A Real Estate Retainer Agreement is a legal contract between a real estate agent and a client. The agreement includes a retainer fee to secure and maintain the services of the real estate agent or their company for an extended time.
When to Use
What Is a Retainer Fee in Real Estate?
A retainer fee in real estate allows the client to hire a real estate agent or agency to assist with real estate transactions.
Unlike a standard service agreement, provisions in a real estate retainer agreement ensure that the agent receives a retainer in advance for services to be provided rather than retroactively billing for their services.
When a real estate agent or agency agrees to help someone sell property, they typically receive a commission. A real estate agent retainer is often non-refundable but may be applied to commission if they complete the sale.
What Does the Fee Cover?
A real estate agent typically asks for an upfront retainer fee to cover the costs of services associated with real estate sales, such as correspondence, walkthroughs, inspections, driving to properties, and completing real estate paperwork.
They may calculate their services hourly and deduct them from the retainer or provide complete services for a non-refundable flat fee retainer. Sometimes, the real estate agent will deduct the retainer from their commission once a property sells.
How To Price Real Estate Retainers
Real estate retainer pricing varies depending on your services and the client’s needs. You need a retainer that covers your operating costs while ensuring competitive pricing. To price your real estate retainer, consider the following factors:
- Hourly rate. Calculate the estimated hours you will spend on this client’s real estate needs and multiply that by your hourly rate to establish a base retainer rate.
- Fees and expenses. Include any additional fees, costs, and expenses associated with your services. For example, if you are helping someone house hunt, consider the mileage and gas associated with meeting them for walk-throughs and inspections.
- Retainer replenishment. Include details about retainer replenishment in your agreement. Establish whether you will require another lump-sum retainer when the original retainer is depleted or if you will continue to provide services at an hourly rate.
A quality real estate retainer agreement can ensure a good relationship with the client. By clearly delineating the scope of work, the client will understand what the retainer is used for. Document your hours and services throughout the real estate process to ensure transparency, and outline the payment terms for retainer refunds and replenishment.
Make the contracting process more efficient by downloading a real estate retainer agreement template, available in Word and PDF formats: