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Note To Mr. Listing Agent: Your Requirement That My BUYER Pay YOU A Bonus If He Buys Your Listing Just Scared Him Away!!!

By Terry McCarley

Real Estate Agent with Coastal Real Estate - Cape Coral FL SL3150658

December 29, 2011 05:01 AM

Note To Mr. Listing Agent: Your Requirement That My BUYER Pay YOU A Bonus If He Buys Your Listing Just Scared Him Away!!! Do you really think you are working in your sellers best interest by demanding a bonus be paid to you at closing from the buyer??? I (and my buyer) both realize this is a short sale and I of all people know they require alot of work as I have represented numerous sellers with short sales. I would never even consider asking (let alone demanding) the buyer of the home pay me a bonus - my commission comes from the seller.

Here is the verbage in a listing in our multiple listing service (this is an example of several similar listings that have recently popped up): Buyer agrees to pay listing broker/agent a bonus commission of $1,500 at closing. Seller has instructed listing agent not to present any offer not providing for $1,500 bonus commission to listing agent at closing. This appears in the public marketing comments along with other requirements including the buyer agrees to pay a short sale negotiation fee as well as the bonus to the listing agent.

To me this is gambling on the belief that some buyer will come along willing to pay this bonus - I personally don't want to gamble on my short sale listings. I want to assist my seller in successfully getting the short sale closed and avoiding foreclosure.

Gambling

I truly hope other agents do not start this same practice as I truly believe it will just create more problems for the real estate industry. Short sales are difficult enough without having to deal with things like this.

My buyer wants to know why he should pay the listing agent this "bonus" when the seller will pay the listing agent the commission when the property closes. He also questions why he should have to pay a short sale negotiation fee. He is willing to offer full price for the home but takes issue with these fees and told me he won't pay them and therefore will not move forward with making an offer. I did finally get him past the short sale negotiation fee (it was minimal) but the "bonus" to the listing agent is a real deal breaker.

I spoke with my Broker regarding this issue as I felt that

A) It may not be legal

B) At minimum I think it is unethical

My Broker in turn called our legal hotline and was told that it is indeed legal which totally amazes me. I believe that if I am representing a seller (short sale or not) I should do everything possible to market the property and locate a ready, willing and able buyer. If by demanding buyers pay a bonus which results in scaring buyers away, I believe I am doing a disservice to my seller.

Do you think this practice is ok??? Any and all thoughts on this would be greatly appreciated!!!

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Julaine Weincek

Century 21 The Real Estate Centre - Bel Air, MD

Sounds like a ridiculous practice to me! After all if you are unable to find a buyer you get nothing except an unhappy seller. People buying short sales are expecting a discounted price increasing it with a bonus isn't going to help it sell. Not to be cold toward the seller but any buyer is going to see this as the sellers problem and not theirs.

Yeah it would be legal if properly disclosed to the seller. Clearly not working in his clients best interest which IS a staple in the NAR ethics. Fiduciary responsibility says we do what's best for them regardless of what is best for us.

I would never require a buyer to pay a bonus when I work for the seller. If they offer a bonus, great if not be happy with your commission and the success of the sale. Great post Terry!

Dec 29, 2011 05:15 AM

Mike Frazier

Carousel Realty of Dyer County - Dyersburg, TN

Northwest Tennessee Realtor

I cannot believe someone would ask for that. Sounds unethical to me!

Dec 29, 2011 05:17 AM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Julaine - I agree with you 100%

Mike - I truly can't believe it either and I totally believe it is unethical

Dec 29, 2011 05:19 AM

go to RealEstateFaster.com & get 20 Listing Appointments per month

Real Estate Faster - Los Angeles, CA

Good for you for your loyalty to your seller. It's great that you want to help them avoid foreclosure by getting a short sale!

Dec 29, 2011 05:22 AM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Thanks Devon - I find a great deal of satisfaction in helping distressed sellers get out of a bad situation and avoiding the alternative of foreclosure.

Dec 29, 2011 05:24 AM

Ralph Janisch ABR CRS Broker

Janisch & Co. - Conroe, TX

Selling Northwest Houston to good people like you!

Wow!!! Thought I had heard of everything. I would just submit without the bonus and insist that it get presented. That's insane!!! Of course the chances of me showing a property with that requirement are slim if there is anything else on the market.

Dec 29, 2011 05:31 AM

Martin E. Kalisker, Esq.

Natick, MA

Real Estate Law From A Practical Perspective

Have you had your broker speak to the other broker about this?

Sounds like you have grounds to send a complaint to your MLS, because offers of compensation are unilateral (one sided) from the listing agent to the cooperating agent. If the listing agent is also a Realtor®, you may have grounds to file a grievance for violation of the Code of Ethics. I would also take it one step further and find out who the lender is and let them know what this agent is doing. All money must show up on the HUD-1!!!

Dec 29, 2011 05:44 AM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Jeanne and Ralph - I loved the part where it states "Seller has instructed listing agent not to present any offer not providing for $1,500 bonus commission to listing agent at closing". I highly doubt the seller even knows the listing states that.

Dec 29, 2011 05:47 AM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Martin - No I hadn't thought of having my broker speak to the other agents broker. Sadly I doubt it would get us anywhere as I am now seeing just about every agent in that office put similar language in their listing remarks. The agent has to be a Realtor® as it is a requirement with our board. The legal hotline said it was legal as long as it was disclosed and on the HUD but I firmly believe it should NOT be legal.

Dec 29, 2011 05:52 AM

Jan Stevens

Coldwell Banker Pittsburgh - Cranberry Township, PA

Probably legal (depending on the state), but definitely not in the seller's best interest so not OK in my book! Especially the part about not presenting offers that don't include the bonus.

Dec 29, 2011 06:28 AM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Thanks for stopping by Jan - I agree - it is not ok in my book either

Dec 29, 2011 07:37 AM

Ellie Penaranda

239.776.5077 Downing-Frye Realty - Naples, FL

Naples Florida Real Estate - Waterfront & Beach Co

Terry, I had to read it twice to make sure I did not misunderstand. This is totally crazy and will only encourage the bad apples to get away with behavior that affects our image in general with the public. I can't imagine any seller would think that the bonus to their own listing agent would be beneficial to the sale of their home, so the agent must have gone out of his way and crossed the line in convincing his seller. Because it is either that, or he is lying about the sellers requirement of no offers to be presented without the bonus. Something is very fishy here - If there is any way to know who the lender is, that would be the party I would call.

Dec 29, 2011 08:18 AM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Ellie - I agree something is fishy but I can't speak to the lender without a third party authorization :(

Dec 29, 2011 09:19 AM

Ed Silva, 203-206-0754

Mapleridge Realty, CT 203-206-0754 - Waterbury, CT

Central CT Real Estate Broker Serving all equally

Terry, not all banks will agree to pay the commissions and put that bill to the sellers. If they have no money they can attempt to defer it to the buyers and if it's agreed to by the sellers why not. It really is no different that a FSBO not paying a commission and the buyers' agent has to get the money from their client

Dec 29, 2011 11:41 AM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Ed - with all due respect I disagree. I have handled numerous short sales and the bank has always paid commission - reduced sometimes -yes! Put to the buyer - never! On a short sale the seller is in hardship and I have closed on some where I made next to nothing but the sellers got out of a very bad situation and I accepted what the bank paid. I, in my heart, believe those sellers will never ever forget me. Today's distressed sellers will be our future buyers and I have had numerous referrals from clients I helped thru a short sale. I don't look at what's in it for me NOW - I look at people and I care about them. I believe you reap what you sow. To force a buyer to pay the listing agent a so called "bonus" does not sit well with me and I highly doubt the seller demanded those terms.

Dec 29, 2011 12:01 PM

Kathy Dowd

EXP Realty, 239 220 4133 - The Villages, FL

Consider it SOLD

Terry,

I have seen that too and it is a big turn off to me as well! My past broker said a listing agent can do what ever the sellers want them to do, but you can write in the Addition Terms that "Buyer will not pay bonus fee to listing agent" If the seller accepts your offer that in the contract to..do you really think the seller is not going to sell because his agent isn't getting the bonus? I personally feel that some agents are are out of line on their listings.

Dec 30, 2011 10:31 PM

Terry McCarley

Coastal Real Estate - Cape Coral FL - Cape Coral, FL

REALTOR, SRES, CDPE - Cape Coral, FL

Thanks for stopping by Kathy. The listing agent won't even present the offer if the bonus is not included. What a disservice to the seller - it literally makes me ill. My bet is the listing agent won't be very successful with short sales and perhaps won't survive the market we are in.

Dec 31, 2011 03:32 AM