Does a Home Buyer need to pay a Retainer for REALTOR in Minnesota?

 
Most home buyers, even first time home buyers, realize there will be fees to pay over and above the cost of the house itself. There are fees to the lender to originate the loan, fees for homeowner’s insurance and closing costs. Most home buyers also know it is a good idea to work with a REALTOR® to help them find the perfect home. Having an agent to represent you when purchasing a home is extremely important. As a professional real estate agent working in Anoka County, I have knowledge about homes, neighborhoods, taxes, school districts and contract negotiation. All of these skills are invaluable when it comes to writing a purchase agreement. But how does a REALTOR® get paid?

Most agents are paid at the time of the closing by the SELLER of the home you purchase.  So in many instances, as a buyer you do not pay commission to your REALTOR®. 

However, in Minnesota our buyer’s representation contracts do allow agents to charge a retainer fee from the buyers they are working with. The amount of time spent with a buyer from first contact to closing can be several months, even years. As agents we put in quite a bit of time showing homes to our buyers. Since the bulk of our commission comes from the seller of the property purchased, we work long hours without payment upfront. It is becoming more common for agents to request a retainer fee of several hundred dollars to offset these costs in case a buyer decides to give up their home search. This fee may or may not be refunded at the time of closing if when the agent receives the commission from the seller.  

How do you know if your prospective REALTOR® will be charging a retainer? You have to ask. Make sure you agent takes the time to explain the contract to you prior to signing. If you don’t feel comfortable paying a retainer fee, interview other agents before putting your signature on the contract. Remember you will be obligated to work with this person for several months until your closing. Find someone you like working with and trust.  Buying a house is an important investment and one of the biggest decisions you might ever have to make.

I personally do not charge a retainer fee. I use the Minnesota contract for buyer’s representation that has a spot for a retainer fee and I write in ZERO. It is my way of showing to the buyer, we are in this together. I will put in the time knowing I will be paid by the seller when we find that perfect place to call home.