A commission bonus is not what sells the house

By
Real Estate Agent with Thompson Company, REALTORS® MD594797
https://activerain.com/droplet/xbH


Every once in awhile I stumble across a listing that offers a commission bonus to the buyer's agent. It is nice to see and I would appreciate the gesture if it was meant as a reward for my hard work. That is seldom the case, however.

It is more an enticement to bring a full price offer or any offer, period. For the latter, one can assume that the house itself is a hard sell - not up date or it has issues or something is off about its location. If it receives an offer despite its challenges then it was either priced accordingly or exactly what a buyer was looking for or both .. but not because a bonus was offered to the buyer's agent. At least it shouldn't. 

The bonus is offered to the wrong party. It is not about me. I am not the one buying the house and the buyer will never benefit from a commission bonus. Don't try to convince me that it is the best house, convince the buyer.

Offering a bonus to the agent for bringing a full price offer is a bad business practice in my opinion. The amount that is written into an offer is up to the buyer, not me. As a buyer's agent it is my duty to research available comps thoroughly and explain those to my client. Based on the market, the comps and the overall condition of the house, the buyer decides what he is willing to offer, not me.

Here's a crazy idea, why not adjust the price downward by the amount of bonus that is offered? Or leave some more wiggle room for negotiations? Why not upgrade an appliance or replace that carpet? Hire a painter? Fix a leak? That would put that bonus to really good use. It would actually benefit the buyer. 

Do I like to get rewarded for hard work and a job well done? Of course, but my reward comes in form of referrals from present and past clients. That is the bonus I'm excited about and look forward to receiving time and time again.

A house sells because it is priced in line with market conditions and comps. It sells because it shows well, has been upgraded and maintained. It sells because there is no guard dog baring his teeth and it is easy to show. It sells because it is clean. It sells because it's been marketed. And if none of the above apply then it will still sell if it's reflected in the price. A commission bonus, however, is just not what sells a house. It's just sending a wrong message.

Posted by

ANDREA BEDARD, M.A. ~ THOMPSON COMPANY, REALTORS ~

 

 

   

                                                                                                              

 

Thompson Company, REALTORS
16910 Oak Hill Rd, Silver Spring, MD 20905
o: (301) 384-9177 c: (240)593-2860

andreabedard.re@gmail.com

Andrea is a REALTOR® based in Silver Spring, MD. She has enjoyed assisting buyers and sellers since 2004 and focuses on residential Real Estate in  Montgomery and Howard County, MD. Andrea is a proud mom and hobby decorator with a vintage soul. She always answers the phone with a smile, enjoys running and treasure hunting and is addicted to coffee.

 

 All photographs are my own and I'd like to keep it that way. All information is deemed reliable but not guaranteed.

 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate Sales and Marketing
Groups:
The Lounge at Active Rain
REALTOR LIFE
Best Business Practices
Advice for Sellers
Tags:
commission bonus
bad business practices
silver spring montgomery county md buyers agent

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
596,857
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Andrea...Great comments.  I used to give any commission incentives to my buyer if the Broker, lender, and the Real Estate Commission allowed it. Those were some happy buyers but I do not think it ever was the reason a buyer bought the home .I rarely see one anymore in our market.

Mar 13, 2012 10:35 AM #1
Rainmaker
361,089
Bridget "Mortgage Mama" McGee
SWBC Mortgage 410-960-2061 - Baltimore, MD
Maryland Mortgage Mama NMLS#196068

Andrea, This is a great perspective, and certainly is the most ethical. What I have heard of the logic behind it is to increase the foot traffic.  If there is 100 similar houses in an area to sell and a realtor can only show  a limited number to a buyer, the listing agent/seller is betting on the incentive to have the realtor show theirs, over a similar house without the bonus. 

It sure seems your way would be money much better spent!  You put the PRO in professional!!

Maryland Mortgage Mama

 

Mar 13, 2012 10:55 AM #2
Ambassador
633,979
Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Andrea, this idea of a broker bonus is so bogus.  In NC, we MUST disclose any income other than our commission so what buyer in their right mind wants to see the agent make an additional$1,000 or more on the sale of the house.  Does the seller seriously think the buyer doesn't get that they are the ones footing the bill?  If the seller wants to offer a "bonus"...offer it to the buyer.

Mar 13, 2012 10:56 AM #3
Rainmaker
680,892
Andrea Bedard
Thompson Company, REALTORS® - Silver Spring, MD
M.A.; REALTOR® Silver Spring, MD and beyond

Hi Mike: I used to see the bonuses offered more when the market turned slow, then not so much but lately I've seen a few "for full price offers". If anything it is making me uncomfortable. The way you handled it is certainly a good way to go about it, provided ones broker agrees.

Hi Bridget: I can understand that logic, I think, and it would explain why we saw it much more when the market was dragging .. The ones offering it for full price offers are the ones that get me. - Thank you!

Hi Mona: Exactly. It should be all about the buyer, right? Try to convince the buyer by having the nicer, better, more upgraded house or better value ... not me. We also have to disclose... better get it in writing.

Mar 13, 2012 10:58 AM #4
Rainmaker
1,444,582
Mike Cooper
Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Sales Pro

Well said, Andrea.  I would love to collect those bonuses, but they really are because the house is not up to the sale price.  You hit the nail on the head!

Mar 13, 2012 10:59 AM #5
Rainmaker
479,716
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
In Tune with your Real Estate Needs - Olympia WA

I couldn't agree more! I guess it's flattering that sellers think we have some magical power to materialize a qualified buyer and then convince them to buy their house.  We don't have these powers - lower the price instead, Mr. Seller!

Mar 13, 2012 11:55 AM #6
Ambassador
2,813,352
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I always suggest to my sellers when utter "bonus"  that we offer a buyer incentive as well... like closing costs.  They should be after buyers, not agents.

Mar 13, 2012 11:56 AM #7
Rainmaker
680,892
Andrea Bedard
Thompson Company, REALTORS® - Silver Spring, MD
M.A.; REALTOR® Silver Spring, MD and beyond

Thanks Mike, of course it would be nice but it's just not about us.

Hi Francine: I haven't looked at it that way! It's up to the listing agent to make sure that the sellers understand that it is their house that will drive the decision, not the agent.

Hi Tammy: Yes, go after the buyer - prepare the house as best as possible and price it right from the get-go. A bonus does not make an ugly house pretty or magically fix anything that's broken.

Mar 13, 2012 12:44 PM #8
Rainmaker
258,008
Shannon Jones
The Shannon Jones Team - Long Beach, CA
Long Beach CA Real Estate

Andrea, I SO agree with you. It's not commonly done in our area, but in the past when I've showed homes where there's a comission bonus being offered, it makes me feel sort of uncomfortable. I wouldn't want to feel like I was ever susceptible to trying to encourage my clients to buy a particular home simply because I would make more money if they bought that home. It would be SO much better if the price was reduced, as you suggested, or if the incentive was offered to the buyer -- perhaps in the form of new appliances or closing cost credit.

Mar 14, 2012 01:19 AM #9
Rainer
52,168
Marianne Infusino
RE/MAX HomeTowne Realty - Franklin Lakes, NJ
RE/MAX - FLOW Area - 201

Great POST and OHHHHH sooo true!  Next time an agent calls or sends me an email about the bonus, I will reiterate the thoughts from this post! 

AND THANKS .... :)  ... you really helped in in the AR community protocol!

Marianne

Mar 14, 2012 03:26 AM #10
Rainmaker
680,892
Andrea Bedard
Thompson Company, REALTORS® - Silver Spring, MD
M.A.; REALTOR® Silver Spring, MD and beyond

Hi Shannon: It makes me uncomfortable, too. It's just not about me, I'm not the one making the decision. The buyer should be courted and any special incentives offered to him.

Hi Marianne: Ironically, I just showed one today that offered a bonus "for a full price offer". The bonus just doesn't matter - if the house is not a right fit, it's not a right fit. Period.

I'm glad I could help! Congrats on the Gold Star, it suits you well!

Mar 14, 2012 01:01 PM #11
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
680,892

Andrea Bedard

M.A.; REALTOR® Silver Spring, MD and beyond
Ready to buy or sell?
*
*
*
*
Spam prevention

Additional Information