If an agent were truly qualified in their field (there aren't very many in Chapel Hill) then a retainer is acceptable and in some markets I have no problem paying one. But most realtors, especially the ones in this area, just want to unlock doors and run around doing a bunch of nothing and they don't add any value to the real estate buying process as they only care about making their 6% commission so I certainly haven't found any worth giving a retainer too, and I certainly don't want to work with an agent that can't afford to drive around and pay for gas or take me to lunch.

Wed Jul 16 2008, 10:30

Let me play devil's advocate and argue "yes."

Charging an up front retainer fee is simply another way of qualifying the buyer. Agents do that anyhow all the time, so as not to waste time with people who appear not to be serious. Many ask whether the buyer is prequalified; lots of agents tell me they won't even deal with people who haven't taken that step. Or a buyer with a $30,000 annual income, no real savings, and no co-signers, who demands to see properties priced at $400,000 and more. And so on.

Or some of the questions here on Trulia: "I want to find a free source of foreclosure listings. I don't want the trial offers; I don't want to pay anything." Sure. They're talking about spending hundreds of thousands of dollars, certainly a major purchase in my book, and they're not serious enough to spend a couple of dollars? I'm not defending any of the foreclosure-listing services, just pointing out that I'm not sure that these folks are really all that serious.

And, oddly enough, psychologically, once someone has "invested" money (or time or effort) into a project, they become more committed to it. People who donate money to a political campaign become more invested in that campaign, various studies have shown. The people who've donated feel more of a vested interest in the outcome.

I know plenty of real estate investor "gurus" who started off offering an arrangement like: "I'll help and support you on your first two deals. I won't charge you anything up front. But I do want 50% of your profits from those first two deals." That pitch didn't work. They changed the pitch slightly, to: "I'll help find and support you on your first two deals. I'll charge you $5,000 up front. And I want 50% of your profits from your first two deals. When the second deal closes, I'll refund your $5,000, so it really hasn't cost you anything." That second pitch--the upfront cash coupled with a refund--works wonders. It not only separates the serious investors from the dabblers, but it creates a much greater "buy in" from the would-be investors.

Finally, here's a story I've told here on Trulia before. It doesn't have anything to do with real estate, but it does have a lot to do with perceived value. A number of years ago, the association I worked for printed an annual "Proceedings of the Annual Meeting." For decades, we'd used a top-notch, expensive printer in Washington, D.C. (Merkle Press, if anyone remembers. I think they'd print the weekly transcript of "Meet the Press.") But costs were climbing, and the association was pinched for funds. We were paying $11,000 a year (this was back in the 1970s). I got a call from a printing company salesman. We met, and he bid $3,000 for the same job. Now, I KNEW something was wrong. If he'd bid $8,000 or $9,000, I'd have recommended switching in an instant. Even $7,000. But his bid was so low that there had to be something wrong with what he was offering. And so I didn't value his services; I knew they must be second-rate. The next year, we paid Merkle $12,000 and the other printer again bid $3,000. I couldn't figure out the second printer's game, but I wasn't assigning the same value to his product as I was to Merkle's. The next year, Markle said the job would cost $13,000. That really was more than we could afford. So, really, reluctantly, we went with the second printer. And he did a good job at $3,000. Exactly what he'd promised. The moral of the story is this: Sometimes people are more willing to assign a higher value to a product if it's priced higher.

While I agree that the current real estate model doesn't include an up-front retainer, there are plenty of other business models that do. And those retainers can serve a valuable purpose.

Not that I'm advocating that position, but it may be something to think about.

Sun May 11 2008, 10:54

So few agents in my market charge a fee that I think it would be to my disadvantage to charge a fee. What's your market like? What does your broker say? If you can do it, go ahead. If an unusually high number of prospects tell you they will call you, and do not return your calls when you call them, you should probably review your policy.

The one exception I make is to non-military relos whom I receive on a referral, and I really ask only for a token amount which I hope will pay for my gas $ until closing.

I'm not convinced that paying a fee will earn greater loyalty form a buyer. Doing a good job and working hard for them will, but they will never really know how dedicated you are unless to keep them informed about your every effort on their behalf.

In most cases, the difficult buyers who just cannot settle on something are just not sure about what they want. Part of our service to them is helping them make that decision and keeping them focused on the goal.

Sun May 11 2008, 10:26

In todays market you have full service realtors cutting their commissions to 3 and 4% just to get business ..
~~~~~~~~~~~~~~~~~
I thought it was 3 to 2%. You keep repeating this as if repeating it makes it true.

Sun May 11 2008, 10:25

I think that most people would resent the retainer, and then ultimately resent you.

Like Deborah, I recently let a "Professional Looker" go who was willing to pay for all of my gas money if I kept them on.

Like Deborah, I declined. Again, they would ultimately resent me when they took forever to find nothing and were out a lot of money doing so.

Sun May 11 2008, 09:50

I agree with Elvis,
I do not charge a retainer fee. 99% of the time I do not have anyone sign an agreement until we go to put in an offer on a property. If I am doing my job and taking care of the clients and their needs they have no need to go with someone else. I try with every client to build a trusting relationship which last beyond the transaction. If you are honest and genuine with your clients they can tell and they appreciate it.
To echo Elvis I have owned three restaurants of my own and if you do not take care of your customers/clients they will go somewhere else no matter the agreement, retainer or whatever. The loyalty you are asking for from them they need to get from you first in the way of service. I unfortunately do not see among many agents the level of customer service that I provide. I have not spent my entire life in real estate so I bring a different view point of what service should be.

Larry Story
Coldwell Banker Triad

Sun May 11 2008, 09:37

I ceased working with 2 customers this week because they are permanent lookers with little hopes of providing a return on the investment. I advised both to seek a new Realtor. One of the customers offered to pay me a retainer; I declined.

I believe I had the loyalty of both clients. I simply couldn't justify the amount of investment of time and energy because I don't believe either can or will make a decision to purchase even when shown properties that meet every bit of criteria. (One has been looking for a few years.) I wasn't simply looking for someone to pay my gas. If I can’t help this buyer, it makes no sense for either of us to spin our wheels.

Retainers are common with many professional services; including but limited to market feasibility consulting, executive recruiting, nutrition consulting, dental appointments, accountants, computer consulting, and attorneys. I do know of Realtors who do have an up front retainer fee; I do not (at this time.)

Deborah Madey - Broker
Peninsula Realty Group - New Jersey

Sun May 11 2008, 07:40

This is one of the easiest questions, for me, to answer, and I answer it with a resounding "No".

I'm not a fan of the exclusive buyer's agreements that tie buyers to a specific agent, (except in those states where it's a requirement, otherwise your agent works for the seller). I'm definitely not a fan of tying them to an agent monetarily either.

If I do my job correctly, educated my client well and give them my hard work and loyalty... when they purchase (IF they purchase), they will purchase through me. If they purchase through someone else, then I haven't done my job well, and they don't deserve to be penalized for that.

Gas costs, and other expenses that go into showing buyers are simply the cost of doing business. And in comparison with other business models, real estate agents have a very LOW cost of doing business. (ie: Restaurant ownership, or Grocery store ownership).

I have no interest in adding an upfront fee that will undoubtedly push buyers away.

Sun May 11 2008, 07:33

Hi Kimberly,
There are actually quite a few agents in our office who do charge retainer fees to their clients. When I have asked them about their philosophies they say that it does create more of a commited relationship and if a buyer knows they are commited to buying then why would they have a problem. Many service providers ask for half of their fee's upfront and the rest upon delivery. It makes sense! Take care,
Beth

Sun May 11 2008, 07:26

Kimberly,


You can ask for anything .. it's the getting part that's extremely hard.

What loyalty would it create..? .. you haven't accomplished anything yet ..

In todays market you have full service realtors cutting their commissions to 3 and 4% just to get business .. and you want consumers to pay for your fuel costs upfront..? .l.o.l..

Should a consumer pay a painter upfront, or the plumber or the local car salesman before they get their car..?


: ^)

Sun May 11 2008, 07:17