I sure did. I sold a property, back in 2003, and wanted it closed in in thirty days. I was uprooting my family to move to a different state and knew I was going to need cash quickly. At that time, I was "real estate rich", cash-poor, and jonesin' to buy in my new area. I knew I'd need to move some real estate quickly so I "bribed" the buyer's agent with a higher than normal co-brokerage fee.
I had three "non-negotiable points":
- I wouldn't accept anything less than the listed price
- The escrow had to close within 30 days,
- All contingencies had to be removed within 10 calendar days.
I listed the property on a Thursday and asked my agent to hold it open on Saturday and Sunday. The property was vacant and I had just repainted it so I knew it would show well. I priced it competitively so I expected offers quickly.
Monday morning, my agent presented me four offers: two were below the listed price and two were above it. What stood out about the one I accepted (which was not the highest offer), was that the offer waived the appraisal contingency. This was 2003 and lenders were using automatic valuation models (AVMs) for home buyers with at least 20% down payment.
I accepted the buyer's offer. Now, all I had to do was to get through the contingency period. Typically, the buyer's agent submits a request for repairs for the seller to accept, reject, or amend. I received that request on day nine.
I was kind of sweating a bit at this point. The request for repairs was a laundry list of items, which I calculated to be 1% of the sales price. I relied on my "bribe" to make this deal happen quickly and denied the request for repairs. I basically said " take the deal or walk"
The contingency was removed and the seller closed a week early. I don't know if my "bribe" to the buyer's agent did it but my house sold...early and for the price I wanted.
Pretty icky, huh? At this point, you might think I'm a real sleaze ball for "bribing" the buyer's agent with a bonus but, I want you to ask yourself these questions:
- What was my role in the transaction? What was my job?
- Who was supposed to be protecting the buyer's interests?
- Would you care if your agent earned more than the average co-brokerage fee if you got the home for the price you wanted?
- How could you prevent such a thing from happening to you?
This is a real estate website so expect a bunch of real estate agents to comment that my post offends them. Some might even say that this practice NEVER happens and threaten that I did something illegal or unethical (I didn't; I was selling a property and I represented nobody).
A few might just answer the question in your mind right now (which is, most likely, the fourth question I asked you to ask yourself). Those are the smart agents.
How do I know you ask those questions? Consumers like you ask me them all of the time. After all, I've been involved in over 600 real estate transactions. Here is an example of questions I get. Read what (sandycat) asks right here:
Does a buyer's agent have to disclose that they would receive a bonus if they sell a particular house? We signed our contract and now our agent said that she just found out that she gets a bonus for selling that house to us. Had we known that the seller was giving a bonus to the agent, we feel as if we could have had more negotiating power. Are there any disclosure laws about this??
This San Antonio agent (kevcrawford) answered her question reasonably:
99% of the time, the bonus being offered is out of the listing agent's commission, not from the seller, so you probably wouldn't have had any more negotiation power. I know that if I have a listing in a slow area that's priced correctly and we're just not getting many showings because the area is slow, I'll tack on a 4% buyer agent commission or bonus and I'll cut my take way down. This is a pretty standard practice in most places.
As far as disclosure, every state is different. I have a feeling that you were happy with the house and felt you got a good deal until you found out your agent got a bonus. You wouldn't have bought the house otherwise. Enjoy your new house and thank your agent for finding you a great home for a deal that you obviously were happy with, because you closed.
At least I thought it was a reasonable explanation, until I read the customer's follow-up comment:
Yes, we feel like we got a good deal. But like I said before, if we would have known that the seller is willing to dish out all this extra money, we could have negotiated a little more aggressively. We are talking large sums of money, OUR money. Also, with a house transaction, we would expect full disclosure. I understand that real estate people buy and sell houses all the time, but we are average people who, at most, will buy and sell a few times in our lifetime. We rely on the experience and honesty of you guys to help us through this sometimes confusing and legalistic process.
Do I feel like we should get a piece of the bonus? No. I say good for her and Merry Christmas for getting a bonus right before the holiday. But we felt as if we were sideswiped and it doesn't feel right.
Ugh, that's not a big vote of confidence for her agent. Let's see if she relaxed. Nope, it gnawed at her:
I'm totally not upset that she got a bonus. And she didn't lead us to this house, we asked to see it. I really have to believe that she didn't know until later. I really think in the end we got a good deal, I guess it felt a little "shady".
Finally, we see that the customer's husband tells all the agents that incentives DO matter:
There is still another perspective and this goes to all realtors. It is about the fact when a professional is to represent the buyer's side and professional advice is requested. Any extra incentive will have some impact on the agents motivation
You want to know as a buyer if there is a special motivation to sell that specific property. Especially when the agent is asked about specific matters you want to trust in their judgement. By not disclosing the extra bonus there is a lot of room for second guessing...
...Honesty still matters and once the deal turns sour it's a lose lose situation for everybody. For the realtor side is about losing recommendations or even worse, reputation.
Smart agents will address this and will advise you to negotiate the fee you expect your buyer's agent to receive before you look at homes. As I've always said, most real estate agents are good and honest business people. Most loan agents are, too. The compensation structure for loan agents and the compensation structure for real estate agents, is broken, though. The REALLY good agents will acknowledge this and want to help you answer all those nagging questions, about the appearance of impropriety, before, during, and after the transaction.
Hire one of them.