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Ethics vs Greed or am I just an Idealistic Realtor?

By
Real Estate Agent with 'Til Dawn Real Estate

Help me out here folks because I am really struggling on this one....

I currently have numerous listings in a neighborhood where homes are still being built. We all know how difficult it can be to compete with new construction; especially when the construction company also has an owner's interest in a mortgage company and can offer tantalizing financing incentives. But...what about when you are told Good Luck selling your resales because the builders are offering huge incentives to Buyer's Agents?!

What exactly does that imply? Am I to understand that there are actually agents who will just show their buyers the newer homes because it is a bigger payoff to them??? I've heard the justification - well, the homes are the same   anyway, so they aren't shortchanging the buyer on homes that fit their criteria. But really - I have shown two homes that were identical in floor plan, both with colors throughout the homes that the buyers liked, but the floor plans were simply reversed. In one home, the kitchen was on the left and FR on the right. On the other home, vice versa.  And the buyers made their decision on which home solely on which side of the house the kitchen was on! (Something you would not know without having actually gone in to see the home!)

Now it's one thing if a buyer has specified that they want a new home. I get that. But I have had several agents suggest that my sellers need to offer an incentive to the buyer's agent to get them to even show their home. WHY? Isn't it our JOB to show the homes that meet our buyer's criteria?

I represent both sellers and buyers. And when I send homes to my buyer clients, I send them EVERYTHING that fits what they have told me they are looking for. I don't care if it is the same floor plan five times over. They might like the position of the rooms better in one over another, the position of the sun rising/setting, etc. And the way I see it, if they are all in the same neighborhood anyway, it'll be a quick trip. They quickly realize they are looking at the same floor plan, and if it is one they like, we walk through all of them so they can decide which one they like better as far as personal characteristics. But that is up to my BUYER to decide, not ME! It should be based on their personal preference, NOT MY COMMISSION!!

Am I crazy here? Don't get me wrong, I am not saying a buyer's agent shouldn't accept a commission bonus when one is offered. But I do have to say, if agents start narrowing their buyer's list based on their commission check, the backlash is going to be ugly! Commission bonuses may be banned. And I think it goes without saying what that will do to our already struggling public image as a profession.

Imagine telling your sellers that they may want to consider offering an incentive to buyer's agent just so they will consider showing their home....wow, are we not screaming out - REALTORS are greedy?! money

I would really LOVE to hear I am not the only one baffled by this...Call me idealistic, but I still believe there are those who are looking out for the best interests of their clients...you know, people who are still doing their job.

Comments (11)

Eleanor Thorne
Equity Resources - Cary, NC
Advantage Lending 919-649-5058

I've also wondered about those poor owners who bought new construction and now the builder has slashed the price on the home they just bought by 100K!!  I'm with you - I don't get the "your seller should be offering more incentive to me if I'm going to show the house!"

Jul 29, 2008 07:20 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

It has been my experience that the best incentive for a home to sell is to reduce price, or for seller to offer perks to the buyer. 

Also, I've noted that usually real estate professionals, who choose greed over ethics, don't last long in the business.  Word gets around swiftly in the community, and that doesn't bode well for longevity in the profession.

 

Jul 30, 2008 05:35 AM
Dawn Nuzzi
'Til Dawn Real Estate - Raleigh, NC

Eleanor - Yep, that's another potential problem. If an owner intends to stay in the house awhile, they will be fine. Once the builders have completed all of their phases, the homes will appreciate again. But for those who have to move now for whatever reason, it's causing a world of hurt.

Myrl - I agree with you!! Lowering a price and offering incentives to a BUYER make sense to me. They are the ones that are making the decision, not the agent.  I also agree and have to keep reminding myself...eventually these agents will put themselves out of business with their greed.

Jul 31, 2008 12:59 AM
Jim Crawford
Long & Foster - Fredericksburg, VA
Jim Crawford Broker Associate Fredericksburg VA

Buyers agents should not ethically accept bonuses.  How are they representing their clients?  Offer a higher commission to compete with the builder.  I've sold many homes in spite of the builders and their incentives over the years.  You must know what you are doing...

Jul 31, 2008 01:38 AM
Jon Wnoroski
America's 1st Choice RH Realty Co., Inc. - Green, OH
Summit County Realtor

Selling a home in the early phases of new construction in a development can be difficult especially if the price of the new home is similar to that of the resale.  It will take time for "resales" in a new development to move on the market.. early on the buyer can get a "new" home for nearly the same price as the "used" home but later on home values for resales will appreciate and move a little better on the market.

Jul 31, 2008 01:47 AM
Cristal Drake
Prudential California Realty - Fullerton, CA
Realtor - Fullerton Real Estate

Wow, I am on your side Dawn.  I am guilty of never even looking at what the commission is offered when showing a buyer.  I only want to get them the house they want and deserve.  I would show all of them regardless.

Maybe there is actually more to it.  If it were me, I would probably pick the new house just because it is new and no one has lived in it.  Then again, if no landscaping were done, drapes, lightbulbs (those add up) etc... then I might pick the house that was gently lived in.  Either way, the commission should not come into play. 

You could though make mention to the sellers about what you are up against.  Maybe offer seller concessions, buy down point, etc....something for the buyer, not the agent!

Jul 31, 2008 02:51 AM
Dawn Nuzzi
'Til Dawn Real Estate - Raleigh, NC

Thanks guys for the thoughts/ideas. I have upped the commision for the buyer's agent but it still nowhere comes close to leveling the playing field against the builders. Right now, it's just set up so my company makes less. That's fine by me as this is my neibhorhood and I want to do right by the sellers, and people who are basically my neighbors. But without raising the total commission any higer, which the sellers cannot afford to do, there isn't really any room to offer more to the buyer's agent.

Erica - sad, but true. Flyers are going left and right which makes me think there is obviously some interest in the home. Are they asking their agents about it and getting swayed to the other homes? Gotta wonder....

I'm with you Cristal....I feel if anything is offered, it should go to the actual buyer, not the agent.

Aug 07, 2008 07:47 AM
Terry Bishop
Terry Bishop Realty LLC - Tucson, AZ
Earning Your Trust and Confidence...

I have always wondered about the incentives offered to buyers when they use the builder's lender and I've wondered about the ethics of this.   Builders often use the incentives to keep the base price up, but then offer x dollars off the lot price or upgrades.   There is an inherent problem for builders to slash prices unless the subdivision will be finished soon. If builders reduce the base price, they have reduced the price of all the homes in the subdivision.  They can justify reducing lot prices or giving appliances, or incentives for upgrades.  I still think it's on the margin of ethics though because incentives should be given to everyone, regardless of lender.  (However, sometimes you can get your buyer a better deal not using the builder's lender...it might be 1/4 point higher.)

Aug 10, 2008 04:06 PM
Jack Climer
Jack Climer Realty, LLC - Springfield, MO

I just dont get it. I would always look at options for the buyers on funding.

Aug 10, 2008 04:16 PM