Steering? You Tell Me. I Say, BUYER BEWARE

Reblogger
Real Estate Broker/Owner

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.

Original content by Debe Maxwell, CRS 228209

Steering?  You Tell Me.  I Say, BUYER BEWARE.

UnethicalWithout 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.

 



Steering to a firm's own listingsMy 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.  



Makes our blood boil!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.

Steering to a firm's own listingsHere'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


Giving our profession a black eyeDo 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?

Debe in Charlotte   

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Comments (4)

Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

If you are a representative of the seller you better be showing your inventory first, the companies second and MLS third. We show in that order regardless but after the initial showings we continue till they write. That being said if it happens to be the first one we are not going to say WAIT you haven't seen everything yet.

I am a firm believer you cannot sell a home to anyone if they don't want to buy it, regardless of price, bonuses, or influence.

Feb 14, 2010 02:31 AM
Jane Taylor
RE/MAX Realty Group - Gaithersburg, MD

I'm with you!  I have gone a step further that has actually bought more good will than you can imagine.  In the buyer interview, I let them know that if there is a bonus offered, I will make them aware AND split it with them.  I know I could be alone with this practice, but it sure works for me.

Feb 14, 2010 02:40 AM
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

Hi Miriam!  Thank you for the re-blog!  I have to say that this practice has long been touted by the firm's agents at listing appointments but, I wonder how many of their buyers actually KNOW that this is practiced?  I don't follow the old school method as I don't feel that it's serving the fiduciary dity to my clients by showing my listings first, then the firm's, then the 'others.'  I show the listings that fit my buyer's criteria, PERIOD!  And, I do exactly what Jane does--just give it to the buyer--makes for a very happy buyer!

 

Feb 14, 2010 03:28 AM
Miriam Bernstei
Rochester, NY

Joyce "as a representative of the seller you better be showing your inventory first"???????? When working with a buyer are you a dual agent then and then you aren't a representative of the seller!  How does this work in your area?

Jane, I am with you and do that same thing.

Debe you are welcome, loved the post and the topic is one that irks me.  It also means that listing agents would press to accept an inhouse deal over others.

 

Feb 14, 2010 04:41 AM