Agent Bonus - Bait, Bite, or Bull? Houston Texas agents how do you feel?

Agent Bonuses - Bait, Bite or Bull?

 

Agent bonuses are bait, they bite and they are full of bull!  They are unnecessary, make a deal more complicated and muddy the waters of negations.   Instead, it makes more sense to keep it simple, transparent and clearly state what compensation is going to be with no bait and switch.  My suggestion is to lower the price and pass the concession to the consumer.  It is not rocket science.  Consumers drive the market, not buyers agents. 

Here are the serious flaws of agent bonuses

The majority of agent bonuses state the following wording:   $5,000 bonus paid to buyers agent with acceptable offer. 

Here is the bait!!! The key word is "acceptable", the squirmy worm at the end of the hook.  What exactly does that mean?  Basically, nothing. Is bull! When the deal is submitted, the buyer agent will of course ask for the bonus, but in reality is only assured of receiving it on a full price offer.  Other than that, you can pretty much guarantee that any type of counter-offer will slash or gut the "bonus" like a flopping fish on the dock of a bay.  Here is where it really bites... "The get you and guilt you" ... It plays out like this:  The listing agent will use the strategy "Well, you do not want the bonus to get in the way of closing the deal with your client, do you?"

The second time it might be worded like this:   $5,000 bonus paid to buyers agent with full-price offer. New bait!  If the acceptable bait is not bitten, you may hear something like this.  Full price offer??? This is pretty much a joke insult. How often does a full price offer get written on a property in this market?  If a property is priced right from the beginning to get a full price offer, the listing agent and seller will not need to entertain the ridiculous idea of offering a bull-crap agent bonus.

Sometimes this happens:   $1,000 bonus with accepted offer

And there is the brainless bait bonus! They forgot they put the bait out there...Here is how this one plays out.  An agent forgot they advertised the BS bonus in the MLS and the buyer agent demands it at settlement and the listing agent and seller are scurrying around as the seller reminds the listing agent "oh, don't you remember, I took that back."  And then everyone looks like a smacked ass at settlement.  Lovely predicaments those are...,

When Agent Bonuses Don't Bite

In my experience, agent bonuses have only worked well with large publicly traded companies doing new construction projects that are a part of their marketing and branding budget.  It brands their name and makes people want to work with them deal after deal as it builds confidence.   In my local Philadelphia market, two companies that did extremely well were Hovanian with The National building in Old City and Toll Brothers with Naval Square.    

The No-Bull Conclusion

Lower the listing price! Consumers are extremely price-sensitive.  Stop baiting! 

Newsflash! Believe me, buyer agents are starving to do deals and will be just as happy to wrap up a deal with or without the bonus.  They are happy to work a deal for 3 percent.   Furthermore, agent bonuses can complicate negotiations instead of enhancing them if not done correctly.  There is no reason to start negotiations off on the wrong foot.  

So in essence, do not bait! Once an agent bites, they will realize it is bull! Say no to agent bonuses!  Let's all start 2012 on the right foot and close a few more deals together.

What are your thoughts?

 

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