Real estate company charging buyers a fee?!? (3%, mortgage, mortgage)

[Tish Thompson]

David,

A retainer has absolutely nothing to do with competence, it has to do with elevating the perception some people have regarding this profession. To consider someone incompetent because he or she does things differently than you do is ridiculous. You have another way of doing business than I do. Does that make you incompetent? Of course not. It's what it is...a different way of handling things than I do. Embrace differences...you may learn something.

Magellan,

You hit the nail on the head! The decision to collect a retainer is MY CHOICE. If someone doesn't like it, don't pay it. Asking for a retainer tells me a whole lot more about my prospective client than a list of questions ever could.

[magellan]

Originally Posted by Tish Thompson

David,

A retainer has absolutely nothing to do with competence, it has to do with elevating the perception some people have regarding this profession. To consider someone incompetent because he or she does things differently than you do is ridiculous. You have another way of doing business than I do. Does that make you incompetent? Of course not. It's what it is...a different way of handling things than I do. Embrace differences...you may learn something.

Magellan,

You hit the nail on the head! The decision to collect a retainer is MY CHOICE. If someone doesn't like it, don't pay it. Asking for a retainer tells me a whole lot more about my prospective client than a list of questions ever could.

Sure! I also agree with you that charging an upfront fee does "add value". It's a great way to weed out the tire kickers from the serious buyers. Charging a fee vs. doing something "pro-bono" is an age old economic theory that the paid service/good is perceived as having more value than the free service/good. Of course, there's always a point of diminishing returns. (before anyone screams that it's not "free" and the buyer's agent will receive a commission, many times that never happens)

Just think of it as a co-pay on your insurance. And the seller is the "insurance company" who pays the agent.

[Tish Thompson]

Originally Posted by North_Raleigh_Guy

I understand why some agents may charge a retainer if they have been burned often in the past by "buyers" who bailed on them, but the idea that charging a retainer adds value to the service is a pretty silly notion in my opinion. As Warren Buffet once said "Price is what you pay. Value is what you get". Adding more to the price of a service does not equate to added value.

If I were a potential client of yours I would find the notion that I need to pay for something to appreciate its value an insult to my intelligence.

I appreciate the services of a good RE agent. But I don't need an upfront fee added on to the transaction, even if it will be credited back to me, to make me understand the value.

North Raleigh,

I totally understand your point. Value doesn't only relate to price or what one pays for a product/service. I still believe that people who pay a little something up front will hold me to a higher esteem (or value) than those who don't.

I read a little bit into your post, and I want to put out there that I can't pick and choose who pays the retainer. If you came into my office and turned out to be the nicest guy on earth, I'd still have to charge you . It's a practice I started a year ago and I have to charge it to all buyers I work with. Otherwise I could get myself in a lot of trouble with the state.

[Tish Thompson]

Originally Posted by christina0001

Using a real estate agent is not free. The cost is built into the purchase price and is at least several thousand dollars. Last year, when I bought my car, I didn't pay the salesperson an extra $100 for completing his forms. He made his money off of the purchase itself, after having housed the vehicle, advertised it, showed it to me, etc.

I have all the sympathy in the world for real estate agents who take customers around, and the customer doesn't buy anything. My cousin did that with a few realtors over three years. I can't imagine how frustrating that must be. Having said that, I'm still not paying a fee. If a realtor thinks I am not going to make him/her any money, then he or she is welcome to find a different buyer to work with. I will be paying enough money through a commission [albeit indirectly, but it's still a part of the price I end up paying]; I am not going to be nickled and dimed to death with fees, too.

Christina,

Point taken. But isn't it great that we have choices? None of us has to settle for anything that we don't agree with.

[shellytc]

Christina, it is not just frustrating and time consuming, all good points.. when taking folks out who aren't serious.. but it costs money!! Have you purchased gas lately? and I have to keep up a good car in excellent working condition, and I will sometimes buy you lunch or a starbucks, etc.. I am investing my time and money. Now, at this time, I do not charge a retainer.. but I have considered it.

Shelly

[DavidS827]

Originally Posted by Tish Thompson

David,

A retainer has absolutely nothing to do with competence, it has to do with elevating the perception some people have regarding this profession. To consider someone incompetent because he or she does things differently than you do is ridiculous. You have another way of doing business than I do. Does that make you incompetent? Of course not. It's what it is...a different way of handling things than I do. Embrace differences...you may learn something.

Tish - I didn't mean to say, or imply that you are incompetent. Although, I do think it puts you in a competitively disadvantaged position when being interview against other competent agents. Again, in my opinion, an agent should be able to weed out those people that aren't serious before they ever take them out to look at one house. If an agent takes someone out and shows them 5-10-15 houses only to find out that they aren't going to buy any time soon, then that agent didn't do his/her job in the planning phase of the sales process.

Now when it comes to land development projects (commercial or residential), I do think it is completely fine to ask for a retainer. However, that is only b/c those sales cycles often take years to complete and the agent often invests months of his/her time to complete it.

[yellowsnow]

So, I just paid a 40K comission to sell my house. Now I need to buy a new one. Sorry, but I just took my hit and I'm not going to start paying to buy. The seller of the home I buy is paying you.

I represent 80K in commissions. The way I see it is you take your chances. Not everyone will buy every time. Some people may buy and sell 2 or three houses through you. If you are an excellent agent, it should even out. When I come in to town to buy, I have my money and I know what I want. It's an easy transaction. I'm not out to take advantage of anyone.

The only exception I can see is people like BullHeadBroker who go out and find multi bejillion dollar properties for the very rich with long wish lists. He does all their leg work for them.

Now if you are going to cut me a deal on the commission when I sell.... Maybe something like 1/2 on the selling end, 1/2 on the buying end.

[christina0001]

Originally Posted by shellytc

Unless you are very saavy, you probably did pay some additional fees on the purchase of your car from a dealership. These are called "junk fees" and are added in. Sometimes referred to as admin fees, and all kinds of other line item names... prep fees, etc.

Shelly

I didn't buy from a dealership, I bought from a car leasing agency. I can't stand car dealerships ... the leasing agency gave me a price and that was it. My itemized bill was:
price of car: $X
+ tax: $Y
= total: $X + $Y

I find it very frustrating when any business says I will pay $X, but when it's time to settle I have to pay $X + $Y + $Z. It's shady. Just roll all of the costs together so I know what I am paying early on.

This topic reminds me of telephone/cell phone service, another industry with way too many little fees to sneak in.

I can't wait until I go through the mortgage application process. It's going to give me an aneurysm, I know it.

Thank you for all of your feedback. I do understand that each company certainly has the right to charge however they see fit. Hey, it's a free country; charge whatever you like. And I know that real estate agents have to front money before they get paid...my response to that is, if you don't like it, get a non-commission based job. What is frustrating to me is when a company advertises something as "free," but then in the fine print, there is actually a fee. I have seen the websites of many agents for this particular company, all touting their "free" service to buyers, but only this one agent was honest enough to mention [albeit in small print] the company mandates a $220 fee.

[jimj]

You know, at first my hair stood on end and caught fire! No way was I going to pay a fee after just paying a ton of commission. Then I read all the posts and thought about it and IF it was credited back when I bought I really wouldn't have a problem with it.
Home Depot and Lowes do the same thing when you want to buy cabinets,flooring,doors etc from them and they design or measure your house. This is for the same reasons y'all are charging, it stops the people who just want something for nothing draining the company of time and money. Gas and cars aren't cheap and neither is time! I wouldn't like someone to come to me and have me spend hours designing a computer sysyem or figuring out their network problems only to have them say "thanks, maybe later" then going somewhere else or doing it themselves. No one blinks when attorneys charge retainers do they? Or when companies charge a fuel surcharge?
I just look at it as a deposit to show I'm serious and not likely to walk away.

[shellytc]

Jim, it is nice that you took the time to understand the point of view and consider why it is used. I appreciate your open mindedness!! And for those others that are thinking about it, remember, you still get to interview up front, and make sure you are choosing the right realtor. It just says, hey we have a relationship and are committed to each other. As long as each other holds up their end of the partnership, we should have a long and fruitful relationship!!

Like I said, I don't charge a retainer right now, but certainly understand why some agents have made it part of their business model.

Shelly