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Getting Paid $1,000.00 Retainers from Your Commercial Real Estate Clients

By Jim Gillespie | May 21, 2014

We could learn much in commercial real estate brokerage from industries that get advance retainers from their clients, such as the legal profession. Exclusive listings have been common for many decades now within our industry, but getting exclusive right-to-represent agreements signed with our tenants and buyers still isn’t always the norm.

A simple approach that brokers could utilize when beginning to work with buyers and tenants could include a statement like the following to them:

"In moving forward, we need to get a $1,000.00 fully-refundable retainer from you. This $1,000.00 retainer will be refunded back to you when we close our transaction."

The more that you impress upon your people that this is a "good faith" retainer that shows you that they’re serious, and that it will be refunded when they’ve closed the transaction with you, the easier it will be for them to then move forward and give you the money.

Even when you don’t have a signed exclusive right-to-represent agreement in place, having a retainer like this will help to bond the client even more to you, and help you to keep them even more loyal towards you. As an example of this, the lending industry is very smart in charging people an up-front application fee, or a loan processing fee. The fee may be only $250.00 to $500.00, but it keeps the client committed to the same lender or agent until the client knows whether or not they’ve qualified for the loan. The client normally won’t risk moving onto another lender and losing the $250.00 to $500.00 fee, unless they know they need to.

Similarly, you could do this within your own brokerage business, too. Just set the retainer fee at whatever the appropriate level will be for the size of the transaction…$1,000.00, $2,500.00, $5,000.00, or perhaps even more. In addition, make sure that doing this is in alignment with the laws in the state or the jurisdiction that you’re licensed and selling or leasing real estate in.

When reimbursing someone the $1,000.00 retainer from your commission that’s been received from a transaction, for example, you’ll want to make sure that all of the parties involved in the transaction have agreed in advance to this in writing. On top of this, you’ll want the written words for how the $1,000.00 retainer will be handled to be very clear to your client, too. You don’t want them mistakenly believing that if they jump ship and end up closing a transaction with another broker, that you’ll be refunding their retainer to them.

Getting buyers and tenants to become even more loyal to you is extremely important, So ideally you’ll want to have an exclusive right-to-represent agreement in place when you’re working with these people at all times. But when this isn’t possible, and you’d still like to work along with these people, getting an up-front retainer can help you to inspire even more client loyalty from them.

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