Real Estate Council of Alberta Fundamentals Practice Exam

What is the definition of a referral in real estate?

1. The act of closing a sale

2. The act of recommending or directing a person for service to another

3. The act of collecting commission

4. The act of conducting an appraisal

The correct answer is: The act of recommending or directing a person for service to another

The definition of a referral in real estate pertains to the act of recommending or directing a person for service to another. This process typically involves a real estate professional referring a client to another agent or service provider who can assist the client with their specific needs, such as buying, selling, or leasing property. Referrals leverage personal networks within the industry to connect clients with professionals who have the expertise and capability required for their situation. This choice captures the essence of how real estate professionals exercise their relationships and networks to foster business opportunities. Referrals can lead to increased trust and business for the agents involved, as clients often appreciate receiving a recommendation from someone they know. The other options relate to different aspects of real estate but do not define what a referral is. Closing a sale specifically refers to the finalization of a real estate transaction, while collecting commission pertains to the payment structure for real estate services. Conducting an appraisal involves evaluating the value of a property and is a distinct service that does not relate to the process of referral.