If you are representing a buyer, how do you feel about accepting a selling bonus?

Asked by Michelle, Dothan, AL Fri May 16, 2008

Would you accept the bonus or would you negotiate that bonus in favor of your buyers getting a better sales price since you are representing their interest?

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18
Alan May, Agent, Evanston, IL
Sat May 17, 2008
Rather than accepting the bonus and turning it back to the client in the form of a gift, I'd prefer that the seller deduct the bonus from the purchase price. That way my client isn't paying interest for the next 15-30 years on my "gift". It also saves the seller a little money (granted, very little, but hey, what the heck, why pay anything extra if they don't have to) by them not having to pay commission on the bonus portion.

Not to mention, that if I accept the "bonus", I will have to pay income taxes on it, even if I pass it along to my client.

This is an often-overlooked aspect, that many Realtors don't consider.
3 votes
Alan May, Agent, Evanston, IL
Fri May 16, 2008
All bonuses, above the regular commission, in my opinion, should be passed directly on to the buyer.

Agent bonuses don't work. Buyer's incentives DO work.
3 votes
Brett Noel, , Los Angeles County, CA
Sat May 17, 2008
Commissions are agreements between two Brokers and not the seller or the Buyer. No need to disclose any commission offered to your Broker from a selling agents broker. Do you tell your buyer that you used to be on a 50% split but now your on a 75% split and he should get part of your higher pay?
Web Reference:  http://www.Brettnoel.com
2 votes
Chad, , Tacoma, WA
Sat May 17, 2008
I love giving seller bonuses. I will grease you to sell my inventory anyday, So who cares? Get rich...
2 votes
Mike Kelly A…, Agent, Santa Rosa, CA
Sun May 18, 2008
I'm a bit floored at the inherent guilt expressed by this thread as to how we our compensated in a real estate transaction. So, no one here ever doubled ended a transaction? I'm sure you all gave away your commission to BOTH the buyer and seller? I mean what are you basing this on? 3% is the MAXIMUM commission you'll ever take in one transaction? Or are you all used to 2.5% or perhaps 2%?!! (Yes, I know all brokerage fees are negotiable). But if a FSBO decides to sell their home and give 4.5% to the selling agent, thus saving the FSBO perhaps 1 to 3% you'll ALL give your buyer the difference? So when you only get 2% or 2.5% of your brokerage fee do you all ASK THE BUYER to make up the difference? Do your SPOUSES and Brokers know how you all do business? In California we have taken the brokerage fee OUT of the real estate transaction. It is a separate agreement made between the brokers to the transaction. Your thoughts fly in the face of logic for most real estate transactions or how we conduct business day to day. You get your Buyer a killer deal by advising them on the correct way to structure an offer, you've brought to bear on the transaction your knowledge of your market, all the connections you've nurtured to make sure the client is treated with superlative service and THEN you see nothing wrong with GIVING away your families income because of some inherent guilt that you are all being OVERPAID!! Gag me with a spoon!! I never SHOP for a bonus and if it is offered it is MY business and the other brokers. So if your client finds a fsbo who won’t pay a brokerage fee you’re going to make sure you SHOW them the house because it’s in their price point? And what of all those great discounters, present company included, who only offer you 1.75%? We had during the “Hot” market, agencies who were NOT stating ANY co-op fee. You had to put your fee on top of the transaction to get paid.
1 vote
Ute Ferdig, Agent, Newcastle, CA
Sat May 17, 2008
Hi Michelle. I personally don't like it when the listing shows a bonus to the buyer's agent as I don't want my clients to think that I am only showing them the house because I want the bonus. I would definitely disclose it to my buyers. I have seen bonuses as high as $10,000 or a Porsche. I would prefer if the seller offered a decent coop and offers an incentive to the buyers. To me that's a win win. Elvis brings up a good point about having to pay income tax on money you pass through to your client and that's why I would not give it to my clients a closing gift. I would just find a way to spend it in escrow.
1 vote
Artur Urbans…, Agent, Burlingame, CA
Fri May 16, 2008
Pam, this is exactly what I meant - Selling agent (Buyer's agent) accepts the bonus and passes it to the Buyer as a gift. But accepting a gift or higher commission would lead you to do less for your client? I don't believe so.
Web Reference:  http://www.cimpler.com
1 vote
Pam Winterba…, Agent, Danville, VA
Fri May 16, 2008
Michelle....

I would rather see the bonus go to my client the buyer.
1 vote
Artur Urbans…, Agent, Burlingame, CA
Fri May 16, 2008
Thanks for the post Michelle. I have to say that some replies surprised me. So - a bonus is totally irrelevant to me. My key objective is that a client will come back to me for another transaction. So why would I ever attempt to withhold relevant information from a client? I believe that majority of professionals will do exactly the same. Passing a bonus to a buyer makes for a nice house warming gift. So sure - I will accept the bonus. Is 3% or 4% commission to the Selling agent disrespectful to the buyer? I really don't think so. It is exactly the same. It might attract your attention when you browse MLS listing, but at the end you don't sell the house because the commission is higher.
Web Reference:  http://www.cimpler.com
1 vote
Tman, , 30642
Fri May 16, 2008
Wow,

Excellent post Jeffrey.!

(are you sure you're a real realtor.?)

; ^)
1 vote
Jeffrey Schn…, Agent, Austin, TX
Fri May 16, 2008
Michelle,

A bonus to a buyer's agent is payment for your silence. It's disrespectful to the buyer under all circumstances. You agreed to work for the buyer with a contract that stated how you would be compensated for ahead of time.

Think of it this way, does the bonus have value? Obvious answer is, yes. Then the bonus is only being used to sway your opinion. That's not in line with your code of ethics, where you're suppose to act in the buyer's best interests, not yours.

Some argue that the bonus is being paid by the seller, or the builder, or the developer. Hogwash. The buyer pays for everything in every real estate transaction. The assertion that they give money to a seller who then purportedly pays everyone else, and thus the seller is paying for your commission, bonus, title insurance, home warranty, etc., is false.

Now, what to do with the situation. That depends on how you think the seller is going to view you giving the bonus to your buyer. If you think it will help, then tell the seller that. If you think it won't, then agree with the buyer that you're going to rebate to them the bonus, put it in writing, and continue negotiating with the seller. The fact that the seller thinks you're going to keep the bonus can work to your advantage.

Best of luck,

Jeffrey
1 vote
Angie Nishni…, Agent, Richmond, VA
Wed May 28, 2008
I have no issue accepting a selling bonus. In my market, its pretty common for builders and resale sellers to offer more than the normal 3%.
However, when I meet with buyers and they sign the buyer agreement I tell them upfront that some sellers are offering a selling bonus and it goes to me. It is no way refunded back to them. I just feel I need to disclose everything to cover myself.

If they ask why I don't refund the difference, I give them the L'Oreal Cosmetics Line............
" because I'm worth it "

:-)
Web Reference:  http://www.nishnickhomes.com
0 votes
Jim Paulson, , 46637
Sat May 17, 2008
Hi Michelle, I have done both. When I needed to kick in some of the bonus to make a deal work I did so and when I didn't I kept it. You need not be ashamed of keeping the bonus because the seller offered it as incentive just the same as they offer a standard buyer broker commission or split.
0 votes
Mary Muldown…, , 32082
Sat May 17, 2008
I agree with Arthur. Acknowledge it to your customer and then pass it on as your closing gift. Accepting a bonus can lead to very bad behavior. You like the 'little something extra' and you begin only showing homes with bonuses. Homes with bonuses begin to be the only ones sold so sellers offer more bonuses and we become more corrupted. When searching for the right home for a customer, commission and bonuses should not be a factor.

Mary Muldowney, Prudential Network Realty, Ponte Vedra Beach, FL
0 votes
Phil Young, , 23323
Fri May 16, 2008
I tell the buyers up front that any bonus will go to them. Never sold a property with a bonus. I don't list any with bonuses to agents. Never thought an agent needed one to do their job.

On the other side the buyer is always informed of any compensation. My clients never question the amount. If their buyers they usually call me when they sell.

One thing to remember in the real estate world is capital gains. Single limit is $250K, married is $500K. It doesn't take many transactions to reach the limit. Plan for the long term.
0 votes
Jed Lane, Agent, Petaluma, CA
Fri May 16, 2008
Tman, I think that you have a wrong impression of Realtors. I too would inform the buyer of the added compensation and I also never let my compensation factor into my negotations for my client. If my cleint is aware and decides that the deal is all to their liking and they are going to close. A major portion of the "bonus" would be given to them in gift certificates to very nice resturants and home furnishing stores.
0 votes
Eleanor Bran…, , Braselton, GA
Fri May 16, 2008
My personal opinion is also to pass the bonus on to the Buyer. You are, after all, representing them and Code of Ethics says that you put their interest above even your own. You could, of course, advise them of the bonus offer and tell them to make the offer lower and include in the special stips that the bonus be passed on to the buyer. In Georgia, the bonus must be approved by the broker anyway, and often the broker wants to get his/her cut of the bonus as well - depending on your contract with the broker.
0 votes
Michelle, Agent, Dothan, AL
Fri May 16, 2008
My personal stance is to pass it to my buyer. Just want to put that out there, because obtaining the bonus wouldn't even be a consideration for me. When working with a seller and they ask about a offering a selling bonus, I advise them to reduce the price or offer it towards closing cost... Just my personal opinion though.

Thanks for the feedback.
Michelle
0 votes
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