents without clearly explaining the referral relationship, a model CoStar CEO Andy Florance has publicly criticized as "lead diversion."
But referral disclosure has already become a flashpoint inside the industry. At NAR NXT last November, the National Association of Realtors' Delegate Body rejected a proposal that would have required greater transparency around referral fees — a significant source of income within the industry. The CPC report cited a survey estimating that 42% of agents earn between $10,000-$50,000 annually from agent-to-agent referral fees.
Despite the failed vote at NAR NXT, some brokerages — including eXp Realty and Benchmark Realty — have moved forward independently, rolling out enhanced referral fee disclosure forms aimed at reinforcing agents' fiduciary responsibilities and clarifying compensation arrangements for consumers. Both companies framed the changes as a proactive step to strengthen transparency, even without a national mandate.
As the industry remains hyper-focused on minimizing legal exposure tied to compensation practices, the report suggests referral fees may represent the next area of scrutiny.
Zillow disputes findings, characterizes fees as a marketing expense
Zillow, for its part, sharply disputed the CPC report's conclusions.
"This report has little to no evidence for its claims," a company spokesperson said in a statement shared with Real Estate News, arguing that it relies in part on anonymous online commentary rather than verified sources.
Zillow described referral fees as "a business and marketing expense agents pay in the same way they might otherwise have spent thousands on billboards, print ads, and other marketing tools."
The company emphasized that under its Preferred program, agents "don't pay unless they've helped their clients succeed in buying or selling a home," and claimed there is little to no evidence that referral fees impact commission rates. Zillow said its internal analysis found no statistically significant difference in commission rates between agents in its Preferred program and other agents in 2025, adding that 85% of buyers and sellers surveyed described their agent's commission as fair or even too low.
In a Feb. 23 blog post, Zillow outlined how it makes money, highlighting agent advertising, mortgage origination and rental services. The post explains that agents pay to appear when consumers click "Contact Agent" or "Request a Tour," including success-based programs in which payment occurs only after a closing — but it does not use the term "referral fee."
Real Estate News has also reached out to Realtor.com for comment.