The COE does requires disclosure of fees like home warranty kickbacks. But I’ve never seen a real disclosure of that to a home seller who is paying for it. I’ve only seen the “management fee” noted in small print.

I even got into a discussion at closing with a listing agent who said there wasn’t a kickback. (There was, she either was ignorant or she was just lying about it.)

Please, go check all your past HUD-1 forms. Then ask your broker where the money goes.

Anyone with half a clue knew the real estate market was falsely inflated with investors purchasing rentals at a time when EVERYONE could buy. Who was going to rent from them? How could 1 in 5 Americans purchase 2 or more homes and think saturation was never going to take hold and they could flip them indefinitely? Hmmn? Obviously many of you commenting here helped clients do just that and you helped them facilitate that belief. Were you being fair and having the best interest of your client at heart then because you were only earning a 1-3% co-broke? Did that make it okay?

No it was not okay and now we have the mess we have. So what is really responsible and what really dictates that you have your client’s best interest at heart? A 3% co-broke, is that the defining point? I think not.

Responsible market correction should dictate that the builders need to stabilize pricing and take the high road and realize they have a responsibility to those who have already purchased as well. How does that happen? Well the first step was to reduce prices to a more realistic level without devastating the market entirely. To date we have seen an average of 70K in price reductions. So now the folks who bought last year are on average 70K upside down, for the owner occupant time will balance that out. Markets go up and down in major metro areas it is the nature of beast. Now we must contend with the glut of inventory builders have. What is responsible? Offering increased incentives to the buyers and their agents so they can keep the prices stable and the value up. There is absolutely nothing wrong with a 10-12% co-broke and maybe 6% seller paid closing concessions and 25-40K in options incentives to the buyer. The 6% covers closing costs and allows them to buy-down the interest rate if they desire or in some instances they can use 3% as builder grant towards down and 3% for closing costs whatever suits the buyer best. The options credit allows them to get appliances, window treatments, landscaping etc. That is certainly a win to the buyer and for the diligent efforts of the agent researching in advance the best deal for the client as well as finding the right home and location, he or she has earned his or her money.

A responsible agent that understands the market, should appreciate the value to their buyer of the scenario above and communicate that fact to their buyer. It shows that the builder understands prices need to stabilize and also that he is unwilling to completely destroy the values for those who purchased when prices were high. That compromise by the builder should be peace of mind for the buyer. And there is immense value in peace of mind. Why should an agent feel ashamed or as if he is cheating his client for serving his client and looking after what is really important? Now bear in mind it is only a win-win if the home, the price and the location fit your client’s needs, budget and desire. But as professionals we would take our buyer there if that was not already established?

As for builder incentives, more often than not you end up giving back a lot of that incentive here. As I said earlier, here it’s the first thing going back to the pot when negotiating. We normally with relos give up for moving expences, lease buy-outs and other incentives we use in-house. We also use it in price reductions to qualify, rate buydowns, etc…

It’s to bad that the agent hasn’t spoken up- but you haven’t said the home is under contract so my guess is that there aren’t to many so-called greedy realtors- but in 40k realtors theres bound to be some bad apples.

“I did want to add to those who say this is a greed play. Logically, it isn’t. As a Realtor we have to disclose our commissions, and when you made the offer on that house with a 12% co-broke, at least here anyway is at the very top in bold letters of the contract offer. I do not see how an agent would collect on this with greed in mind.”

In Arizona (where this is being done), commission is not revealed AT ALL on the contract offer. In fact, it (legally) CAN’T be discussed in the offer here, as the offer is between buyer and seller, and the commission is a seperate contract between seller and listing agent broker.

While commissions SHOULD be fully disclosed (IMHO) the fact remains that is can EASILY be hidden from the buyer here. It shows up on the HUD1 that the buyer gets just a few days before close. By that point, it may be too late. I suspect many buyers wouldn’t be willing to breach their contract with a seller over a commission dispute with their agent and they’d go right along with it and close the deal. It’s entirely possible the buyer might not even notice the commission split because it’s listed on the “seller’s side” of the HUD1.

I’d like to point out again that in the email the listing agent sent out to buyer agents, the first line read, “Bring one buyer and take the rest of the year off!”. Greed may not have been his intent, but he’s clearly playing the greed card. If he weren’t, rather than highlight the benefit to the agent, why not take five minutes and outline what the creative agent could do for their buyers with this 12%?

There are something like 40,000 licensed real estate agents in the Phoenix area. I can assure you that MANY will see “12% co-broke” and “Bring one buyer and take the rest of the year off!” and think exactly that — never once considering returning some of that money to the buyer. The *exact* same thing happens every day with new build spec homes. Many builders here are offering 8, 10 and even 12% co-brokes. I’d bet a 12% commission check that the *vast* majority of agents here pocket the huge builder commissions and never blink an eye. Other than a miniscule number of bloggers here (Swann, Dalton, myself) I’ve *never* seen an agent here openly market/discuss returning ridiculous builder co-brokes to the buyer. I’ve *heard* dozens of brokers and agents discuss how much THEY can make on spec homes. That’s only ancedotal evidence, and I’m sure there are some agents “rebating” commissions to buyers. But I’m just as sure far too many do not.

Sorry, I think this agent is playing to greed, pure and simple. I’ve emailed him asking him to comment here. His lack of appearence speaks volumes IMHO.

I couldn’t agree more. I’ve never understood the agent bonus perspective. Especially here where it’s always in the remarks available to the public. If you can afford to give the bonus, lower the price until it’s at an attractive level. Seller wins, Buyer wins, Agent gets paid for doing their job. Thoughtful post, nice reaction.

I did want to add to those who say this is a greed play. Logically, it isn’t. As a Realtor we have to disclose our commissions, and when you made the offer on that house with a 12% co-broke, at least here anyway is at the very top in bold letters of the contract offer. I do not see how an agent would collect on this with greed in mind.

To me, it isn’t marketing to the greed of an agent, its being offered to the greed of a rebate buyer- period. Splitting this with a buyer who is needing or wanting a rebate would satisfy both.

Further, if a buyer comes in on an offer like that, the first thing that would be negotiated would be that fat rebate.

If, as an agent, I’m going to offer a bonus like that, it is likely they were reducing the price and the agent said, lets take an outside the box approach- lets go up on the incentive to sell, this would be more genius than you realize. Builders do this every single day in many parts of the country.

The buzz about this listing is a hat tip to this agent. His clients, and their community is being well served as it is holding up the value of the home and neighborhood.

We’ve practiced this approach for some time when reducing the sales price, we instead increase the bonus offer- pay for closing costs, etc… what is really different here? Nothing- he just went about it “differently.”

Anyone out there ever seen *actual and specific* stats that show (or not) that adding agent incentives actually increases/speeds up home sales?