Does offering a finanical bonus ($2,000) to the buying agent really work? Do you feel this is ethical?

Asked by Zach, Academy/Sherman Park, Saint Louis, MO Thu Jun 5, 2008

Does offering a finanical bonus ($2,000) to the buying agent really work? Do you feel this is an ethical practice?

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Dawn Ohnstad, Agent, Wayzata, MN
Tue May 31, 2011
I have personally never shown a house based upon commission or bonuses offered. I would rather see enticements for the buyer.......mostly a price that is exciting compared to other homes. And yes, I think it would be a breach of ethics to have my conduct with a client be influenced by what is best for me, rather than what is best for the client.
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R. Bruce Dur…, Agent, Apple Valley, MN
Fri Jun 6, 2008
Agent bonuses are a farce for the ethical agent. They should be in the commission amount, if anything, and not as an incentive to the agent. I feel as if there is a chance the buyer will question my motivation and ruin my credibility with them. I will suggest they write the bonus amount in the contract as a seller paid closing cost. Regards, Bruce
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Owen Zweiback, , Bonita Springs, FL
Fri Jun 6, 2008
Hey Zach: I've found that adding bonus money to the buyer's agent doesn't help much in selling the property for a greater amount of money or more quickly. What I like to do instead is offer some perks to the buyer themselves. I also have found that incentivizing the buyer's agents w/ a little higher co-broke offering works better than the bonus.
1 vote
Tman, , 30642
Fri Jun 6, 2008
Zach, good morning...

Is it ethical..? ... it's ethical, in a funny self serving way..

Does it work...? .. nope.....

Think of it this way ...

You go out to buy that new white 4dr sedan at the local car dealership, you've done some research, you know what you want and discussed it with your salesperson ...

In the meantime, your salesperson is now pushing you to drive that 2dr purple 5 speed that won't fit you, let alone your 3 kids...

This all being done because there is a $500 bonus on this particular car that the salesman will get in the offing, if sold .... oop's, so much for the credibility - and the buyer will probably go some place else.

$2,000 in landscaping or $2,000 in interior painting helps sell houses .. $2,000 in closing costs or $2,000 in kitchen upgrades helps sell houses -and- reducing the price $2,000 helps sell houses....

$2,000 in a bonus.? .. hmm, does anyone need a sporty purple 5 speed that fits 2 with a family of 5...?

; ^)
0 votes
Jennifer Kir…, Agent, Minneapolis, MN
Fri Jun 6, 2008
To answer your question, yes, it is ethical to offer a bonus to the buyer's agent. Depending on the price of your home, this could be a significant amount or not. It really does not matter because if a buyer does not like your home, no amount of money you offer to the agent is going to make your home more appealing to the buyer.

You are better off contributing to the buyer's closing costs or offering some kind of incentive. I think lowering your price by $2000 is insignificant as the buyer won't see the reduction as valuable. They would rather bring less money to the table in closing costs or have money for repairs/updates. Hope this helps!
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Jim Johnson, , 78233
Fri Jun 6, 2008
Depending on the price range of your home, you would do better to price your home accordingly and offer $3K - $5K in buyer incentives. This accomplishes two things. It expands the base of prospective buyers, and strengthens your bargaining position.
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Teri Eckholm, Agent, St Paul, MN
Fri Jun 6, 2008
Hi Zach--

I personally think the funds get negotiated out of the deal as it is required that any bonus is disclosed to all parties. Usually when the buyer hears of the incentive, they are concerned that they may have overpaid by the amount of the bonus to the agent.

I would recommend that the $2000 be taken off the price of the home or use the funds to make a repairor enhancement to the home.

If you really want to offer an agent incentive, raise the amount of commission offered to the buyer's agent in the MLS.

Good luck!
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Pacita Dimac…, Agent, Oakland, CA
Thu Jun 5, 2008
There is nothing wrong with offering a bonus to the buyer's agent to close a transaction. It's nice to have, but it's not the reason why agents would show your property.

Agents' biggest motivation is to find a house that the client will like enough to write an offer on and that has a chance to close. That's when we get paid -- when escrow closes. If we happen upon a listing that offers a bonus, that's good...but it's not the draw. We'd be violating our fiduciary responsibility if we only showed our clients properties that have the highest commissions or bonuses instead of finding properties that meet their needs.

If you'd like to offer a bonus of $2,000, and there is a gap in agreeing to a price between the buyer and the seller, it's best that you apply that bonus as a credit to the buyer towards closing costs or towards repairs and inspections. As such, it's a win-win for all.

Good luck!
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