The following blog was written by Paul Slaybaugh. I totally agree with it. I do not like selling bonuses - listen, if my buyers are not truly interested in your property on its own merits, a selling bonus is not going to make them buy the house.
In my own opinion, the best incentive is to offer to cover the buyer's closing costs in some way, or buy down their mortgage points or offer to pay for their home inspection with an inspector of their choosing - do something to get the buyers motivated to purchase your property.
I'm always excited to show property to motivated buyers - and when my buyers get a good deal, that's bonus enough for me. Paul stated this in a much more colorful way - and I say GO PAUL! :)
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.