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Hi all. We are trying to sell our home as we are moving out of state due to job relocation. We have been less than thrilled with the number of showings on our property. We have a high end home in an area of modest means. We are thinking of putting a bounty of sorts out to area realtors. $20,000 if they bring us a buyer within 30 days. Do you think this is a resonable idea? I truly think that whoever buys our home will be relocated from outside of the area. So, I wonder if offering this incentive to the RE Agents will even make a difference. I would like to hear your opinion as professionals.
The usual purpose of such an incentive is to have your house shown before or instead of any competing homes. So if there are a significant number of options out there for a buyer looking at homes like yours, the incentive can be a good idea. Remember though, that the buyers agent really cant convince their client to make an offer on your house. So while they might be enticed to bring their buyer, the house is what sells the house.
But if the buyer is my client, then it is misleading not to let them know that an incentive is being offered to me by the seller in the event that the buyer actually purchases that home. Consider the situation in reverse. If you are a buyer and certain sellers are out there offering YOUR agent more money to show their home, wouldn't you consider that a material fact and believe that you have a right to know? After all, the buyer's agent is legally obligated to put the buyer's best interest above their own. And, knowing that, wouldn't you wonder if you were then being pushed toward one listing over another when it may not be in your best interest? Also, wouldn't you want that money to come off the list price rather than going in the pocket of your agent -- who already signed a buyer brokerage agreement with you that specified in advance the amount of money they were to be paid for their services?
But it sounds as if you are probably right. There may simply be no buyers in your price range in your area at the moment. Here's hoping you find one sooner rather than later! Best of luck.
when I move to your city, you will be my realtor..........absolutely refreshing
I'm always uncomfortable seeing agent-focused incentives like this. I believe a buyer has every right to wonder if he or she is being steered toward a particular listing because the agent is hoping to get a big pay-off. And I believe the buyer also has every right to ask, "why is that $20k being offered to my agent instead of taken off the price I'm paying?" since, in effect they will now be paying off that $20k over the next 30 years at 5+% interest.
I'm with you on this. It makes me uncomfortable, I disclosed and rebated it to the buyers, in the situation I was in.
Buyer agency bonus money is disclosed within the closing documents and sooner or later the buyers are going to realize this and perceive they paid $20,000 more than they might have, had the price been reduced.
I would talk to your Realtor about using that $20,000 for other more constructive purposes that may actually help your marketing efforts more.
(1) Pay your buyer's first X months of mortgage payments with it
(2) Offer it to buyer closing costs, interest rate buy down, and price reduction
(3) If there is something about your home that needs to be updated; offer it as an allowance for a remodel (Seller offering $20,000 allowance for kitchen remodel-make it YOUR dream kitchen!)
Intownhomes 247 - I tried to give you rep points but have to "spread it around" more. I fully agree with your post. We are representing the best interests of our clients...and not disclosing a $20,000 incentive can break the trust we have worked so hard to build.
The use of an incentive for the agent - while nice - often over estimates the ability of us, as Realtors, to talk our clients into buying one house over another. With the Internet, its difficult to NOT show them a home that they would be otherwise interested in...and if a particular property doesn't light their fire at the initial stages...no amount of persuasion is going to get them to BUY it. Ok, maybe I'm being too general...I (personally) would not be able to talk someone into buying a house they weren't interested in otherwise...and I couldn't sleep at night (even on a $20,000 mattress) if I did.
I would talk to your Realtor about using that $20,000 for other more constructive purposes that may actually help your marketing efforts more.
(1) Pay your buyer's first X months of mortgage payments with it
(2) Offer it to buyer closing costs, interest rate buy down, and price reduction
(3) If there is something about your home that needs to be updated; offer it as an allowance for a remodel (Seller offering $20,000 allowance for kitchen remodel-make it YOUR dream kitchen!)
Intownhomes 247 - I tried to give you rep points but have to "spread it around" more. I fully agree with your post. We are representing the best interests of our clients...and not disclosing a $20,000 incentive can break the trust we have worked so hard to build.
The use of an incentive for the agent - while nice - often over estimates the ability of us, as Realtors, to talk our clients into buying one house over another. With the Internet, its difficult to NOT show them a home that they would be otherwise interested in...and if a particular property doesn't light their fire at the initial stages...no amount of persuasion is going to get them to BUY it. Ok, maybe I'm being too general...I (personally) would not be able to talk someone into buying a house they weren't interested in otherwise...and I couldn't sleep at night (even on a $20,000 mattress) if I did.
Dave
Thanks for the insight. I think we are going to drop the price $50,000 and offer no bounty. The closing costs might be an opition as well. The kitchen remodel idea does not apply as we are in a 3 year old home with a top of the line kitchen. It is nice to see RE Agents with values. I have had to deal with a couple that are less than ideal.
Thanks again, everyone for the opinions. It has been helpful to get responses directly from agents.
I would think it unethical to not disclose to my client that I am getting paid $20,000 bonus + commission. We are taught disclosure, disclosure, disclosure, I also would have thought it would have to go on the Hud statement.
That's the thing about ethics...sometimes the answer is "maybe."
Quote:
Originally Posted by alison get us a home
I would think it unethical to not disclose to my client that I am getting paid $20,000 bonus + commission. We are taught disclosure, disclosure, disclosure, I also would have thought it would have to go on the Hud statement.
We've actually gone around on this subject before. The Realtor Code of Ethics specifically addresses compensation from a 3rd party which MUST be disclosed, but there was some logical arguments on both sides regarding bonuses like this.
In my personal opinion, it WOULD be unethical to not disclose it to my buyer - and as a minimum it would be a barrier to building a long-term positive relationship with them (I use the term "unethical" here without regard to what the Code says, but based on my own personal ethics). But remember, not all agents are REALTORS (therefore this Code does not apply to them)
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That's the thing about ethics...sometimes the answer is "maybe."
