Comments on: A Commission is Prize Money (?!?)

By: Chris Dowell

Chris Dowell — Wed, 07 Nov 2007 21:13:48 +0000

I have been offering higher commissions and bonuses to buyer’s agents. It works a little. Lately, I have been having seller clients make offers to buyers. My latest is a seller client that is offering a New convertible BMW to the home buyer. http://BMW.DowellTaggart.com

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Mon, 05 Nov 2007 15:18:47 +0000

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By: Missy Caulk

Missy Caulk — Mon, 05 Nov 2007 11:55:23 +0000

Jay, I have a home listed now at 5%, from a relo company. When the sellers hired me, it was at 6%, I have had 2 showings since then, in 3 months. Before the sellers took their buy-out, I had at least 2 a week before that. In a buyers market, I believe Realtors do look at the compensation offered. I kept the listing when relo offered it to me, because most of my marketing and expenses were upfront.
I have had it painted, and staged since the original sellers moved out and it shows much better, ( too much country style) by the previous owners. I have discussed this with relo and they won’t budge, company policy.
I have helped several families move here,(with this company) but this is my first listing with them. I’m thinking about offering 3% and me taking less, just to get this sold.
One of my buyers who transferred here, their house has not sold in OH, offering the 5%. She told me the same thing. Why would a big company want to pay all the expense of inventory and not offer 1/2% more? I just don’t get it.

By: J. Ferris

J. Ferris — Sun, 04 Nov 2007 20:31:48 +0000

Thank you Jay! I’ve often found it very frustrating to come up with a concept that would explain commissions to the buyers while noting that some varying rates may not pay for the services rendered.

“For example, if I have a signed BBA at 3%, and the seller is paying 3%, then the buyer owes no additional commission. If the seller is paying less, the buyer makes up the difference. If the seller is paying more, then that additional amount is rebated to the buyer at close of escrow. This is all clearly discussed and disclosed up front. The buyer knows exactly what the numbers are before they even see the home.”

That’s the black pearl of the post. Thank you!

By: Brian Brady

Brian Brady — Sun, 04 Nov 2007 20:12:01 +0000

Jay,

Let me start off by saying that the “extra bonus” should not drive the home choices a Realtor shows his/her client…BUT…they do work. I’m assuming that many Realtors (like many mortgage originators) are self-serving.

Should a listing agent then use the greed factor when pricing a home? If we know the’re bums, should we play to their weakness and offer that bonus? More importantly, is it the listing agent’s responsibility to point out the “greed factor”, as flawed as it is, to every seller?

By: Bob in San Diego

Bob in San Diego — Wed, 31 Oct 2007 17:54:47 +0000

A few thoughts…

With so many buyers searching online via IDX prior to even contacting an agent, I do not believe that commissions play much of a part in determining which listings they want to see.

Agents who screen listings based on commission are not fulfilling the fiduciary duty they owe their clients.

In San Diego County we have already started to see lawsuits filed against agents and brokers by buyers who would have purchased a different property if their agent had shown it to them but didn’t based on commission.

If you are a buyer working with an agent, you need to ask the agent if there are any reasons or conditions that would impact their decision to not show you a particular listing that seems to match the buyer’s criteria.

By: Darla

Darla — Wed, 31 Oct 2007 17:32:46 +0000

Excellent post. Realtor incentives in my area (SoCal) just don’t work.
We are working for the client…not our own pocketbook.

By: Real Estate/Buisness News » Blog Archive » A Commission is Prize Money (?!?)

Wed, 31 Oct 2007 16:26:58 +0000

[...] Original post by Jay - The Phoenix Real Estate Guy [...]

By: The Property Pundit

The Property Pundit — Wed, 31 Oct 2007 03:39:15 +0000

I have a condo for sale that my realtor suggested putting a bonus on for the buyer’s realtor. I’d be interested to hear if this would back-fire or not. Originally I thought it would be a good idea since the condo is in an area that caters to realtors who would promote it because of the bonus. But, I’ve also wondered whether some wouldnt want to be accused of promoting the unit just because of the bonus, so they didn’t suggest it to their buyers.

Maybe I’m overanalyzing it and it wouldn’t make a difference. I do know that if I was a buyer and I saw a realtor bonus, I would make my realtor credit that to me.

By: Teri Deane

Teri Deane — Tue, 30 Oct 2007 14:15:53 +0000

I totally agree with your take on this. So much so, I’m copying my post on Inman News for you here (I’m an agent in Maryland, BTW):

This issue came up with some agents in my office and we all agreed that we rarely (if ever) look at the commission cut offered to the buyer’s agent (although many listing agents try to market that along with bonuses — thinking it will bring in more traffic). In my local market I have seen many homes sit unsold with these “teasers” in place. The seller is better served by improving the condition of their home and/or not over-pricing it in the first place. Any agent who is ethical will represent their client by showing them all homes that meet or could meet their needs. Way I figure, if my customer likes a home that happens to offer a higher than average commission — that’s just the luck of the draw (as it is when they opt for a FSBO or a property listed with a discount broker–both of which mean double the work for the buyers agent). In my experience, it’s a lot more common for an agent to shave a little off their commission to make a deal work than it is for them to only show homes with greater than 3% commissions.