The Price is in the Pudding (Yeah, I know it's Proof)

Brenda - Thank you!  Thank you!  Thank you!  I'm sorry, but I just don't get the whole bonus to the selling agent strategy.  The buyers agent is not the one buying the property, so if the sellers want to offer some kind of incentive, offer it to the buyer - either reduce the price or offer a closing cost credit.  Doesn't that make more sense?  Really???

In todays market there is not enough room for a bonus... Appraisals are coming in a razor thin margins and that strategy went out with the equity that we all lost in 2008. Great post and so true! ;)

Hi Brenda, personally, I totally disagree with the agent bonus approach.  I actually give pause to showing these, as I don't want even the appearance of impropriety, or my client questioning my motives.  The one time I received one, which was 5 or 6 years ago, I gave it to my clients... as a price reduction, of sorts.

Excellent post, what about the listing agent who puts in comments buyer to pay listing agent bonus at time of close of $$$.  We see that a lot in my area now.  I think this is doing a seller a bigger dis-service

Great blog, I agree. After a buyer decides on the location, the price, condition and acessibilty of the home will determine howquickly the home sales.  In California, you don't typically see additional agents bonuses....but I LOVE it when I do! 

Just read several of your blogs.  You do good work.

Brenda, I agree with you. I'd rather the buyer get a lower price than giving me the bonus. I don't want the buyer feeling as though I'm not working in their best interests.

I do not let the possibility of a bonus affect what I show or how I discuss a property with a buyer.  However, if the seller wants to try it--certainly can't hurt!  I like to think the majority of agents will forgo the bonus and take it off the price for their buyers.

There is another side to this.  What the Seller is doing in some cases is changing the split between the listing and selling agencies, with the emphasis on the selling agency.  e.g. a 60-40 split is common in our area.  One listing offered a 2% buyer agency commission, (40% of 5%) with a buyer agent bonus.  This effectively made it a 6% commission with a split closer to 50-50.

In many cases, the agency will let the agent keep the entire bonus.  This is actually a little cheaper for the Seller to get the same amoint of commission in the buyer agent's hands.

I don't have a blanket policy about receiving a buyer agent bonus i.e. I don't feel the need to give it to the buyers.  It does not influence or limit which houses I show to the buyers.

In general, it may help somewhat but I never suggest it to my listing clients.  I just don't think it helps enough.  Price adjustment is critical for a lower end house.  But as you go up in price range, price adjustment in lieu of agent bonus may have less impact.

My point:  it isn't all right or wrong.  It depends.  And it may be useful is some limited situations.

Well said!    This can go along with the Walmart Pricing Strategy of $99,999.    You would lose critical buyers looking between $100-?    I agree that we need to pay close attention to our pricing strategy!

Amen to your post, yet how many sellers offer bonuses to agents?

I am now convinved that offering a bonus is not the right thing to do. I myself have a home that just won't sell and had thought about this. Thanks for the eye opener.

Suggested. You are SO right on the money with this.

The agents who are looking only for more money for themselves are not looking out for their clients' best interests.

Hi Brenda, like minds... we just wrote a very similar post yesterday!

As I was reading your reference to pudding., I was listening to Bing Crosby sing "I Wish You A Merry Christmas" and his reference to "figgy" pudding...still trying to fiugiure out what that is!!!

Right now the inventory is so low that you don't need to offer a selling bonus, just a good home at a good price.