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Cash Bonus, Hawiian getaways, and the kitchen sink too

With homes sales leveling off in the valley, I've noticed more and more incentives for Realtors, or their clients upon closing. There are cash bonuses to Realtors, there are cash bonuses for buyers, trips, etc..but do they actually sell the property? There are also bonuses offered to agents who bring a full price offer.

Federal rules require that cash perks be disclosed, but offerings like trips or other non-cash items do not. Non cash items should be disclosed to the client at the start just to avoid any uncomfortable situation later on..in fact it is suggested that any bonus received should go to the buyer.

You can bring a buyer to a house, but you cannot force them to buy it, no matter how big of a bonus is being offered....having an extra $10,000 to go toward their down payment, or room remodel may sway them a little...

Currently there is a home in my market that is offering just that-$10,000 to the buyer to do with however they wish...I'm keeping my eye on that one..the home is listed under $300,000 and it could really come in handy to who ever decides to make an offer...

I have a home listed where the seller wanted me to post that they would give 2 tickets to Hawaii to the agent who brings an offer before June was over...My partner and I dressed in Hawaiian skirts and lei's etc. and passed out lei's to every Realtor in town letting them know of the offer...We went around town all day dressed like Hawaiian honeys, and of course everyone asked why...and we told them that our seller is offering tickets to Hawaii, and we would pass these on to the buyer...It's July....no offer...so as you can see if the home is not for the buyer it 'ain't gonna happen...

Incentives is a trend that is rapidly growing across the country, but in my opinion, just plain good pricing does the trick..

Posted by Shari George on 07/03/2007 07:43 PM

Comments (21)

selling, bonus, buyers

21 Comments on Cash Bonus, Hawiian getaways, and the kitchen sink too

JUL

2007

I think I agree with the pricing strategy

Shari - Right on target - it's about whether the home and the price are right for the buyer. Nothing else matters.

With home sales slowing significantly across the country, look for these kind of incentives to get bigger and bigger.

Nice to see you posting again...

The builders here are offering an array of incentives - sometimes something particular will sway a buyer, but not often. Most builders will reduce the price a comparable amount, but that's when you find out what they're really paying for the trip, furniture, etc.

Shari: As much as I hate to admit it... it works in our market. As a listing agent, it goes completely against my grain... But every time I do it (I should mention that the home needs to be priced correctly too), these listings are shown MORE often and sell MUCH faster than our other inventory.

I don't mind if an agent promises extra bonus if the property is purchased by a certain date. Bonus $500 by July 31st, kind of thing. But when it starts exceeding nominal amounts I worry about how much profit is the seller walking away with and how much is my buyer paying. Just doens't feel right.

Offering incentives is great for the agent but the house will still not sell unless it is priced right. Price it right and it will sell. Great post

I'm not showing another house until somebody offers me an airplane as an incentive.

I have seen a lot of boats being thrown into the deals here in Georgia...

couldn't agree more. take the incentives out of the price. it makes for a quicker return to a healthier market for all of us.

I always pay attention to those perks..email listings agents and request for more info about the perk not listing - lol

That's weird. And when they come here and they tell everyone the seller bought them tickets to Hawaii...I wonder if we'll give them preferential treatment....lol!

JUL

2007

We are seeing some new things here in Arizona offered as incentives as well. One of the latest that I have seen is an agent indicating they will give a gas card to every agent who shows their listings between certain specific dates, as indicated on the lock box logs. And there are the various air fare tickets, some offered to buyers, some to the agents, and then there are dinner coupons. There is always something new cropping up. We have a listing that offers a "as is no fee" golf cart with the home.

Is there a conflict of interest if an agent collects an incentive after selling a house to the buyer? It would seem that it should at least be disclosed to their principle

Hi Shari - if the sellers who offer these bonuses and prizes, etc. would just price their property where it REALLY should be, I bet they'd find they might have a sale. I'm not in favor of these kinds of things, preferring instead to have my sellers price it right and have it in good condition - spend that bonus money on new paint, some landscape sprucing up, lowering the price - whatever needs to be done. Offering a bonus or a prize is not going to get the house sold any faster, in my opinion.

I've had sellers offer these bonuses and prizes, and none of them helped sell the house. When I'm working with a buyer and we see a house with one of these kinds of offerings, it doesn't cause them to like the house anymore than if they weren't offered. And I will not try to sway a buyer into buying a property with one of these offerings - if they like it, they like it. That offering will not change that fact.

Good post!
Ann

I'm seeing lots of interesting incentives here in the Hilton Head and Bluffton, SC area. I have to agree with you---I've never seen a buyer purchase a home because the Realtor stood to gain from an incentive. I'd prefer to see my sellers be more price sensitive right now.

You are so right. It doesn't matter what is being offered, or to whom the incentive if for. If the house isn't right for the buyer, they just won't buy it.

Very good post. This is a practice you are going to see growing more as the market continues its current trend. You are absolutely right...if it's priced right, it will sell.

I have never understood why incentives to an agent work if the are doing their fiduciary duty, which is to represent the best interests of their clients.

I never look at the commission in the MLS or pay any attention to bonuses when I am showing property. It either meets the buyers needs or it doesn't, period.

Good post Shari, I have been in business for over 27 years. Gimmicks will come and gimmicks will go. My buyers don't seem to pay attention to all these incentives that are being offered. They either like the home or they don't. If a person is going to make the biggest investment of their life they have to love or at least really like the home. Great post and have a wonderful 4th.

JUL

2007

Sue- I'm glad it works in your area..I wish for this one that it would have..the sellers are very anxious, but I think asking for a price reduction is in order..

Chris--I read somewhere that a seller was offering a new Lexus to the buyers agent...

Jennifer boats often get thrown in here too, people just don't want to move them..we are a boating community...

Marty-- It does seem strange, that is why when we were running around town, we said that we were giving the trip to the buyer..it seemed less sticky..

Shari, I agree totally, incentives don't help. If a buyer wants the house, they will buy it. Price rules, always and forever in RE.

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