Thursday, June 19, 2008

Retainer Fees: To Pay or Not to Pay

I came upon a blog discussing the topic of buyer agents charging retainer fees. While there are some that are totally against paying retainer fees to a buyer's agent, there are others who understand the circumstances that would make the payment of a retainer fee valuable when it comes to retaining the services of a dedicated buyer's advocate.

Here is my comment:

From a buyer's perspective, I would want to know the buyer agent's policy regarding retainer fees before passing judgment. How will the agent or broker treat the retainer fee? Will they be returning the fee at closing, or will they be keeping the fee no matter what?

The answer to this question--in addition to the agent or broker's reputation--can determine whether a retainer fee is worth paying. Because, if a buyer's agent makes it clear that the retainer fee will be returned at closing, applied towards an appraisal, credited towards closing costs, etc., then one can safely assume that this agent or broker is only charging the fee to make sure that they are dealing with serious people; because, they only get paid when a transaction closes. They need to know that they are giving their best and dedicating their time, energy, and resources to serious clients only.

It is reasonable to assume that any employed person expects compensation for the work they do regardless of industry and regardless of whether they are on a salary, hourly wage, or any other form of compensation. How many here would go to work without the assurance of receiving a paycheck?

A good buyer's agent--especially, an exclusive buyer's agent with a good reputation for being a steadfast advocate for the buyer--is worth paying a retainer fee. When it is in writing that the fee will be returned upon the completion of a designated event, then this is a good indication that the agent or broker is not trying to "get rich" from charging retainer fees. Instead, they are merely looking for the assurance that they are dealing with serious people.

In summary

I work on retainer in my own real estate practice. However, I do not keep the retainers that I collect. Instead, I return them upon the completion of a designated event, which is ALWAYS in writing. I should also note that repeat clients NEVER have to pay retainer fees a second time and neither do the referrals they send my way. I am very dedicated to my clients' satisfaction. Their happiness means everything to me and I always give them 1000% of myself to inform, shield and protect the strength of their negotiating position. This alone substantiates the value of paying a retainer fee for my service--a fee that I return to clients in the end, which they do not have to pay a second time.

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