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Old 10-12-2007, 12:41 PM
 
276 posts, read 1,386,037 times
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I recently received some unsolicited advice from a realtor who was showing my home to her client. She suggested offering an "incentive bonus" to the buyers agent if they get a contract by November 15th. She suggested a bonus of $5,000. (her client was not interested in pursuing our home).

We are currently FSBO and used a discount transaction broker to get our home listed on mls and realtor.com. We are currently offering 2% to a buyer's agent. I am very aware of the drawbacks of our situation.

Currently, many realtors are not showing our home because we are not listed with a traditional agent. This particular agent suggested this incentive bonus as a way to get these agents to show our home. She said an incentive bonus is better than raising the commission to 3%, since the agent kepts to keep all of the bonus, as opposed to a commission, which needs to be shared with the company the realtor works for.

Any ideas on this? Have I been given correct info?
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Old 10-12-2007, 01:45 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 20,943,214 times
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Depending on where you are, your information may be correct.

I have contractural agreements with all of my agents and any "bonuses" are subject to the same commission split agreement as a regular commission. I would probably give the agent more than the usual split in a situation as you describe though. Our local MLS prohibits advertising of such bonuses on the MLS listing, but it's not against the rules to pay one. (another wacky MLS rule).

We have no problem showing any property that is listed by any company, including discounters.

We do however have a hard time showing listings by certain agents whom we have found over time do very little homework before putting things on the market, causing us to have to find out material facts that affect the property. (they also usually list for less %) They cause us to worry about making mis-representations to our buyers, and through the entire closing process we end up doing most of the work.

Good luck to you, in a challenging market, don't you deserve the best service you can get?
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Old 10-12-2007, 02:38 PM
 
575 posts, read 1,691,251 times
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As I understand it commission allocations are set in stone. There is more leeway with bonus payments, so the info was probably somewhat accurate; although I have an agent friend who said her office has an agreement about bonus payments as well, she does not keep 100%

But knowing whether that would increase your showings and result in a sale would require a crystal ball.

Here's my recent experience:
We were on the market at the same time as 5 other houses with basically the same floorplan as ours. All were listed by traditional RE companies though.

One was offering a full 5% to the buyers agent as well as a cash bonus for a quick close. In talking with the sellers they felt it did get them added traffic. They certainly had more folks look at their house than we had look at ours. But it didn't translate to a quicker sale.

We priced below market and sold first, then the other reasonably priced house sold, then the folks with the creative commission/bonus offer switched agents, went with a standard commission agreement, dropped their price, and sold.
The other two houses are still active listings.
I think price is still key in getting that sold sign out front.

Unfortunately there are some agents who avoid FSBO's, especially if there are a lot of other choices on the market. That said, as a buyer I always research on my own and if your listing met my criteria I would make sure I saw it.

Along those lines, I also research any house I'm seriously considering in depth. If your commission/bonus offers to agents come out to the standard 6% or less, fine, I'd live with that.
In the case of the sellers in my example above though, where commissions were well above the norm, no way would I have made a full price offer on that house. My reasoning being that instead of bribing agents to show their house (a little harsh maybe, but still...) a reduction in price would net them the same amount and would be much more beneficial to me.

Good Luck - it's not much fun having a house on the market right now in most places.
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Old 10-12-2007, 02:39 PM
 
Location: Virginia Beach, VA
2,124 posts, read 8,434,510 times
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it is one way to see if the action will pick up. We can list the bonus the agent in our MLS, in fact we add it to the agent remarks so they definately see it. Also, my broker does not make me split a bonus with him.

shelly
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Old 10-12-2007, 03:48 PM
 
Location: Nashville, TN
1,177 posts, read 3,939,215 times
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Kristin, a bonus incentive is not necessarily going to attract an agent. When I contract with a client as a buyer's agent the compensation is set then. It is usually set as a percentage of the purchase price. If the buyer wants a house that is offering a bonus incentive for the agent(e.g., $4000) I negotiate for the 4k to be taken off of the purchase price. My rationale is that I agreed to work for that client at a certain fee and I don't want that client even perceiving that I 'steered' them to a particular property because of the bonus. You might want to consider paying 4k in closing costs or just reducing the price by 4k.
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Old 10-12-2007, 04:05 PM
 
Location: Virginia Beach, VA
2,124 posts, read 8,434,510 times
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Well, if it were me : ) I would list with an agent. regardless of that I would offer a minimum of 3% commission to help with showings. AND price your home at the lowest number possible, compared to sold and active comps.

Shelly
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Old 10-12-2007, 08:05 PM
 
238 posts, read 730,248 times
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Quote:
Originally Posted by kristin1 View Post
I recently received some unsolicited advice from a realtor who was showing my home to her client. She suggested offering an "incentive bonus" to the buyers agent if they get a contract by November 15th. She suggested a bonus of $5,000. (her client was not interested in pursuing our home).

We are currently FSBO and used a discount transaction broker to get our home listed on mls and realtor.com. We are currently offering 2% to a buyer's agent. I am very aware of the drawbacks of our situation.

Currently, many realtors are not showing our home because we are not listed with a traditional agent. This particular agent suggested this incentive bonus as a way to get these agents to show our home. She said an incentive bonus is better than raising the commission to 3%, since the agent kepts to keep all of the bonus, as opposed to a commission, which needs to be shared with the company the realtor works for.

Any ideas on this? Have I been given correct info?
A buyer's agent owes a fiduciary duty toward his client. He represents the client's best interests, and avoids conflicts of interest. A buyer's agent would never encourage a client to purchase a home, because of an incentive offered to the agent.


Just kidding.

Of course agents will bring more people to your home, if you offer them more money. That doesn't mean you'll get a buyer.

You'd get more bang for your buck, if you offer your incentive to buyers.

More and more people are using the internet to look for homes, rather than relying on agents.
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Old 10-12-2007, 11:15 PM
 
Location: SC
9,101 posts, read 15,520,273 times
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I'm doing what you are doing and am offering 2.66% but I'm told 2.5% is plenty for a buyer's broker's commission. As an experiment for 3 weeks I took 10K off the already well below market asking price AND advertised on the flyers in the "take-one" box in front of the house and in the daily paper that for a few weeks only I was ALSO going to give the buyer's agent AND the buyer each a $2000 gift card from their choice of Home Depot or Best Buy etc. I thought it would increase the interest level but I was wrong. I had the same number of showings as I did before I lowered the price and added the incentives, so I raised the price back up and got a low ball offer in September after 3 months on the market which I countered but the buyers didn't come up nearly enough.

ANYWAY to make a long story short, at least in my case the incentives didn't make any difference and since then I've gotten feed back from brokers whove shown it to their clients who all say its a good price (and nobody is complaining about the commission level).
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Old 10-13-2007, 07:51 AM
 
Location: Palm Coast, Fl
2,249 posts, read 8,510,876 times
Reputation: 1006
In my office the sales associates get to keep 100% of the bonus. The office down the road, the bonus is split according to their regular commission split. It all depends on what the agreement is between the broker and their sales associates.
I'm curious how you know you aren't being shown because of who you listed with. After all, this agent was there showing the house, right? I would think that you aren't being shown because of the 2% while other houses are out there listed at 2.5 and 3%, some even higher.
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Old 10-13-2007, 08:37 AM
 
Location: LEAVING CD
22,973 posts, read 25,035,816 times
Reputation: 15605
Boy, talk about soliciting a bribe!!! I'm sorry but this is the one thing that sticks in my craw! I don't think it's right or fair for an agent to get a "bonus" on top of commission to do the job they're contracted to do.
It is my belief that any money beyond the stated commission belongs to the buyer period! Unless the agent discloses to the buyer the amount of the bribe (incentive) and gets an agreement from the buyer releasing it to the agent, otherwise how is this not dealing behind your buyers back?
I had an agent on new construction who got a 5k "bonus" from the builder when we bought, she was at least honest enough to tell us about it, and after we moved in and I thought about it I kind of got ticked. She could have at least got us a house warming gift of flowers or something for the "free" 5k plus commission she got don't you think?
How is this different than let's say Payolla in the record business or "incentives" in the military contract business (both are illegal btw)?

I'm sure I will get some heat for this, and as you've seen in my past posts I do not dislike realtors but I do expect it to be above board and fair.
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