Incentives to Buyers: To Give or NOT to Give?!

By
Real Estate Agent with Casa Latino Four Corners, REALTOR, CDPE

Incentives to Buyers--Cash back at closing, Cash after closing, Gift Cards to those customers who Buy/Sell with You--whatever's legal, moral, ethical-or is it desperation rearing its ugly head?  Do YOU give incentives to Buyers?  Do I give incentives to Buyers?  Typically, no, although sometimes I am able to--but I don't rely on it to get customers.  This post will most likely be a jumbled, rambling exhortation on incentives, commission, and negotiating skills but bear with me--I'm on a roll.  (Also, if you think about The Secret, what you think about, you attract (think nice/happy or think cheap/money-grubbing--and that's what you get--and I am thinking about attracting a large number of ready/willing/able Buyers and Sellers who like me and want me to represent them in one of the largest financial undertakings of their lives--buying or selling real property--I love it!)  But--back to the story--

I usually don't TELL Buyers I will give them anything if they will work with me.  I think it's a bad idea to LURE people to work with you.  On the other hand, lots of agencies, agent, companies DO have a "freebie" just to get the phone to ring.  But, usually, I want customers to work with me b/c I'm an excellent agent and b/c of the results I get them--which saves them money, both in the short- and the long-run!  We'll come back to that at a later blog, though.  Basically, some large companies I work with WILL give incentives to Buyers--but only after you do business with me.  WHY give incentives to Buyers?  Shouldn't a Buyer's choice of which real estate agent to use to buy real property in Florida be based on how well they get along with the agent, the agent's experience, what kind of a great deal that agent can swing for them, and the other awesome results that the agent may be able to bring to the Buyers?  Of course, it is!  More importantly, your real estate agent should be guiding you and doing a great job negotiating on your behalf to save you even MORE money.  However, just today, I have had the unpleasant experience of an actual bidding war FOR the Buyer and WITH the Buyer (Yes, WITH the Buyer) on behalf of the Buyer re: incentives from a competing company--sort of.  I look at this as both short-sighted on that Buyer's part and a bad idea b/c when an agent immediately begins to give their OWN money away easily, what do you think they'll do when it comes time to negotiate on your behalf?! (Please note: I never actually talked to another agent and I don't know the agent, company, or if their incentive actually exists--but it probably does exist with how desperate some agents are getting in this market.)  How weird of situation this is.  Let me explain. 

I am an agent that typically works with referred customers and those customers generated from my personal and company advertising but I also work with Internet leads (NO, I don't pay for those anymore!) and with Relocation customers (they are AWESOME people, generally, to work with!), as well as e-Business customers from my company's world-wide network.  Even in this market, my business has DOUBLED from last year (actually, it's better than that b/c I just closed two more transactions with Buyers last week and another is set for Monday.  I think I'm doing pretty good, especially when some agents haven't had a closing in weeks or months.  That, actually, may be another blog that relates to this one, with agents/companies doing some desperate things--not necessarily illegal, just desperate--like giving away some or all of their commission--crazy, if you ask me.)  Anyway, I am a full-time agent and I'm here for the long haul--this is my career--not something I do at times--and I see the value of extra certifications and education and somewhere along the way, I became LendingTree certified, as well as Prudential Relocation certified (that's another story, though).  So, focusing on the LendingTree stuff and my issue today: 

I got a referral (actually a LEAD--there's a big difference) for a customer who probably went to LT and signed up that he needed an agent to find/buy a house.  Great!  The basic idea is--they give great incentives to customers who use LT-certified agents, once that customer closes on a property.  So, okay, I'd prefer those people contacted me directly, so I wouldn't have to give a HUGE chunk of commission to the e-Business people, but so be it.  Money DOES make the world go around.  And, while my usual priority is referred customers, I will take on others if I have time b/c I now actually LIKE to work with Buyers who want to work with me--But they have to be 5-Star Customers (again, that'll be in another blog, but suffice to say--they have to WANT to work with me and see the value of working with a results-oriented, caring agent). 

So, with this particular customer, I am told his contact info, etc. by my relocation/e-business company, and that he's looking ASAP to buy.  Great!  So, I e-mail, then call.  When I get in contact with him, he is likeable enough and we talk and he basically says he's already found a place or two (without my help), so he's going to see what'll happen with those properties first--by himself--and if nothing happens with those particular properties, he'll be in touch with me later.  Again, Great!  I mean really--great--he found a place and that's fine; doesn't need my help.  But, what he forgot about is that he can't access those incentives promised by LT until closing on a property with--you guessed it--ME. 

So, I get a call this morning from one of my e-Business contacts saying this gentlemen has realized he won't get the incentives unless he uses me.  So, I call him back.  We talk and he's a really nice guy.  Just wants to buy a house.  Also, he wants those incentives.  We talk about the location of the places he wants to see and, not only am I familiar with the area, I know exactly which places/streets he's talking of seeing and the exact gated community he is interested in; HE doesn't but I do.  I ask him if he's done a drive-by and he hasn't.  (I don't particularly think he'll even LIKE the area but it's my job not to STEER anyone to or from an area--actually, that's against the law, of course.  I actually suggest another community to look at, too, should he like that area/road and the other community is more inexpensive, has less assocation fees, and a community pool.--But that's b/c I really am an expert in the Orlando area--I know a LOT of the communities and what may/may not work.)  So, anyway, I say, "Yes," I can show him the homes, just give me a bit to make arrangements and I'll call you back but let's look at 'em later this afternoon. 

I make some phone calls for showing instructions--no problem and I'm lucky b/c most are vacant, on multilock, which means I can show them whenever; only one is appt with the owner.  Again, Great!  Then, when I call the customer back, of course, the other company--I don't know who they are and I'm sure they are a good company (I wasn't told by the customer which company they are--nor do I really care--it's not necessarily any of my business)--have called this particular customer back and said they'll meet the incentive being offered to him by us and better it by half.  Competition is good!  It keeps prices in check and gives customers value and makes them feel like they have choices--which they do.  Whether this customer buys from me or not doesn't necessarily impact me good or bad--I'm here for the duration and that just means that I have today to myself and my family--but it may impact him one way or the other.  We'll see. 

Here's the tricky part:  The customer asks me re: the incentive "Can you do better than that?"  Hmm, lemme think---give up MORE of my commission of which I already am paying a substantial portion of to the relocation/e-business department, directly to the customer----personally "NO!"  What I said to the guy was--"My business is steady enough that I don't have to beg for business nor give up more of what I am worth in order to get business."  I went on to say "However, while I personally won't necessarily sweeten the deal, perhaps my company will sweeten the deal for you but just so I can give you real numbers re: incentives, exactly what price do you think you'll end up buying?"  All incentives with LT are based on purchase price.  We talked a little more from there and we eventually got off the phone with my promise to get the actual figures (I actually DON'T keep figures inside my head about incentives from LT re: purchase price--it's too confusing!) and then call the guy back.  And, guess what?  My company actually low-balled his initial incentive earlier and, based on the actual figure the guy had last told me, my company's offer wiithout any changes KILLS the other company's incentive.  But, of course, now the guy's not answering or returning my phone calls, so he won't know what an awesome incentive he's being offered.  Go figure!

Well, I was going to be showing a few places at this time but I guess I'm giving myself the day off.  I'm going to post this, re-read it, then let it stew in my head and maybe some other fun stuff will ensue from it later this weekend or week.  Have an awesome weekend and I'll see you at the closing table Monday at 2 p.m. for another closing (THAT one also has incentives--but not from me personally--it's from Costco!). 

    

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cash back at closing
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Rainer
4,502
closed account
Fort Lauderdale, FL

Wiw,

that info is stuff i was not familiar with.  thanks!

Nov 03, 2007 07:58 AM #1
Rainer
209,246
Marc Grossman
Marc It Sold! - Longwood, FL
GRI, Greater Orlando Real Estate Broker

Lisa, I will not get into a bidding war for a buyer, etc.  We've all probably been asked for this at one time or another from a buyer or seller.  I will not lower myself to that level & have no issue telling prospects of such when asked.  My ability as a realtor are what I offer the client. 

As to gifts, I always give a personal gift to all of my clients in one form or another and it always exceeds the $25 allowable by the IRS, which is such a bogus amount in this day and age. 

Hope you had a great weekend!

Nov 04, 2007 04:14 AM #2
Rainer
68,711
Lisa Spalding
Casa Latino Four Corners, REALTOR, CDPE - Longwood, FL
REALTOR, CDPE

Thanks, Marc, for the comment.  I pretty much do the same thing.  I rely on my ability as an effective r e agent to get me customers.  Then, I WOW them with an in-office meeting (if they are Buyers) and consultation, I give them great customer service (which should be expected of any agent) and I communicate well/often with the customer, then they get a closing gift and I keep in touch with them after the transaction has closed. 

During the initial meeting, I go over why they should work with me: 1.  consultative skills, 2. top-notch negotiating skills, & 3.  I take care of all the details of the transaction (taken from my By Referral Only coach).  I don't dangle any incentives in their faces and hope they'll pick me b/c I have a great freebie or whatever should they choose to work with me.  (Sometimes my company or affiliates will do that but I don't typically do that.)   

Nov 05, 2007 01:39 AM #3
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Rainer
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Lisa Spalding

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