Steering? You Tell Me. I Say, BUYER BEWARE
This post is very interesting. I have always wondered about the ethics of paying agents "extra" bonuses for selling in house listings. I have always thought that it would be more ethical or fair to just give a higher commission split. "Bonuses" paid at the end of year means that a broker is holding money you have earned, hedging their bets, and then rewarding agents if they have a good year. I suppose a broker could hold back or adjust the amounts at will. If I were a broker I would also gladly pay agents a "bonus" to sell in house listings because I make so much more money when they do. Buyer beware - an agent may be motivated by more than what is best for you ----- I do believe that for most agents a bonus will not efffect their intentions however, since a bonus is sitting there you will never know.
Steering? You Tell Me. I Say, BUYER BEWARE.
Without breaking the Code of Ethics and calling out one particular firm/agent, I would like to voice my concern about a practice in our business that I feel is completely unethical.
I was recently at a listing interview when the seller asked me what form of compensation my firm is offering our agents to sell our own listings. Of course, that was all that I needed to hear to realize for whom my competition works!
You see, there is a local firm whose agents 'tout' at their listing presentations that their firm offers them a bonus to sell their in-house listings. This is disclosed to the sellers at the listing presentation--the sellers are led to believe that this will give them the 'edge' on the competition and don't always realize the backlash from this practice.
My response to the sellers: "You're moving to Pittsburg, right? Well, how would you like to be taken on a buyer tour to see only the homes that your agent wants to show you because they're further compensated (beyond seller paid commission) to sell you one of their firm's listings? What would be worse than purchasing one of those homes only to realize a month later that your DREAM home was just around the corner and was not ever shown to you because it was not listed with your buyer's agent's firm?"
The sellers signed my listing documents right then and there, without hesitation! They said that they had never thought of it that way and were more than appalled that this practice was even LEGAL and certainly didn't want ANY part of having someone purchase their home that was steered to do so. They said that even if the practice were disclosed to the buyer, they felt that it was bad business--especially in our business.
As it happens, the Commission is currently reviewing this practice and believe it or not, according the the Charlotte Observer, there are three REALTOR Associations who actually support it. Read this.
Here are the exerpts that just make my blood boil:
"We don't believe in-house compensation is a disclosure issue," said Jarrett, the firm in question's representative, who was to make a presentation to the commission at its monthly meeting in Raleigh yesterday.
And further, the writer stated, "Jarrett is supported by the presidents of Realtor associations in Charlotte, Greensboro and Raleigh, each of whom wrote letters on the issue in the past month to the real estate commission." Yet more, "Jarrett, argues... that a customer gains no benefit from knowing if a company is getting extra compensation by a third party, such as a relocation service."
WHAT? Let me get this straight--A customer / client who is being steered to purchase a property because of further compensation from that firm to sell within that firm does not deserve to KNOW about this compensation?
Let's define STEERING: To direct the course of; to guide; to govern.Here's another example that shows how these agents STEER: 90% of the time when I receive a call from a buyer's agent who wants to see one of my listings right then, I can almost guarantee it's an agent from the firm who offers compensaion to their agents for selling their in-house listings. Do you know why? The agents set the tour and the buyers ask, while they're on their tour, "Why aren't we seeing that house?" So, they call at the last minute to make the appointmet. I've had clients tell me that they have had this very experience; they were not aware of the practice until later talking with someone who was selling in their neighborhood who told them about this 'deal' that the firm offers. I'm completely shocked that there have not been multiple lawsuits about this practice--I'm also amazed that this is not REQUIRED dicslosure.
Do we reallly need any more black eyes in our profession? Why not simply ban this practice? Buyers deserve to be shown the homes that fit their criteria--NOT just the homes that fit the agent's criteria (or the firm's) for making a few extra bucks!
Disclosue, disclose, disclose...
What say YOU?
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