The Buyer's Agent Bonus: Thanks, But No Thanks.

By
Real Estate Agent with Realty Executives
https://activerain.com/droplet/4rsj

Thanks, but no thanks.  Therein lie my in-depth sentiments regarding buyer agent bonus compensation.

It’s a tricky business, this whole trust-building endeavor.  From the initial consultation with a prospective client, to the signing of the closing documents and all stops in between, a certain rapport and mutual belief in the positive intentions of each party must be developed to produce the desired outcome: namely, the purchase of the most appropriate property at the most advantageous terms.  With ample opportunity for an agent to unintentionally spit the bit along the way, warding off the encroachment of countless variables that would undermine the health of the relationship is an undisclosed facet of the job.  And what, pray tell, is the swiftest and surest endangerment of one’s relationship with the client?  Money.  More specifically, the belief, whether founded or not, that the agent is twisting his fiduciary obligation by putting his financial interests before those of the client.  That’s a relationship killer.  Once any doubt creeps into the mind of the client as to the motivation of his representative, you might as well go ahead and split the sheets.

I don’t want a bonus to sell your listing.

If your listing fits my client’s criteria, and you are offering me fair compensation for services rendered, I will show the property.  If you are offering compensation that does not meet my minimum standards, I will show the property if my client agrees to make me whole. Mind you, that’s a terrible disincentive to buyers and buyer’s agents alike, but run your business however you see fit.  What I do not require is any kind of additional spiff over and above suitable compensation.  An extra percent if the transaction closes in the next 30 days, a co-broke that is double the normal range of compensation, a week aboard the listing agent’s yacht after the close of escrow … all such supposed motivators are liable to call my judgment into question.

Am I really pushing property “x” because it represents that best value proposition for the client, or am I mentally slathering SPF 15 over my epidermis in preparation of the promised week in the Bahamas?

I’m not real keen on trying to explain to my client why I am grossing 20k on a $200,000 transaction while we are sitting around the closing table.

So while I appreciate the extra incentive a listing agent and/or seller may try to stoke via a buyer’s agent bonus, it calls my credibility into question.  Matter of fact, I will typically apply any such bonus (if monetary value can be readily affixed) to my client’s closing costs.  I maintain my reputation and my client gets an unexpected perk.  In fact, I would be in breach of my personal ethics, if not my fiduciary obligation, if I didn’t carve out such extraneous allotments for my client’s benefit.  If I am being compensated fairly for my role in the transaction, it is my duty to corral any additional nickels that fall out of the seller’s pockets for the buyer.

Want to expedite your home sale?  Put the agent bonus back in your shorts. Repackage the offering as a reduced price or concession towards the buyer’s closing costs. Make the terms more appealing to my client and you will produce the desired result. The seller gets his fast sale, the buyer gets more attractive terms and both agents get happy, referral-prone clients. Everybody wins.

If I want to go play Dread Pirate Roberts in the Caymans, I’ll do it on my own dime.

 

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. D B 08/07/2010 02:09 PM
  2. Christopher Webster 08/07/2010 09:43 PM
  3. Gregory Bain 08/08/2010 03:56 AM
  4. Karen Rice 08/08/2010 02:33 PM
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Rainer
25,637
PHIL MCGREEVY
Chesapeake, VA

Paul was you last post a confession that your claims to ethical concern for your clients when there is a bonus involved is just Marketing propagaqnda[bull]on your part?:)

And since that is your truth you assume that all personal marketing claiming ethics and standards is propaganda? Now that is Irony:)

Remember you insinuated Agents involved in offering incentives in Marketing of Homes may be either un-ethical or greedy depending on which side they were playing and unnecessarily causing a conflict of interest for the Ethical Agents like you. Are you going to completely deny this as you make 'My Style' remarks towards those who disagree with your logic and reason and play the role of a victim and dismiss the educated arguments and opinions of your detractors and pretend there only personal attracts?

When you were a child did your mother hear this from you a lot; "Mommy their picking on me"

Have I missed? the times you challenge a detractor of your point of view with a valid, professional unemotional, insightful counter other than you have the right to state your own opinion and to write what you want on your blog. I havn't missed your dismissing them personally for challenging your point and it's validity along with challenging your insinuations and motives.

 You put it up for debate BY NOT KEEPING IT TO YOURSELF or among like minded friends and assosciates and posting it in public.

You should be happy you got more Yeah's than Nay's and some that love you coming to your rescue by their own free will. Yes everything is personal on some level even in debate. So What? I don't like the statements 'Nothing Personal' and 'It's just Business'

By the way I do believe that your giving any offered bonus to your clients is admirable, ethical and shines a good light on our profession. The debate was in the reasoning, insinuations and pretensions you felt compelled to add along with your disagreement with incentives in our industry and was that a accurate assumption in itself.

Again if you see this as a personal attack so be it. But Hell I don't even know you; just what you wrote here and thats what I had a concern with not you but I do have a tendincy to be blunt and a smart a..  I have given up most my vices but I still can't resist being a Pompus A.. when I get an opportunity; for that in this and my other post I apologize BUT still stand by non personal attack points:)

PS; OOP'S I did miss your replys to John and BB

I hear you and agree but adverting enticement[Marketing call it what it is you do it also]] is not only what makes the Real Estate World go round but America or any Capitalist Country and incentives also is prominent in all industry's as motivation.

Do you boycott products that seem always on sale which means they really are not, or company's who's commercials are enticing and not relevant or Burger King when they offer a product special on a Burger only if you by fries and a drink because they make huge profits on fries and drinks

I think you may be confusing your personal morals for ethics two very different things

You claimed yourself Marketing Ethics is propaganda. So is an agent just 'enticing' clients to believe he is ethical by giving bonus to them to use in hope of getting a referral or repeat business and giving up the bonus is as tax deductible marketing expense

 

Aug 10, 2010 08:35 AM #123
Rainmaker
212,146
Inna Hardison
ha media group - Orlando, FL
Wordpress for Real Estate & Design, Print HaMedia Group

Educated indeed.  Ironic.

Aug 10, 2010 08:48 AM #124
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

No, I am not curled up in the fetal position, Phil.  I do not feel attacked.  I am confused as to where you misread hurt feelings or persecution in any of my comments.  I find some of the labels and arguments ironic and damning of the collective interest in ethical discourse (in that derision of a practice that one finds ethically dubious is somehow too presumptuous to address as a topic), but you'll have to do better to make me feel personally victimized in any way, shape or form.  This is nothing but a blog.  Opinions get shared, ideas debated and objections voiced.  How any of that translates into a child's plaintive cry for help escapes me.  This is really getting tedious.  You are welcome to add any further commentary you like, but I'd suggest that this dead horse of a topic has already received a merciless beating.

Aug 10, 2010 08:58 AM #125
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

Just read your PS, Phil.  Now we are returning to topic.  My point of contention is the source of the enticement, not the enticement itself.  Puts the interests of the client and the agent somewhat in contention.  Yes, the Real Estate world is moved by money, as it should be.  While I would prefer each party was fully responsible for the pay of the agent in their employ, the industry is not there yet.  For the time being, we can eliminate as much of the conflict of interest as possible by eschewing the sweeteners that are meant to draw us to a particular goal, rather than the best interests of the client.

Again, I'm largely rehashing, though.  I think this one has run its course from just about all perspectives.

Aug 10, 2010 09:12 AM #126
Rainer
25,637
PHIL MCGREEVY
Chesapeake, VA

Just to beat a dead horse here are my mis readings; maybe it was more 'Mom can we go now these jerks are annoying me  and for the life of me I don't know why' Yes it does seem I was A TAD more out of place than you, NEVER MIND:)

I don't hold myself up as some altruistic martyr that will sacrifice my just compensation in the name of charity.

So far, I have been dubbed self-righteous, pious, sanctimonious and more for this silly little post (mostly on other threads).  Never thought a frank opinion about the ethical considerations involved in a Real Estate transaction would strike fellow professionals as preachy, but perhaps I am too close to the material to allow for fair reflection. Seems an incredibly cynical reaction to me.  Disagreement, dissent, discord ... basically any other "d" word you can conjure is to be expected, but disparaging the mere audacity to state an opinion as it equates to best business practices?  When did so many of us give up?

Okay, Everard, I'll add a little more than my admiration of your sled.  While your straw scenario is as good a place to arbitrarily start as any, it is a frivolous exercise since I have yet to disclose what my fee structure is.

 I appreciate the free online diagnosis, but me and my life-sized Fathead are perfectly content to wallow in our own shared neuroses.

 As I have fallen into the bad habit of responding only to the various degrees of scathing rebukes,   

Inna, you have touched upon a few thoughts that I had yet to voice on this thread.  Particularly in regards to the perceived ethical high ground I claiming in this post while its detractors have populated their profiles with marketing propaganda designed to accomplish the very same feat.  I suppose it is of little consequence as we are all here to market our wares and put our best feet forward, but the irony is not lost on me.  

Aug 10, 2010 09:32 AM #127
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

Wow, we are now reduced to revisiting the bridge of the comment chorus.  Thanks for repasting my comments and again veering off topic to address my debating prowess (or lack thereof).  As I said, time to move on, Phil.  You have an entire blog to populate, not sure why you are wasting all of your energies here.

For the record, anyone who launches an initial comment by derisively referring to the author as "Ghandi" is essentially asking for whatever he gets by way of a retort.  

Am I really the one with hurt feelings here or are we treading in that murky realm of internal projection again?

Aug 10, 2010 09:37 AM #128
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

<<Attention Real Estate shoppers: You have reached a post that is no longer in service.  Should you need assistance or feel you have reached this post in error, please press "esc."  As always we value your commentary and look forward to serving your threaded hijinx again in the future.>>

Now go sell a house or something.

Aug 10, 2010 09:54 AM #129
Rainer
25,637
PHIL MCGREEVY
Chesapeake, VA

LAST ONE PAUL I PROMISE:)

My last post was a lame attempt at an apology by myself re-reading them I can see you didn't feel attacked maybe just surprised and baffled

I agree with our previous post

"For the time being, we can eliminate as much of the conflict of interest as possible by eschewing the sweeteners that are meant to draw us to a particular goal, rather than the best interests of the client."

I would like to see that applied to ALL PROFESSIONS who claim to be concerned with clients/customers best interest.

You say your contention is with the source not the inticement. I am not sure of your 'source'

But I will guess that you can see it as were a listing agent might use the bonus to lure a greedy Agent into selling[not help buy] their clients that home for the extra cash? Not a good thing.

Yes their are bad apples in every Profession but I am optomistic and believe they are only a few

But your point if it wasn't there[bonus] that could never happen[or confict of interest] is valid

I beleive the bonus is used 95% of the time as a Marketing Strategy letting Agents know the sellers are motivated and not to lure Agents based on internal greed but I am not real confident writing that.

I spent most my life trying to stay away from the Rat Race and all the Bull involved and lack of honesty and sincerity but in Real Estate it is all around me and you have to be on your toes to preserve your personal character and not fall in to the mud.

Most training tells Realtors about being of high ethics and their fiduciary duties out of one side of their mouth and then teach Marketing tactics[like bonuses] and recommend actions that are dubious at best out of the other side.

One example I was told to tell prospects for a listing that some devious agents use open houses to find buyers for other homes but not me I am a good Agent and the first open house I held my broker told me to take other area listings because the purpose of an open house is to find new buyer clients.

I still don't believe the 'source' or enticement can't induce the Majority of Professional Realtors to even challenge in their own minds a conflict of interest or need to apologize for accepting it if it works out that way. I don't agree that the bonus should always go to buyers needs based on theory all sellers would have given it up anyway in price. There are considerably more import things to focus on during negotiations to put together a win-win deal. If you mishandle negotiation it could cost your clients much more than the bonus your going to credit them

As a realtor I had to accept how we get paid and the many consequences that come along with that and also try to understand when I work in a transaction for a 500k home after 1 viewing by client I may make 15k[less split] and when the transaction after 30 viewings is a 100k home I make 3k

What do I say to owner as  LISTING AGENT  when I sell a 500k home in 5 days to 'my buyer' and the hud gives me 25k [because my broker allows me to knock off only 1%]

You know their are many 'situations' I could mention bonus is one of them if you make that an ethical and moral question you can't hide from the others.

Acceptance of injustice or coruption is a bitter fight for me but in this case I don't see a big problem accepting a bonus if all else is on the up and up; and maybe about .1% of listings offer them.

Let them have their Marketing Strategy with bonus offers they are easy to handle and it is way down on my list of things I have seen and heard about that are real conflicts of interest and harmful in big ways to clients.

 

Aug 10, 2010 11:25 AM #130
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

A fair and well-reasoned conclusion to a tempestuous discussion.  As such, I will not offer any additional counter arguments to the question of the bonus, but rather let it stand as the last word on the matter. Good on you, Phil.

Aug 10, 2010 12:26 PM #131
Ambassador
526,161
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

Except that this should have been a "Members Only" post since we were discussing compensation.

Tom

Aug 10, 2010 04:05 PM #132
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

Explain your logic, Tom.  Why woud discussion of compensation be appropriate behind the veil of a member's only post, but not fit for public consumption?  If there were to be anti-trust concerns (no violations in this thread that I can discern), hiding the post from the public would not mitigate such in the least.  Moreover, brokers discussing compensation in secrecy is much more ripe for an accusation of wrongdoing.  If you have to shut the doors to address a matter that does not involve client confidentiality, you probably shouldn't be talking about it.  I have no such qualms discussing what I consider a matter of ethical concern in the public forum.  If there is any concern over what the DOJ would make of a thread, its public or private nature would have zero impact on whether a violation had occured.  My hunch is it might even be considered more damning to have a bunch of agents/brokers discussing compensation behind closed doors as that gives the appearance of impropriety (I thought I was done with that phrase on this thread ;).

Privacy does not give agents additional priviledges to discuss matters that are legally out of bounds. 

Aug 10, 2010 04:46 PM #133
Ambassador
526,161
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

Paul,

Please don't twist my comment to suit your agenda.  I never said we should take illegal or unethincal debates into a members only post.  I simply don't believe having discussions about certain issues in public is appropriate.

Like you, I'm entitled to my opinion which I expressed. I'd invite you to discuss this in a different venue, but given your position, I think I'm going to agree to disagree with you and leave it at that. 

Take Care...

Tom

Aug 10, 2010 05:20 PM #134
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

My agenda, Tom?  Take your leave if you must, but it's a simple question.  What makes a private discussion amongst agents regarding compensation any more appropriate than a public airing?  Perhaps I misinterpreted the nature of your objections, but I still don't understand the rationale. 

Aug 10, 2010 05:35 PM #135
Ambassador
535,531
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

What the hell did this become?  While I admire banter and debate and am damn sure Slaybaugh can deal with any directed in his vacinity, there seems to be a vitual edge-tour that is plain pissed that he brought up the subject in the first place. 

And Member's Only?  Hell, I'd be more willing to do Biz with someone who actually brought it up so I could see it, breathe it, and make my own decision as a consumer.  To make it an Agent's Only Post and Idea would drive me off faster than Bono into that particular tree. 

The discussion of compensation being an "illustrious priviledge" is archaic in my opinion.  But if you make it consistent, I'm in! 

Show me your pay scale and I'll show you mine.  Transparency, Full Disclosure, and making sure A$$Holes don't mine my Bank Account like Gold Diggers ripe on a precedent introduced by a Male or Female Component that rhymes with Anna Nicole's former attorney is ... in my own best Legal & Ecomonmical Interest.

Aug 10, 2010 05:36 PM #136
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

Sardi from the top ropes.  Thanks for the tag in, getting weary.

I understand that some think I am posturing, and that's fine.  Maybe trying to earn myself a little bit of business by proclaiming myself the ethics brigade and all that.  First time I've been tabbed as hall monitor, but I guess there is a first for everything.  I don't like a particular practice.  I discussed it openly (originally intended for consumers, ironically), as I do most everything else.  Some disagree with the thesis, and that's cool.  Some think I'm trying to empty their pockets, so I can understand the vitriol from that corner as well.  This latest bit about what is acceptable fodder for publicly viewed content is an entire different blog post.  What a carnival.

Anyway, I actually enjoyed the debate(s).  Gets the blood flowing and the mind racing.  Hopefully we were all able to take away something that we hadn't considered before and apply it to our practices.

 

Aug 10, 2010 05:51 PM #137
Ambassador
1,730,106
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Paul,

I did not read all the comments, so I might be repeating someone before me. This is the position of an agent. And all  the explanation is about the dangers to the agent's relationship with the buyer.

Understandable. I can even understand that you think it should be repackaged, etc.

What if the amount of money offered as bonus is significantly less than the amount of reduction in price to do the same thing, sell the home faster?

Aug 10, 2010 07:41 PM #139
Rainmaker
338,314
Paul Slaybaugh
Realty Executives - Scottsdale, AZ
Scottsdale, AZ Real Estate

Credit towards buyer closing costs in that instance, John.  Why offer to line my pocket further if A) we all claim it doesn't matter to us, and B) the buyer is the one making the ultimate decision.  Further incentivizing the one making the actual purchasing decision is always the way to go in this agent's estimation.

Aug 10, 2010 08:10 PM #140
Rainmaker
153,401
Amanda Evans
DFW Living - Fort Worth, TX
Real Estate Broker - Fort Worth Texas

Parked.

Aug 11, 2010 09:08 AM #141
Rainmaker
593,168
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

This relic of the past was a good tool when everyone represented the seller! But, a bonus to a contracted Buyer's Agent is a bribe!!!!!!!!!!!!!!!!! It's unethical imoral and most likely illeagal!!

If you have any doughs about it's ethicy just look at North Las Vegas! Where bribes were paid to both agents, LO's and buyers.

Bill

Aug 11, 2010 02:12 PM #142
Rainer
48,244
Mary Wilcox BPOR, CDPE, SFR, ASD, ABR
Reece Nichols-Mary Wilcox - Kansas City, MO
Reece Nichols Mary Wilcox BPOR, CDPE, ASD, SFR, AB

Paul,

Just UNCLICK the box that says you want to be notified when someone comments.

POOF! It's magic!    LOL

Aug 17, 2010 06:09 AM #143
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Paul Slaybaugh

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