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My position on a Buyers Agent Bonus may be state specific. I'm a realtor in Tennessee, and in Tennessee we are required to tell the buyer upfront what our fee for services is. My fee is typically a percent of the sales price. In most every instance, the seller will pay this fee or a large portion of it. The buyer is responsible for any portion of the fee that the seller doesn't pay. In doing this I have agreed to provide the full range of Buyer Agent services for that fee. If a bonus is offerred that pays me above and beyond what I originally agreed to then I don't believe that I am due that bonus. IMO that bonus should be applied to a reduction in the purchase price of the property or to be applied to the buyer's closing costs and prepaids. It is definitely in the buyer's best interest to do this and I believe it is the right thing to do given that I've already told the buyer what my fee is. I'm not keen on changing the rules in the middle of the game.
A question I would have is, if a realtor tells a buyer upfront what their fee is for their full range of Buyer Agent services, and the realtor is then offerred a bonus in addition to the agreed to fee, what is the justification/rationale for accepting the bonus? What other services are they providing above and beyond "their full range of Buyer Agent services"?
I am not a fan of the buyers agent bonus even though it means more money for me. I would rather the price be reduced. In the long run you will make it up because you will keep your client for doing that.
As one who sold their house in a very tight maket with a buyers agent bonus I don't think it would have worked if the price of the house was reduced by 3K. The 3 K was a drop in the bucket for the cost of the house. The buyer put 260K down. However the 3K had a greater impact on the buyers agent. My neighbor at the beginning of my flag lot had his house for sale also. The buyers agent that got the bonus worked for his main agent. I told think he was to happy but for that agent to talk the client out of my house was a personal 3k loss for him. Again the bonus unlike a commission was all for him. Do I know if the buyer knew about bonus prior to settlement? Nope.
The whole concept of a selling agent bonus is contemptible to me. It implies that Realtors steer their clients. I would pass the bonus back to my buyers.
Listing agents who are consulted by their sellers on how to make the listing more competitive ought to recommend lowering the price or offering a buyer's bonus, instead of a selling agent bonus.
Ok lets get real here there is good and bad to bonuses, but for the majority most realtors are commiting the deadly sin of steering. I have to commend the posters on here who are being honest with there clients and disclosing, as well as offering up some of the bonus. While I commend that I wish I could say it was the rule rather than the exception. I think the realtor's association needs to step up and make some rules regarding how bonuses are handled and disclosed to clients. The realtors who are out there hunting for that bonus, and directing there clients to those homes first, also seem to be the ones that aren't willing to give a concession to there clients to seal the deal. How insane is that to plead with your dishonest broker to get a concession! I see so many of them refuse to give a concession, and then after weeks of the client asking family etc..the realtor finally realizes they are going to have to do it to make the sale. Let's get real folks it is a bonus, something you would not have had otherwise, so stop making the word realtor go down the drain, and be honest with your clients like some of the outstanding realtors on this post have!
I recognize and acknowledge that realtors do debate the merits and the ethics of bonuses. I've stated before that, to me, bonuses are fine -- on the assumption that they are offered in order to increase showings.
As someone who keeps any bonus (and yes, I disclose before showing the property, and yes, I show FSBOs regardless of compensation and, no, I do not make my buyers make up for any "lost" commission if I'm only getting 1.5%), I do have a very serious problem with listings that indicate the bonus (or any aspect of compensation) is contingent on the terms of the transaction itself.
Personally, I believe that bonuses or compensation rates tied to any aspect of the actual offer (i.e., full price, close within 30 days, etc.) should be prohibited.
I would be particularly interested in opinions on this slice of the bonus debate from other agents who, like myself, accept bonuses or commissions that may be higher than those offered on similar properties.
I keep bonuses also. I also don't 'steer' because of a bonus (or anything else), so, since I'm not considering the bonus to begin with I don't care if it's 'tied to any aspect of the actual offer'. I don't influence my customers to make a full price offer, to close within 30days or anything else. As a transaction broker I give them the benefit of my experience and facts of record, encourage them to have confidence in THEIR choices and get it done. If there is a bonus tied to the deal and I need to kick that in to help the transaction come to fruition, I do it.
Ok lets get real here there is good and bad to bonuses, but for the majority most realtors are commiting the deadly sin of steering...The realtors who are out there hunting for that bonus, and directing there clients to those homes first, also seem to be the ones that aren't willing to give a concession to there clients to seal the deal.
I'm sure there are some that will think I am hopelessly naïve, but I really don't agree with you at all on this point. Like most agents, I've come across others in the profession that, after meeting with them I felt like I needed to shower the slime away. However, they were a small minority at the peak of the boom and, as best I can tell, they have not survived the current tough market.
As to the secondary issue of agents contributing their commission to "close the deal," let me set aside the question as to the nature of the agent that is or is not willing to negotiate his or her own compensation and state that, for me personally, it is a practice in which I have rarely engaged (and even then, my contribution has been in the hundreds, not thousands, of dollars).
If the buyer and seller can't come to an agreement using their own resources, the deal probably shouldn't get done - no matter what any of the agents may theoretically have at stake.
For those that presume that everything is negotiable when purchasing a house...contract-wise, commission is not one of those things:
Contract #1 occurred when the seller executed a contract with the listing agent specifying the total commission that will be paid to the agent's broker in the event of a sale. Listing contracts generally do not contain language along the lines of "commission is less if the seller doesn't like the offer but is afraid to turn it down."
Contract #2 occurred when the listing agent executed a contract with any cooperating broker via his posting on the MLS of a specified percentage commission that would be paid to that cooperating broker who found a buyer that delivers an offer acceptable to the seller. The offer of compensation definitely does not include language that says "buyer's broker may receive less than promised if your buyer chisels my seller."
Brokers and agents are not a party to Contract #3 - the one between the buyer and the seller. Brokers and agents have no obligation whatsoever to "contribute" any of their contracted compensation to resolve an impasse. To expect otherwise is usually a ploy attempted by people with little experience or understanding of contract law or, in the case of individuals that are savvy enough to know better, a crude attempt to gain a benefit to which they are simply not entitled.
Last edited by Eric Young; 11-26-2007 at 09:22 AM..
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Thats great but
