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Since I came from the Philly area, in your agents defense, he does not have to (although I ethically feel I would) tell you about the incentive simply because you are looking at a property. It is however required to be disclosed to you at the time you write an offer.
What he should be doing is precisely what has already been mentioned. Provide you with history of the property, the area, recent sales, etc. If you are looking in an area that he focuses on, he should have some insight of the condition of other properties comparable to those you are interested in and what they sold for.
I think that is your bigger issue. The agent is there to advise you and provide you with information so you can make your own decision of what is right for you. If he were to push for the property offering the incentive with the other information to back it up, I would find a new agent.
Where are the BUYER's agents?!? Who is looking out for me?
Sadly, no one. I'm past the point of expecting anything insightful from my Buyer's agent.
Quote:
We already asked him for all this - we told him we want all the possible information to make informed decision and he has been a disappointment.
Sorry to be so negative but this is supposed to be HIS JOB!!! Isn't that what you guys get paid for? Isn't that why you have exclusive access to the data to help us poor little uninformed buyers make a decision and negotiate the deal??????
I totally understand where Evie is coming from. You need to ask/beg your Buyer's Agent to dig for all of the information to help you get the best deal possible? Like she said, isn't this their job?
That's all you can come up with Bill? You are always so quick to jump on your soapbox and start quoting your "Code of Ethics" and spout a bunch of rosy nonsense about win/win strategies and yet this is your response to a very serious ethical question posed by Evie regarding hidden incentives for buyer's agents that completely compromises their integrity and fiduciary responsibility to their client - THE BUYER?
Why are there incentives from sellers to buyers agents at all if you are so bound by this alleged code of ethics to represent your client - THE BUYER?!?!? Why do you hide these incentives from your client - THE BUYER? How is that "being honest with everyone?" As a lawyer, I would be disbarred and probably prosecuted if I allowed my client to offer an incentive to opposing counsel in order to settle a matter favorably. How is what you do any different?
Are you defending this practice? Your silence on the issue, to me, implies tacit consent. Please - speak up.
If I sound angry, it is because I am angry. I have read a lot of postings on this board defending realtors, yet this practice is despicable. I have had similar experiences as Evie with buyer's agents and I am so frustrated and fed up with the entire real estate agent industry. Where are the BUYER's agents?!? Who is looking out for me?
I've made a couple of posts in response to Evie's questions.
To briefly answer your question, the buyers agent is required to show all homes to the buyer. S/he cannot steer the client to a home for the purpose of getting a higher commission.
It is not required to disclose to the buyer the commission rate that is being paid, unless that rate is lower than the buyer/broker agreement with the client which would require him to pay a portion of the commission.
The buyers agent should at all times be working in the clients best interest regardless of the commission being offered.
Some sellers will offer a higher commission in the hopes that it will bring more buyers. I would never steer a client to a home based on a higher commission.
If my buyer client were down to the wire on a couple of homes and making a decision, and one had a higher commission, I would certainly inform my client of that amount so that she would know that there could possibly be a conflict. I would be extremly cautious so the client would know that anything I say is for her interest and not mine. There wouldn't be a conflict because I would be working for my client, not steering her toward a higher fee for myself.
Steering my client and not representing her interest over my own would be a violation of ethics.
Hmm...A tiered pay scale based on negotiating skills and ability to read the market (or find you an overpriced home) Seems like a noble concept; however, it remains open to corruption.
Once again it seems we have many (or a few) folks who have not understood a few basic tenets regarding agents.
You are the boss. You are hiring a specialized employee. You must interview this person, hire them via an employment contract and then gauge how well your employee is working for you. You can fire your employee; however, we would hope you understand a few things first.
Your employee can have a bad day, if you can and you're the boss, so can s/he.
Your employee can only work to the level of expectation that you set during the interview/ hiring process....oop did we set expectations, discuss the offer & acceptance, how the employee negotiates, information provided prior to making an offer, repairs and commission? bonuses? opt out of employee services? firing the employee?
On the subject of bonuses for the buyer's agent, I'd like to jump up on my soapbox:
(1) Why does the seller (and the seller's agent) offer an increased incentive anyway? It is a marketing strategy to generate additional traffic for the property. It assumes that there are agents out there who will show THAT home just because of the additional compensation available. Sadly, there ARE real estate agents out there who use that as a criteria. Bottom line - is it an EFFECTIVE marketing tool to help get a home sold in a tight market?
(2) Assuming that it IS effective, is it the seller him/herself, or the seller's agent who recommends this particular incentive? This makes a huge difference to ME in terms of how we as professionals are perceived. The seller's agent recommending this says "hey, my friends out there can be bought!" doesn't it?
(3) There are other incentive packages out there aimed at the buyer with the same net to the seller (paying x mortgage payments, closing costs, reducing the price, rate buy-downs...).
Frankly, I can understand why the consumers (specifically buyers) have a negative slant on this practice. It promotes the perception that, for many agents representing our client's best interest takes a back seat to our own. ** Perception is NOT fact and many - Like Captain Bill would not steer their clients based on commission alone! However, I (personally) would not recommend this marketing technique to my seller, but WOULD implement it if asked to do so by them. Recently, I was asked to do so (buyer's agent bonus in lieu of a price drop). We also included it in the advertising on the flyers and gave the option of "passing this savings on to your client."
The buyer's perception of THEIR agent in this situation can't be anything but "if there is room in the budget to pay the AGENT more, why shouldn't I get that savings?" And I can see some validity to that perception frankly.
I work very hard not to cut my commission. Heck, I'm in this business to make a living...but I see this particular marketing technique as counter-productive for our profession. It only promotes and reinforces an already negative stereotype of real estate professionals. It's NOT unethical or illegal...but is it the BEST way for us to do business?
Just my thoughts.
Last edited by DavePautsch; 01-16-2008 at 06:48 AM..
Reason: Wanted to address the point about perception v. fact
I moved from PA where incentives were very, very rare and if they did exist, they were more often than not, for the buyer in closing costs, transfer tax or some other.
I moved to NC where the bonuses here are on nearly every listing and often are $2000-$5000 or more for the buyers agent. When I bought, my agent received a $5000 bonus ontop of the commission. (to clarify one thing, commissions here are typically a bit lower than in PA).
I have a problem with this. Not that my agent got a bonus, but on my getting this huge bonus as a buyers agent. Why are they not simply offering a higher commission and eliminating the bonus. I feel it is a huge area for misuse by some unethical agents and contention and ill feelings between the buyer and his agent, should he not want to agree to the agent receiving all of it.
Seller is selling something of value. Seller decides what incentive they want to offer for the successful closing. Sellers are free to offer whatever they feel will be good for them.
There are buyers out there who do *not* sign buyer agency agreement. They consider the licensee that is working for them "their" agent. (They are not their agent) But, without a signed written agreement for service for pay, there is no agreement for a minimum or a maximum fee. So, if there is no buyer's agency agreement, the licensee is "working without a net" and if the buyer closes, they get whatever is offered.
If the buyer has hired an agent and the contract says a minimum fee is $4,000 and the maximum is $15,000 (for example, it could be a dollar amount or a percentage) then anything less then the minimum is owed by the buyer, and anything more is given to the buyer.
In theory, bonus were paid to licensees without the brokerage split. Making it a little more attractive - to entice cooperation. It's an incentive, not a bribe.
I moved from PA where incentives were very, very rare and if they did exist, they were more often than not, for the buyer in closing costs, transfer tax or some other.
I moved to NC where the bonuses here are on nearly every listing and often are $2000-$5000 or more for the buyers agent. When I bought, my agent received a $5000 bonus ontop of the commission. (to clarify one thing, commissions here are typically a bit lower than in PA).
I have a problem with this. Not that my agent got a bonus, but on my getting this huge bonus as a buyers agent. Why are they not simply offering a higher commission and eliminating the bonus. I feel it is a huge area for misuse by some unethical agents and contention and ill feelings between the buyer and his agent, should he not want to agree to the agent receiving all of it.
Lauren, I have a problem with it also and have written so on many threads in this forum. As a Buyer Agent, if the seller is offering me an incentive bonus over and above my agreed to commission, I negotiate that this bonus be used to either lower the price of the house or pay for closing costs of the buyer. To me this comes down to "what is in the buyer's best interest versus what is in the buyer agent's best interest". I think it is a no brainer but there appear to be some agents who disagree. One caveat here though. When I am hired by a buyer I let them know that my commission is based on a percent of the selling price, nothing more and nothing less. Some agents tell their clients that their commission is whatever the seller is offering. The difference between the two can be attributed to different state laws and/or different business models and/or a different interpretation of the Code of Ethics.
Last edited by gbone; 01-16-2008 at 10:58 AM..
Reason: spelling
I moved from PA where incentives were very, very rare and if they did exist, they were more often than not, for the buyer in closing costs, transfer tax or some other.
I moved to NC where the bonuses here are on nearly every listing and often are $2000-$5000 or more for the buyers agent. When I bought, my agent received a $5000 bonus ontop of the commission. (to clarify one thing, commissions here are typically a bit lower than in PA).
I have a problem with this. Not that my agent got a bonus, but on my getting this huge bonus as a buyers agent. Why are they not simply offering a higher commission and eliminating the bonus. I feel it is a huge area for misuse by some unethical agents and contention and ill feelings between the buyer and his agent, should he not want to agree to the agent receiving all of it.
I have to say, I actually don't have a problem with these types of incentives in general. Hey, this is a tough market and a seller wants to do something to stand out and get more traffic. My problem is that it is not transparent and it wasn't disclosed to me. I thought my agent was giving me bad advice, and then to find out he was motivated by this bonus.
If he would have been upfront about it,it would have made the deal more attractive to me as well. We are a team - I want to get my house for a good price, he wants to make his living. I don't mind a good agent getting paid for a job well done.
But when it is hidden from the buyer, that is when it becomes sleazy.
I have to say, I actually don't have a problem with these types of incentives in general. Hey, this is a tough market and a seller wants to do something to stand out and get more traffic. My problem is that it is not transparent and it wasn't disclosed to me. I thought my agent was giving me bad advice, and then to find out he was motivated by this bonus.
If he would have been upfront about it,it would have made the deal more attractive to me as well. We are a team - I want to get my house for a good price, he wants to make his living. I don't mind a good agent getting paid for a job well done.
But when it is hidden from the buyer, that is when it becomes sleazy.
At least he didn't have you at the offer stage when he told you about the incentive for the first time.
As I mentioned, PA law only requires disclosure at the time of the offer but I think he should have told you when he had you inside the house showing it. He already knew it at that point. Unless it was honestly overlooked.
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They consider the licensee that is working for them "their" agent. (They are not their agent) But, without a signed written agreement for service for pay, there is no agreement for a minimum or a maximum fee. So, if there is no buyer's agency agreement, the licensee is "working without a net" and if the buyer closes, they get whatever is offered.
