Profile picture for Honestly Realty

Buyer Broker Commissions Bonuses, Do they work? Should they Work?

Agents have always offered selling bonuses to help sell homes. Do they really help sell a home faster?  Should a buyer's agent accept a bonus?

  • June 24 2010 - Fairfax
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (19)

There is nothing wrong with competing at every possible level, and bonus offers are just one more level.

Case study:
in 1998 in El Paso, Texas, the market was moderately over-supplied.  An employer with about 2000 local emplyees, and 10,000 nationally, decided to move headquarters to Houston.  Many emplyees elected to move to Houston and so about 300 additional houses cam on the already crowded market. 

The worked smart to sell their employee's houses and did so at every level:
1. Set pricing on the low end of the calculations.
2. Insisted on giving the listing agency 8% commission and that 4% be offered to the buyer's agency.
3. Offered buyer closing costs up front.

Those 300 houses, on average, sold much sooner than the competing marketplace.

They competed on every level and won.  Yes, they walked away from some upside potential, but they smartly avoided carrying many dozens of houses for many months.

Should a buyer agent accept a bonus?  I think so.
  • June 24 2010
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I just sold a bank owned property where Wells Fargo was the seller.  The seller paid my company a $1,500 bonus because it closed within a certain amount of time.  However that was not a consideration on showing or making an offer on this property.  I don't think this will help a home sell, I think any incentive given to the buyer will.  Ricks example of buyer's paid closing costs will help a buyer chose one home over another.  If a bonus happens to be part of the deal I think it is great.   I really don't think most agents have the bonus effect their advice on a particular property. 
  • June 24 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Bonus to the buyer agent rarely helps to sell the property - sometimes it may even hinder the sale.

By law, buyer bonus must be disclosed to the buyer - for obvious reasons.

The buyer will NOT purchase the property unless the price is right, etc. and most agents rely on referrals and value their reputation too much to consider the seller's bonus. 

A better option is to price the property competitively and offer the bonus to the BUYER - after all, it is the buyer who makes the decision to purchase or not to purchase.
 
Offering "bonus" to the buyer agent for "full price offer" (especially if the property is over-priced) is a wasted marketing opportunity.
  • June 24 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Honestly Realty

Accepting a bonus is a bribe?  Shouldn't all bonuses pass-through to the buyer.  Accepting a bonus could clearly be seen as a conflict of interest.

  • June 24 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

NO.
The intent is innocent - to bring the attention to the property. Many buyer agents share the bonus with the buyer, and even if they do not share, the bonus MUST be disclosed to the buyer. It's the law.

The idea is that if the buyer needs to decide between two comparable properties, one with the bonus and the other without the bonus, the buyer will choose the first one, especially if the agent is sharing the bonus with the buyer.

This is NOT a bribe. It is called creative marketing.
  • June 25 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Honestly Realty

It's called a conflict of interest.  A buyer's agent should not receive additional compensation for selling one property over another.  Do agents search the MLS by sub-agent or buyer agent compensation? No, I do not think so.  How does a bonus get more attention for one property over another.   The agent gets paid more to sell the bonus property and not the other. 

Vivian do you give more attention to homes with a higher commission paid to a buyer broker and avoid the lower commission properties?

But it does appear the bonuses do move homes.  Why? Because agent steer home buyers to these homes and away from lower offers of compensation.  For a sub-agent this is fine.  For a buyers agent it is wrong.

  • June 25 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for blue screen exile
It may be ethically "wrong"; but it works; and is effective at getting more showings, especially compared to FSBO that get minimal showings from the agents.  Even if not "on the list"; the agent will often say that it is on the way, and that the agent just wants to stop in and see.

If you actually put in your contract to your agent to refund you any excess commission over a given percentage, it wouldn't make any difference to you as a buyer anyway.  And those that are motivated to sell by putting in such concessions are also motivated enough that they will list below market value just to get it to move quickly.

In a rising market, you can offer a buyer agent less.  In a falling market, you often have to offer a buyer agent more if you want the property to move, just due to market saturation and the substantial extra work for the agent.
  • June 25 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

"Vivian do you give more attention to homes with a higher commission paid to a buyer broker and avoid the lower commission properties?"

No. I do not search for properties with "bonuses."
I send my buyers a complete MLS list of ALL the homes on the market that meet their criteria and my BUYERS decide what homes they like - as all or most agents do. 

Clearly, you have very little understanding how real estate industry works. 
Buyer agents CANNOT stop sellers from offering bonuses. Neither can listing agents. Sellers offer various incentives to purchase their property if they must sell and can afford it. It is their right to do so. 

Who are YOU to dictate how sellers should market their property?

p.s. my name is Vivianne - it is only polite to use someone's true name given by the parents.



  
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Honestly Realty
Vivianne -
I think you need to read my post one more time..  I never said there was anything wrong with offering a bonus.  I think it is a great idea.  Unethical buyer agents accept these bonuses. Listing agents are wise to offer bonuses.  It's like catknip. I also have no problem with a sub-agent accepting the bonus, since a sub-agent represents the Seller.  However I think we can all agree that 99% of agents showing homes to buyers are Buyer's Agent.  If bonus homes sell more quickley then it proves that buyer agents show bonus homes over non-bonus homes.
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for blue screen exile
It is plain foolishness to assume an agent should not accept a bonus offered to them.  Especially as the agent has to split the bonus with the broker, and it is not the agent's choice in many cases whether to turn down a bonus.  Saying someone should turn down a bonus is like saying people should always pay list price and never clearance price, to make sure they are not ripping off the company they are buying from.

And if no bonuses in that industry, why have any bonuses in any industry?  Forget Christmas bonuses and end of year bonuses, and profitability bonuses, and efficiency bonuses, and innovation bonuses... you agreed to work for a given value; that is all you get regardless of how much extra time and effort and creativity you put in.
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I do not know the statistics on that. You merely saying that sellers offering "bonuses" sell their homes faster does NOT necessarily make it true.

I know of many sellers who did offer bonuses to buyer agents and did NOT sell their homes. Bonuses do NOT sell homes IF the property is over-priced or in poor condition for the price. 

Bonus is just an icing on the cake.  
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Honestly Realty
Pasadenan-
You are missing the picture here.  Bonuses from the client of the agent would be great.  The Buyer broker agreement could provide for a bonus to the agent if certain conditions occurred.  Found an acceptable home in a given period, negotiated on their behalf beyond expectations.  But for an agent to accept a bonus from the listing company on house "A", but no bonus on house B could be a conflict of interest.  What if the agent did not show house "B" with no bonus and it was a better value.  Maybe the agent did not show house "B" because it backed to a busy road and felt it was not a good match for his client.  The bonus on house A still creates the potential for a conflict of interest.  Also FYI most brokerage firms allow the agent to keep 100% of any bonus offered provided the original compensation met their requirements.
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for andrewnagy
Always in a buyer's market
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Buyer agents may be drawn to an ad that says $500 bonus, however, it must be disclosed to the Buyer (in NC) who knows what s/he is looking for. So, market to the Buyer instead of the agent. Include something like a Free Home Warranty, offer to credit the cost of an appraisal at closing, or a free gift card for $200 worth of paint or gas. ANYTHING to make your property more appealing.
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Honestly Realty
Venita,
Exactly, instead of a $5,000. buyer agent bonus offer a $5,000. credit towards the buyers closing costs.
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Some sellers (a few) offer closing costs assistance AND the agent bonus..... AND they price the property competitively.  It is the sellers' choice as to how to market their property based on their personal situation.
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Honestly Realty

Vivianne - would you agree that being prepared and priced correctly including terms are the most important.  

  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Absolutely. Always.
Bonus is what it is, creative marketing.
  • June 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

No they do not unless you are an unethical Realtor! See Real Estate agent commission bonus [link removed by moderator].
  • November 07 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.