REALTORS^® and their clients often depend upon third-party service providers during a real estate transaction. Clients frequently ask for recommendations for home inspectors, contractors, surveyors and other professionals.

Because your advice carries weight, it’s important to manage both your responsibilities and the legal risks associated with making referrals. 

CREB^® and REIX offer the following reminders:

1. Be clear about your intentions

Provide two or three options for each service and encourage client to do their own research. Make it clear that your suggestions are based on past experience, client feedback or colleague referrals, and that clients are free to use any provider. 

Document the conversation. Consider confirming your recommendation by email or text rather than relying on a verbal discussion. 

As stated in RECA’s Recommending Service Providers bulletin, “The issue isn’t how many service providers you recommend, but rather how you make the recommendation.”

2. Avoid acting as the intermediary

Members should not select or pay for services for their client. Arranging and paying for services such as inspections, particularly when a commission is pending, may create a conflict of interest. 

If issues arise after a glowing inspection and conditions are removed, you may not be protected. 

3. Stay within your area of expertise

Do not provide guidance in areas outside your licence or professional scope, such as inspections, mortgage financing, construction, property development, condominium document review or legal matters. 

If a claim arises and you are found to have acted outside your expertise, REIX coverage may not apply. 

4. Avoid minimizing concerns

Clients rely on your professional judgement. Casual estimates or assurances about repairs or costs, such as “that’s an easy fix to the furnace — shouldn’t cost more than $1,000,” may be interpreted as expert advice. 

According to REIX, this is a common issue and coverage may be limited if you appear to be advising outside your scope. 

5. Maintain your referral list

Update your business practices to keep your list of recommended providers current. 

• Diarize a time in your calendar to check their reviews and online presence throughout the year 

• Ask clients about their experience 

• Seek input from colleagues regarding who they recommend and why 

• Be open to feedback and update your recommendations as needed

The REALTOR^® Code 

Be mindful of the REALTOR^® Code when providing recommendations to your clients.

Rule 10 — Outside Professional Advice 

The REALTOR^® shall encourage parties to a transaction to seek the advice of outside professionals where such advice is beyond the expertise of the REALTOR^®.

Rule 12 — Competent service 

A REALTOR^® shall render a skilled and conscientious service, in conformity with standards of competence which are reasonably expected in the specific real estate disciplines in which the REALTOR^® engages. 

Referrals are a routine part of real estate practice. Clear communication, proper documentation and well-managed processes help protect you and your clients.