Different markets enable brokers to try different business models. The brokers in and around State College, Pennsylvania, the town that boasts Pennsylvania State University as its primary economic, educational, and cultural engine, have embraced single and dual agency in a big way, according to former college professor turned real estate broker George Friend. Friend says that there are about three large brokers in the area that dominate 90 percent of the business, of which he is not one, but there is plenty to go around in the market area where about 1,500 houses are sold per year from the MLS. At any given time he has between five and 15 houses listed, and represents a similar number of buyers simultaneously also. "We're always in a buyer's market," says Friend. When he entered the real estate industry ten years ago, Friend always thought two things were strange - that listing brokers set the fees for co-brokers, and that real estate brokers didn't charge for their services the way other professionals do. Attorneys, accountants and engineers charge retainer fees when a prospective customer wants services, why don't real estate brokers do the same thing? He outlined a variety of ways that sellers and buyers can hire him, based on the risk/reward system. The more risk, the higher the commission. If the customer wants to save money, they can pay more of a retainer up front. "We are only as professional and effective as we make ourselves be -- I'm worth hiring because I get results," says Friend. " And clients are happy to pay for results, and willing to pay retainers, because they commit us to our best effort, as well as committing our clients to reasonable pricing, fix up repairs, and reasonable negotiating positions." Friend says that his unorthodox fee structure was inspired by the expired statistics which the MLS in his market calculates at about 30 percent. He heard at a Dave Beson seminar that the national expired rate is over 60 percent. "Why run a business model that makes successful sellers subsidize the unsuccessful ones?" asks Friend. "The retainer sure screens out the "maybe" sellers!" So how does Friend compete in an environment where brokers charge six to seven percent commissions, co-broker fees range from 2.25 percent to 4.50 percent, and sellers are conditioned to pay up at the end of the transaction? "If you don't ask for it you don't get it," says Friend, simply. We started buyer representation in 1993, and I got my first buyer customer the first day. They paid me a $2,000 retainer to buy an $80,000 house. Clients are happy to hire you and if that means writing you a check which will be reimbursed when you settle, then they will do that. I haven't had any negatives or resistance." Hard to believe? Buyers in most areas are not only resistant to working with one agent, they don't believe that they pay any fees at all, and certainly not up front. But that may be in other markets. Friend says sub-agency is dead in his market. "About a year and a half after we implemented buyer representation, our association hired a guy to come in and do a seminar on buyer representation. During the course of that, the lights went on and the brokers suddenly understood that this was an opportunity to list buyers," explains Friend. "We saw the advantage of creating a good working relationship with buyers. If you called and asked any broker what percentage of their showing appointments are by buyers agents, they would tell you about 98 percent." So,..."If they want to work with me, I just ask for it," says Friend. "I don't tell them they can go to work with other people if they don't want to pay it. I show them my presentation and tell them the fees I charge. I charge a set fee regardless of the co-broker fee, and if it is higher, I credit the buyer back the difference. If it is lower, my clients pay the difference." Friend charges three percent to represent someone in the market. If he receives funds from more than one party in the real estate transaction, he discloses that, and the parties acknowledge that the buyer will be paying his company, the difference between the co-broker fee and three percent of the sales price. "I do not want my fee to be set by anyone other than myself," insists Friend. "I established what it will be. Lots of other people say it is whatever anyone else will pay me to be the co-broker. I don't think that is fair. If my fee is always the same, I don't care what property I show the buyer. It eliminates a conflict of interest." As a sole practitioner, Friend also enjoys the luxury of being flexible. "If someone wants a $500,000 property, I might negotiate it down, but I would always know what my fee and retainer are before I head out the door with my client." What about first-time buyers who may have trouble coming up with a down payment, much less retainers fees? "I can decide," Friend says. "One client didn't have cash, but I said "I'll work with you and found them a house. They wrote a contract on the house, and I asked, "Can you pay any retainer check? They wrote a retainer for $300. The deal didn't go through but then the perfect property came on the market. They wrote the offer and without my asking, they wrote my retainer and handed me a $200 balance. "That was a sweet moment for me; they were convinced of how hard I was working. for him. "What I was trying to do was get out of driving people around in a car, and they don't buy. The only way o make it back is to charge other people more than I am worth," says Friend. "What this means is that I'm not working with lookers anymore. Lookers won't pay you $500. Let somebody else drive them." Friends retainer system is so successful, he now implements it with sellers, too. His income has doubled in the last year. He has four fee schedules from which the seller can choose: commission fee, flat fee, hourly fee, or fee for service. "If they want to list and sell at six percent, there is a $1000 retainer. If they want to pay $500, then commission is seven percent. If they want a five percent listing, then the retainer is $2,000. Flat fee is based on the value of the property and the amount of the retainer. A $100,000 property is a flat fee of $2950, with a retainer of $750 and commission of 2.7 percent of net sales price to be paid as the co-broker fee. That will save them a little money over a six percent listing. If they don't want to pay a retainer at all, then it is an eight percent listing. "That person has asked me to take a huge risk," reasons Friend. "So this lets them have different choices. They can pick what they are comfortable with. They get to buy the services the way they want to. "In my market, 30 percent of properties expire and that means if I had 20 listings, then six of them won't sell. When I do the retainer, it saves a lot of out of pocket expenses which would be paid and not recuperated almost one-third of the time. It's better for the seller because they aren't subsidizing the other houses that don't sell. "It's not really about the mechanics, it is about saying to people, here is how I work," concludes Friend. "Why work so hard for people who won't make you money?" Have any readers tried working on retainer? How does it work for you?