Realtor Retainer Fees

[Jarrett Duncan]

Hey guys,

I own a rental property in Denver but have recently been searching/buying out of state due to the price points and to diversify across different markets.  I recently closed on a 4plex in FL but had a less than stellar experience with my realtor.  I'm now exploring other markets and trying to build up a team, and I've encountered a couple brokers in both AZ and FL who require either a retainer fee or charge by the hour for their services (identifying, evaluating, walkthroughs, etc.).  Both credit this back to you at closing (against their commission), assuming you close on the property.  If you don't eventually close on a property, you forfeit that money.

I'm just curious if anyone else has worked with a realtor/broker under this arrangement and what their thoughts/experiences were?  I obviously understand their reasoning for doing this to safeguard against people wasting their time and that is definitely not my intent.  However, this is different from the typical broker arrangement so just wanted to see if anyone else has had experience with this and how it worked out for them.

Thanks!

Jarrett Duncan

[Davida McDonald]

Great thread. I'm a Realtor in Florida in a very high turnover tourist are. There are more people interested in the "idea" of owning a property here than actually pulling the trigger. What happens is, people come down on vacation for a few weeks, decide they love it so much and want to buy a place, ask the Realtors to show them tons of properties, then you never hear from them again. Or, they stay in contact for years and years asking 1000's of questions asking for a video walkthrough after walkthrough with no offer ever made and the end result is still unknown. 

About 2 years ago I started charging a retainer to all Investment Buyers not located in the area and out of state vacation/2nd home buyer clients. It's not that I am untrustworthy or can't do my job, or that I'm "not" a seasoned Realtor, I charge a retainer because I AM A BUSINESS. I don't work for free. A serious Investor will respect the work it takes from his Agent and understands that business is business and should have no problem putting up a retainer. I have been a Realtor for about 10 years now and I can't believe I didn't charge a retainer before 2 years ago!! I have been able to weed out so many "so-called Investors" and vacation/2nd home buyers that want nothing more than to say they saw a cool house while on vacation and have no intention for the next 5 years or more of ever buying 1 property. Thankfully, I have had very minimal backlash from my second home/vacation home buyers that I charge a retainer from. I educate them on what their request entails from me, they see the work I put in because I am extremely transparent, and they appreciate me and me them. It's a win-win.

The bottom line is if you want a good Realtor, you have to trust them and they have to trust you. The retainer is a benefit to both parties. Meaning, you as the buyer are obligated to make a purchase within an allocated time and your Realtor is obligated to fulfill their duties to standards. A lot of agents stop responding to customers/clients when they feel the customer/client is not serious, trustworthy or committed. The retainer agreement satisfies both sides... Successful people in any business that are good at what they do, don't work for free. Realtors don't get paid hourly or salary, we only get paid if and when a property closes. I also don't show any properties to any buyers without a pre-approval in my hand and have spoken to the lender or obtained a proof of funds letter if its a cash purchase. Asking for a retainer is a MUST in my business!