Realtor Retainer Fees

10 Replies

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.


Jarrett Duncan

I’m about to get my real estate licensee and I wanted to charge people on a retainer. I too am curious what prices people are willing to pay.

It wouldn't surprise me if that started to become more the norm. Personally I don't do that, but most of my business is with people who I have been able to meet, shake a hand and look in the eye. Once you can do that you have a different relationship. Our area does not advance as quickly as other areas and I still deal with a large number of people who have no computer or internet access. A decent number of our clients still require us driving out to hand sign a contract because they do not have an email (Yeah surprising, I know). But guess what, they are not on-line looking for a different agent or trying to find that hunting camp or farmland on their own either.

Online leads often look at an agent more like a source of information. A question is asked, you research an answer and then they ask someone else a different question on a different place. While there is nothing wrong with that, after about 350 questions from people you don't know and who never call back, some agents stop responding to random requests. You hear them all the time "The agent never responded". So I can see it and understand it, Knowing your client is exclusive or you are "on their team" always moves that persons needs/requests to the front of the line.

Good luck in whatever you decide. I would like to know how it works out eitherway.


Pretty sure you can do this if you want. If my agent did that, I’d just find a new agent. I can’t imagine you being able to do this while being a new agent either. If you’re good at what you do and have 30 years experience sure, but new agents are a dime a doZen.

I also keep up my end of the deal and close when I say I’m going to close, but that’s it.

@Mike Cumbie Thanks for the feedback, I can certainly understand why realtors are choosing to do so.  My guess is that as more and more start to encounter the issues you outlined above, they will start to follow a similar model to protect their time and efforts.

@Caleb Heimsoth It's not about not closing, if I have an accepted offer I'm going to do everything I can to close the deal.  My concern is paying a retainer/hourly fee during the due diligence process when you might either walk from the deal if the numbers don't make sense (before making an offer) or get outbid.  This could lead some people to jump into a bad deal to justify the fees they already owe the realtor.

The two realtors I've come across that are doing this seem to be experienced and very well respected based on the research I've done.  

@Jarrett Duncan I'm very late to the party here but the topic is interesting. Realtor to client relationships are built on trust first and foremost. Often as brokers, we are looking for a certain level of loyalty in this relationship that is not often reciprocated by the client if they are an investor because investors are looking for whoever brings them the best deal. That said, brokers who cannot provide this value shouldn't be "hired" in the first place. I could very easily put a dollar value on my per hour service but it would be cost prohibitive to nearly all of my clients and I believe, cause a level of distrust. If you're running into this over and over maybe it's your market that I'm unfamiliar with but I find it hard to think you couldn't find a fantastic broker in your area who does not charge a retainer. 

What a great question and excellent replies. Many investors are coming from out of state and jumping into the Ohio market not prepared to actually close a deal. Not because of the money, but because they come across different ideas they want to try and bounce between different strategies (BRRRR, flip, etc.) or local markets during there search and purchase process while figuring out they don't have the resources ready to really invest. All of the leg work rests on the agent to find that deal and get ground info back to the client, not to mention all the agent previews, different POS restrictions contractor meetings, inspections, etc. With that said while deciding to move through the contingent phase investors can bail repeatedly leaving the agent empty and a bad taste in their mouth on out of state investors. As lower purchase priced property's are what the majority of investors look for ($20k-50k) the compensation after broker fees is very little. So for agents to help keep there efforts to the investors that are serious might do a retainer fee or an exclusive rights. My advice for agent and investors is to vet thoroughly before doing any leg work. Have real phone conversations and a clear goal outlined. I usually waive the retainer fee, if they sign exclusivity with me. I've been burned many times with investors and other conversations I've had with agents in my market is that most experienced agents won't work with investor because of those reasons. But, you get what you pay for. If you plan on doing serious investing in an area, spend the time to vet your agents and be sure to get a Sharp agent! ;)

This works well with exclusive buyer agency arrangements. When I was a broker, I was lucky enough to take C Charles Chatham’s seminar, “The Art of Real Estate Counseling”, before he and his son Rocky passed away.

Chatham’s policy was to never take on more clients than you have time for in order to find a solution. 
After counseling with a client applicant and you decide that you can solve the situation, you enter into a contract with or without a retainer. The amount is up to you and what you feel your time is worth.

Some of his articles are at the link above. He was truly a maverick in the field. He was practicing single agency and buyer representation before it became law.

I can say that when I used the technique, I had a 100% closing rate. However; I had to be sure that we could work together and the project was feasible. He used to say, “Feasibility is equal to Fee Ability”

You can’t look at it as getting paid to sell something. It’s more like getting paid to find a mutually beneficial solution which requires all of the agent’s experience, education, due diligence and fiduciary responsibility. In other words, you need to act as if you were dealing on your own behalf; but for the client.

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!

@Jarrett Duncan

Also late to the party but would love to hear an update!

My business partner and I have been struggling to close deals. We’ve been looking for five months, offered on 18 and walked through around ten. None of them have worked out and our realtor has stuck with us. (This is during corona as well).

Most commonly is the rehab blows out of budget and we are priced out.

We very much appreciate his help as we're eager to buy, but at the right price where we can BRRRR. Which means, he's doing a lot more work than having a normal client.

We all know the 80/20 rule.

Also as others have mentioned before, our budget is low. When we close, it’s not a fat check like other clients might get a realtor buying a fixed up home. We are also BRRRRing, so there is no near future sales agent commission possibilities.

I believe a retainer is fair. Considering how much work a realtor puts in for us. It’s also a way of showing we’re serious on closing deals and in this partnership.