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Randy Pereira's Blog

Trust 2 Move - San Antonio Homes

By Randy Pereira | Broker in San Antonio, TX

Seller Q&A: Should I offer a bonus to the buyer's agent?

Dear Seller,

Providing an incentive works, and the simple answer would be yes.  However, you still need to look at your specific situation.  What are the comparable home sales in your area suggesting?  What is your current competition doing?  The purpose of the bonus is to motivate the buyer’s agent to show your home, and the increased showing activity will help produce a reasonable offer.

Unfortunately, we have 7.7 months of housing inventory (San Antonio, TX area) and properly pricing your home plays a very significant role.  The bonus offered may motivate the agent, but if your home isn’t priced properly you won’t have a motivated buyer.  Buyer’s have access to more information than ever before, and spotting an overpriced home online isn’t very hard to do.

Many new home builders use this approach, and it works…. but they have control over pricing, incentives, etc… throughout the entire subdivision.  The buyer is already interested in the location, homes, and general price range.  The buyer’s agent bonus just helps to bring in traffic, not necessarily close the deal.

You, Mr. and Mrs. Seller, only have control over your home.  Proper marketing and pricing should be priority number one.  If you need that extra push to get traffic through the door, then offer a bonus, it wouldn’t hurt.  If you have a one of a kind home, and/or limited competition in your area then perhaps price your home a little higher, as well. The buyer’s agent will be motivated, and the buyer will not have anything else to compare your property to… increasing your odds of getting it sold.

 

Sincerely,

Randy Pereira, Realtor
ULTIMA Real Estate
www.trust2move.com

…if you, or someone you know needs help with a real estate matter, feel free to call: (210) 442-9178 or email: randy@trust2move.com

You can also join us on www.facebook.com/trust2move.homes


Comments

By Ellen & Doc Stephens,  Mon Feb 28 2011, 11:06
Nice post, Randy.

An idealist would say that a Buyer's Agent shouldn't even look at the agent compensation - they should consider only their fiduciary responsibility to their Buyer to help them find the best home. A realist would note that, since most Builders are paying from 5 - 8% commissions to the Selling Agent, a "practical" agent would naturally show those home first. Why pass up free money? So, we Listing Agents sometimes have to encourage our Sellers to offer additional incentive (in addition to pricing right, properly preparing the home for showing, and our dazzling array of marketing tools) to balance out the "reality" of the market place.

On the other hand, we see some agents who discount their listing commissions and then try to pass that discount on to the Selling Agent as a reduced commission to the Buyer's agent. That, in my humle opinion, isn't serving their fiduciary duty to the Seller. Because they couldn't even negotiate their own commission, now they want to penalize their colleagues and spread the loss. The average Buyer's Agent does about 6 deals a year - do you think they want to give up a reasonable commission on one of them? Probably not going to sell very fast.

Doc Stephens, REALTOR®
By Randy Pereira,  Mon Feb 28 2011, 12:19
Thanks Doc for taking the time to comment.

The reality is... some buyer's agents don't live up to their fiduciary responsibility, just like you said. The bonus is a marketing tool, just like anything else. How that buyer agent treats his or her client, is a totally separate issue... and I just found another article to write about.. lol.

I believe buyer agents play a very important role, and should be compensated fairly for their work. If their job is done correctly, any questions/concerns regarding compensation, are handling in the buyer representation agreement. **that too can be negotiated... if needed**

Personally I agree with you... and would never recommend a seller offer a reduced commission to a buyer's agent, because sellers/listing agents want/need that cooperation with other agents in the local area.


All the best...

Sincerely,

Randy Pereira, REALTOR®
Randy,

A Seller is allowed to offer a bona fide bonus as an incentive. However, the bonus should not be the driving force for the Buyer's agent to show a particular property. The Buyer's agent should not steer the Buyer to the property in hopes of selling that property just for the bonus, e.g. builders' bonus'. The Buyer's agent should always have the Buyer's best interest foremost.

This also goes for listings that only pay a Buyer's agent 2%. I would be curious to find out how many agents show those listings, and how long these listings stay on the market.

Good post, by the way.

Thanks!


Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS #267658
Sterling Mortgage Services NMLS #373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell
http://www.sterlingloans.biz
By Randy Pereira,  Tue Mar 8 2011, 08:14
Hi Dianne,

Thanks for sharing. I couldn't agree more.

I did do some searching on mls regarding your comment..."how long these listings stay on market" based on different commission levels, at time of final sale. The initial results were actually very interesting... if you are interested, I would be happy to share it with you.

Sincerely,

Randy Pereira
ULTIMA Real Estate
http://www.trust2move.com
Randy,

Absolutely! You can either call me at my office or send by email: dianne@sterlingloans.biz.

Thanks for the info!

Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS #267658
Sterling Mortgage Services NMLS #373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell
http://www.sterlingloans.biz ..

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