You have already been provided with some great food for thought here. If my sellers insist on an agent bonus, I always recommend the AMEX gift check as there is a fine undetermined line in REC rules regarding these types of bonuses.
Personally, it has been my experience that a cash bonus to a buyers agent carries little weight . . . a buyer wants to see what a buyer wants to see and it would be considered unethical for an agent to promote one property over another simply due to a bonus. The same goes for the 2% or 2.5% buyers commission (atthought in today's market 2.5% is the norm - although I realize this may sound contradictory) . . . a buyers dream home is a buyers dream home and they couldn't give a hoot if the buyers agent is getting 2% or 2.5%. A buyers home of choice is not our decision it is that of the buyer, we are just brokers of a deal.
Love and Peace,
Francesca, Realtor, ePro
All commission must be paid through the broker, bonuses are commission to no matter if you call it a bonus, gratuity or gift. Be careful with those gift cards people, don't lose your license or worse.
That is the law!
J R, sellers usually offer these bonuses to entice and compel agents to go out of their way to have their clients show their home vs others because they may make more money on that sale. Sure agents are not suppose to show properties based on their compensation however its human nature that some may take the bait. On 2% + $1,000 I don't think the bait is good enough when most other listings are offering 2.5% and 3% broker cooperation either of which will be more then the 2% + $1,000 bonus.
2% = 5,500 + $1,000 bonus =$6,500
2.5 % = $6,875
3% = $8,250 which is pretty much the average in this market
You make the call...
There are two very good arguments against the whole practice. The first is that the selling agent's influence over the buyer (his client) is far from absolute and may, indeed, be marginal. The seller may well be paying for nothing at all!
The second is, as a buyer, how comfortable would you be if you knew that an agent was making a great deal more by "pushing" certain houses on you? We are seeing this question being asked of physicians and drug company bonuses.
Think about it.
Although, as I say, an agent should not look at the commission amount when showing homes (and most really do not,) there comes the point where it becomes just not worth the effort. A now defunct agency constantly offered only one percent. They did not last partly because they got little cooperation in showing their listings. Three percent on both sides is about right, except in very high end properties, which might well have a different marketing approach and a different commission structure.
I agree - the agent will get paid through her broker whatever split they are in with their broker will apply with the commission and the bonus. I also agree that if using this as a strategy to sell your house quicker, a buyer's incentive is more enticing than a bonus to the selling agent. Perhaps a home warranty or a $1000 credit towards closing costs.
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In my neck of the woods, I tell my sellers not to bother with an agent bonus, just reduce your price! The buyers are easier to bribe than the agents!!!
I would recommend to your seller that increasing the payout to the minimum customary level of 2.5% would be a far more effective strategy to increase agent interest/showings.
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"I always recommend the AMEX gift check as there is a fine undetermined line in REC rules regarding these types of bonuses"
Whoa... Not at all, I'd suggest talking to your broker about this one. There is no fine line, the rules are clear cut and dry from the rec on value of gifts as well as ANY form of payment to an agent MUST be through the broker. We're in the same state so I can say that as a matter of fact being and as a broker myself.
As far as 'average' commissions, we all know we're not supposed to go there. If one listing is offering less than the next, I really don't care. I already have an agreement with my buyer so they don't have to worry that I'm not going to show them a house with a low fee being offered.
I'm aware of the reason. I simply don't think any cash enticement will make a buyer want a particular home. Buyers see homes on the internet. If this one is priced right it will sell. If it isn't, then all the bonuses in the world aren't going to make someone buy it.
Basically Ken would be rewarding an agent for the luck of the draw. There is no way we can make someone buy a house because there is a bonus. I'd be more inclined to reward the LISTING agent a bonus if you feel they worked hard to promote your home. I think all gifts with the sale of a house are silly. Even to the buyer. Who would buy a house costing hundreds of thousands because they were getting a minuscule gift?
Any bonuses go to the agents Broker, it is up to him whether he gives the agent the full bonus. Most times the broker takes a piece of it, like he/she does with the commission.
I'll be interested to see what others say, but I think this is the case.
If you are thinking of incentives - I would combine what is customary in your market as selling agent commission with an incentive to the buyer - perhaps a contribution towards closing costs.
Good luck to you!
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