I recently showed a buyer a property and the listing agent called for feedback. As we were ending our conversation, he said something to the effect of "the $1,000 bonus isn't too bad". I told him I hadn't noticed the bonus and that never affects whether I show a property or not.
From time to time, I notice when the commission is higher on one listing as opposed to a lot of others and sometimes I notice when it's less--particularly a foreclosure or short sale. However it never influences whether I show a home or not--even when it's less. I put in the criteria my client wants, they choose the homes and I show them their choices. I never leave out the lower commission listings or draw attention to the ones with a bonus or higher commission. I have heard agents encourage sellers to do this thinking it will really get more attention from other Realtors. If I ran across a great home and I thought it was what my client wanted and the commission was lower, I would show it.
I am curious as to whether or not you think this stategy really works and has made a difference in getting attention to a listing and getting it sold.
Royal Oak Realtor selling Real Estate in Southeastern Michigan. TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.
Unfortunately there are agents that do not put their clients first. And higher commisions are the first thing they are thinking about. I will show any home for sale I will even show FSBO even if they are not willing to coop with a broker. But that is just me.
If a bonus is being offered my first question is, why don't they just lower the price to what it should have been to begin with? There are agents who are commission driven. That's why we have the ability to sort listings on MLS by commission offered to the selling broker.
Hi Cathy,
Thank you for your soooo timely post!
Why is it everyone always assumes it's always about the amount of commission?
Today I wrote an offer (actually for another Realtor I was covering for in my office ) and yes, on Mother's Day. After writing an offer, the buyer asked about commission, and truthfully I had no idea. It was a property appearing to a good value...period, that's it. After looking at the commission paid to the selling broker I explained the fee and the process.
Cathy, please keep your focus on your clients, (not doubt, you're on the right track) and not the $$$. One of my very first r.e. classes soooo many years ago I don't even want to mention was from a wonderful by the name of Walter Wilcox. Walt was an older gentleman (at the time) who said something I've always remembered, never figure your commissions ahead of time if you make a sale. If so, you may see your buyers and as dollar signs and NOT those we serve.
Walt also said "If you take care of the people you're working with...in the long run they will always take care of you". Back then, I was a very impressionable at age 23, and Cathy I can tell you his words have always served my clients well.
Best of luck to you!
Cathy, I do exactly as you do. We show what the buyers want to see ?
No,I do not think it makes a difference to most realtors. If they are showing what their buyers have picked out. It's a nice plus when you find out it is there, but that's it, for me.
A few years back, I recall seeing some research on this and found that this kind of thing does not increase your chances of getting sold. By far, the single most influential factor is price.
Lynda: I don't know if you are a Mother, but that's really great that you were covering for another Realtor and made it happen on Mother's Day!
I totally agree with what you said about taking out minds off the money and keeping my focus on the clients and not seeing them as dollar signs!! I have always held the view that any time we focus on the results of our actions, we are no longer being in the moment when we are actually creating them and they can never be the best they can be--whether it is a client in Real Estate or anything else we are up to in our lives. It is hard to do as mostly I know I am not FULLY present in the moment--the internal dialogue is a very distracting thing. I have three pending sales right now and about four buyers getting close. While I am with them and showing them listings etc., I do not think of the money. However, since I have had only two leases close so far this year, I find myself mentally counting what may happen financially this month. Even then, I hate to do that and stop myself--because after all there are many things that can happen before the docs are signed and the check received. Thanks so much for your post
Bonuses to Buyer's Agent are showing up more and more here, both in the New Construction and Resale markets. I have always made it a priority to show my clients properties that meet their needs regardless of commission or whether a bonus is included. I've sold a FSBO that wouldn't agree to pay my broker's 3% commission and my Buyer had to pay the commission because he really wanted the house -- I even offered to terminate our Buyer's Rep Agreement so he could buy it -- he said No, he'd cover my broker's commission. On another deal, I got a 1% Buyer's Agent Commission -- the Listing Agent took 3%! There have been times when a builder was offering a bonus and I was able to help my Buyer's out by telling the builder to use my bonus towards my Buyer's Closing Costs. Showing only those properties that have larger commissions or bonuses is not looking after our client's best interest.
Several years ago, I was talking to a rookie agent and she was telling me her client had written an offer on a house but was now having second thoughts about it and wanted to see another property. There was a sizable bonus offered on this property and she said I'm going to show it to him and hope he walks from the other contract so I can get the bonus -- I really need the money. Well, I was shocked that she was telling me this and I blurted out "That's completely unethical!" No, I didn't apologize and we never really chatted about our business again -- I decided I didn't want to know what she was or was not doing for her clients.
Judi:
I helped a client with a lease when they first moved to Michigan and then a year later they wanted to buy. I must have showed them well over 60 homes and then we found a FSBO in the subdivision I had just showed them a home. They really liked it and the seller could hardly afford the commission and brought money to the table as it was. I took less commission but they wanted to make sure I got something. I have listed a home for less commission but I always make sure that the buyer's agent still gets 3% while I might take 2% or whatever we agree--never the other way around--I want the listing to attract realtors to show it. Which brings up another point: I hardly ever notice a bonus or higher commission (I don't really every look at that) but I do notice when it is less--it won't keep me from showing it if my client likes it and it meets their criteria.
I agree about not wanting to know what the other Realtor was doing--something is alwyays lost when we focus on the money.
Over the years, I've found bonuses do not work. First of all they are the property of the broker, So if an agent is on a 5-/50 split they get $500 of a $1000 bonus. But, it is at the discretion of the broker.
Also, we've sold many homes over the years by increased commission. Yes it is true, agents even call to confirm. One caveat with increased commission, if it is too high, person assume there is a defect in the property.
As a listing agent, I have to say that when a property is priced competitively and is offering a 'higher than average' selling commission, it gets sold faster. I have the stats to prove it.
We price our properties to sell and we offer better than average commissions to the buyers agents. We teach our sellers the importance of both of these practices, first priority is price, second priority is commission offering. It works.
Hmmm, interesting question Kay -- why don't you post a blog on this so more Active Rainers can read your question and comment. Would be an interesting discussion, I'm sure.
I've never seen that offer, I have to think about it...
Kay:
As Laura said earlier in this post, rather than the realtor getting a bonus, they feel that it should go to the buyer with closing costs, decorating allowances etc. I have seen listings that offer buyers 6 months paid condo fees and other similar offers. I think it sends a different message than offering the buyer's broker something to get their client to notice it. An offer like paying the first three payments or paying condo fees can go in the description that appears on Realtor.com and other places to entice the buyer to look at and buy the home--I think these work better than a bonus to the Realtor.
Christina: I agree that the main thing that sells a home is having it priced right (which takes into account the condition of the home). I think this is enough and that higher commissions need not be necessary.
Jim: I hadn't thought about the split and that half of that bonus may be even be going to the Realtor--all the more reason to give something to the buyer.
Thanks Judy. I'll do that.
Cathy, knowing that this house is priced right , today's market has me spooked. I am doing cma's every two weeks on some of the homes. I've always lowered the price instead of giving incentives.
Cathy, I read this the day you posted and thought I made a comment. Was scrolling through my subscribed blogs and hadn't seen you post in a few days and noticed I had not commented.
No, they do not work. I tell my sellers in Ann Arbor/Washtenaw County to just do the work or price it accordingly. Deferred Maintaince.
I love it when the house my buyers want had a bonus, but I would have shown it even if it didn't have one.
Personally, I do not feel a 1,2 or 3 thousand dollar bonus would affect whether I put the home on the tour or not. The other day, I found an un-sold parade home advertisment that got my attention: $10,000 Agent Bonus + a 4 day Cruise. Wow, what a mark-up I thought....
But it did make me think for a moment as to who might want to buy this mammoth home. One underlying fact however, is that the homes offering lower buyer broker compensation do get fewer showings than the standard and above standard offerings. Does speak volumes about the sad nature of the beast.
It is what it is. When I'm at a listing presentation, I let the sellers choose which buyer broker compensation plan they want to fit into. They see the competition and they choose their place among the competition. I let them pick the Price, Wages and Accessibility with one small factor. The listing broker vesting between $1,000 and $1,500 upon listing; keeps 55% of the gate :) Never a problem with the Commissionmectomy!!!
Have a great year Cathy!
Kay:
I just did a cma for a home that is unique in the area and did it a few times with both of the MLS that I belong to and was worried about pricing it right. I asked another realtor and she suggested a value price check with an appraiser. I had never done this and he helped me with giving some comps he would use. I suggested they get an appraisal before hand and they are going to do so we will have the best sense - it has some historical value so it was difficult.
Tamara:
I would never not take a bonus if it was offered - I am always happy to see it - but it doesn't influence me in the least in regards to showing it or encouraging a buyer to look at it or purchase it.
Missy:
You did comment on this when I first posted it but thanks for doing it again. I am particularly happy to know that I am on your subscribed list as I value all you do on AR and with your business. I learn from your comments and posts. In fact, I visited all your sites just to see what you are up to and saw your signature card and visited that site to utilize in the near future. I put my business card but I like the way you do it - I utilize the internet to my fullest capability and have learned much from your experience. Thanks again.
Frank:
While a bonus does not affect whether I show a home or not (and it seems a lot of Realtors agree), I do feel, like you, that a lower commission in the MLS does affect whether it is shown. It doesn't affect it for me but I do notice that more than the bonus. I have a listing coming up and they are good friends. I told them that they still want to offer the buyer's agent a certain commission to be in the competition (I will sometimes take a % less but never like it to come off the buyer's side for the above reason - even though the listing agent has the most cost in advertising a listing.
I'm with you the property is first! I don't ever look at the amount I will get until the offer has been accepted, This way I am never tempted to lead someone to a property that isn't best for them.
Thanks Todd:
That's a good practice. I try to keep the money out of it until it closes and I get handed the check because so many things can happen. If we are focusing on the source of the money--our clients--and giving the best service possible--the money will follow and not be a distraction.