New to Real Estate · San Diego · Member since 2019 · 8 posts · 5 votes
Hi Everyone,
I am fairly new to real estate still but I am on the hunt for my first rental property. I have been in contact with some real estate agents.
I have one real estate agent that has asked me to sign an agency agreement and $300 in order for me to work with him. I am wondering if that is a normal thing or is this a red flag.
Real Estate Agent · Ormond Beach, FL · Member since 2017 · 215 posts · 158 votes
6y
I disagree. I like the idea of charging a small fee up front ($200 to $300). There are too many people who want all the expert advice and then drop the agent like a rock as soon as they get their answers/info. My broker has 30 years of experience in real estate investment, commercial real estate, and rental management. He can provide market analysis and real estate investment planning for his customers that is tailored to their specific needs and goals. He is thinking about charging a small fee upfront to be credited back to the buyer/or seller at time of closing. This shows that the customer is committed to him and prepared to actually move forward with their investment. And if they don't buy or sell anything, then they got an amazing education at a very cheap price. (I feel very lucky to be working with him. I'm learning a ton every day).
Realtor · Ocala, FL · Member since 2017 · 2 posts · 1 vote
6y
The Florida buyer agreement has a section dedicated to the retainer. Real estate (done properly) is professional and nobody bats an eye at other professions. You pay an attorney a retainer, heck you even pay a photographer a retainer (deposit) for your family photos on those creepy "Holiday" cards sitting on your dining room table.
Real Estate Broker · Pueblo, CO · Member since 2015 · 35 posts · 37 votes
6y
This is the typical quagmire that real estate investor friendly agents deal with all the time. The seasoned investors say never use a real estate agent, we are worthless, yet we're not. The only difference is that we do lots of deals a year where the typical investor only does a few.
I have thought long and hard about this over this past year. My modus operandi at the moment is I make a calculated decision, I either believe you are a serious investor, have cash to make the deal happen (or can get it) and I work with you, (typically a real live investor will want to show off properties they've acquired in the past) or I simply blow you off. My time is valuable and I should be compensated for it. If your a one-off home buyer I have a pre-approval letter from a lender that almost guarantees me that you can buy. With investors I have to take their word for it.
I was recently contacted by someone here on biggerpockets and got the spiel, I got my contractors license, my brother is in finance, blah blah blah. I spent a little time sending properties, answered some emails, the guy sent me a big list of properties he wanted to see one evening. I had early morning showings scheduled the next day so I simply responded I'd be calling him the next day. By 10:30 the next morning he was leaving me a nasty voicemail, maybe I'm too busy, maybe I don't want to work with him. I was really put off. Geez if you need a response in less than a 4 hour work window you're a little too demanding for me. (I can hear it now, time is money, you have to strike why the irons hot, PLEASE). Cut to the chase, I blew him off. A week later I see a post on here, he's under contract but doesn't have enough money to close on the deal and is looking for creative suggestions.
There is nothing illegal, or unethical about a real estate agent asking to work on a retainer. It's entirely up to you to move on, or pay the guy.
Real Estate Broker · Hugo, MN · Member since 2016 · 688 posts · 596 votes
6y
@Sean Abrahamsen we have considered asking for a retainer.
But do not. We do a lot of business in our area and have a lot of people contact us some are serious and some are just tire kickers.
Our reputation in the community is strong enough that we obviously are not hurting for investors, it would be nice to be able to separate the tire kickers from the legit buyers. We haven’t moved to that model yet because we generally will ask them go on a few showings to see if they are serious, if they don’t we don’t waste anymore time with them.
With oos it much more difficult.
We notice every few months there must be a boot camp going on where they tell the investors to network with multiple agents in the area and have them all looking for you. We can spot them pretty quickly and dismiss them.
We don’t require contracts, but also won’t waste our time with a client that is just using us. If I had a retainer it would make things easier. I spend $300 in the first two weeks looking at properties for clients.
The way I look at it if we are bad agents then you should have done your homework (if you are not an established agent how many deposits would you get anyway), if not I will always earn the $300 and save you a lot more than that.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
As people have said a couple dozen times on here the agreement is normal, the fee isn't. My guess is he is proposing the fee because there are a lot of out of state buyers that completely waste the time of local agents and never actually end up buying something. Not that this is your issue, but that is just a different perspective. Just tell him you do not want to pay the fee and he will either be flexible or decide not to work with you.
San Antonio, TX · Member since 2018 · 24 posts · 8 votes
6y
I think it’s not a norm to charge you. He may or may not be a scam. For the benefit of doubt, would he jeopardize his license for just $300?. If you dont feel comfortable paying, you can always search for somebody that does not charge you. Just my 2 cents.