In real estate, a referral can carry more weight than you think.
A client asks for a roofer, electrician, plumber, landscaper or contractor. You have a name you’ve used before—or someone you’ve heard good things about—and you pass it along.
Simple, right?
Not necessarily.
A 2022 New Mexico appellate case offers a reminder that recommending a vendor can create risk for a real estate professional when reasonable care isn’t used in making that recommendation. In the case, a broker recommended a roofer without verifying whether the contractor was properly licensed or insured. During the repair, a fire severely damaged the homeowners’ property. The court ultimately found that the broker owed a duty of reasonable care, even though the broker’s relationship with the clients was not fiduciary.
Fast Referrals Need a Slow Check
The lesson for 2026 isn’t “never recommend a contractor.” It’s know who you’re recommending before you put your reputation—and potentially your business—behind the referral.
Before adding a vendor to your trusted list, consider verifying:
- Licensing: Is the contractor properly licensed or accredited for the work?
- Insurance: Can they provide current proof of liability coverage?
- Track record: Do you have enough experience or reliable references to feel comfortable recommending them?
- Professionalism: Do they communicate clearly, show up when promised and provide written estimates?
- Credentials: Are their qualifications appropriate for the specific service they’re providing?
And don’t stop at one name. NAR’s guidance recommends giving clients several qualified professionals to choose from, rather than steering them toward a single provider.
Keep the Client in the Driver’s Seat
There’s another important distinction: a referral isn’t the same thing as hiring the vendor.
Whenever possible, let the client contact, evaluate and contract directly with the professional they select. NAR specifically advises brokers to avoid hiring third-party vendors directly for work performed at a client’s property.
Your client agreements should also clearly explain who is responsible for researching and evaluating contractors. A well-written agreement can help establish expectations, but it shouldn’t replace good judgment.
The 2026 Takeaway
Today’s real estate business moves quickly. Between digital referrals, online reviews, AI-generated recommendations and increasingly specialized home services, it’s easier than ever to send a client a name in seconds.
That’s exactly why the vetting process matters.
Your vendor list isn’t just a convenience for clients. It’s part of your professional risk-management strategy.
Before you hit “send,” take a few extra minutes to verify the credentials, insurance and reputation of the person you’re recommending. Your clients deserve a qualified professional—and your business deserves the protection that comes from making thoughtful, defensible referrals.
Source: REALTOR® Magazine
“Always Vet Your Vendors”
National Association of REALTORS®
