Make Sure Selling Incentives Don't Break the Rules

May 14, 2012

Some housing deals are coming with sweet incentives for the real estate agents who can bring in a buyer, everything from big bonuses to fancy cars. But if you’re not careful, you might get in trouble for steering, some real estate professionals warn. 

A home seller in Virginia is offering a C-Class Mercedes, priced at $37,900 — or $30,000 bonus, whichever is preferred — plus commission to a buyer’s agent who is able to bring a buyer to his $1.9 million home. Other incentives sellers are reportedly using to push a sale, include offers to buyer’s agents of fancy trips, higher commissions, or gifts.

"Bonuses and high commissions could motivate an agent to encourage a client to buy the house that offers the best reward to the agent, rather than the home that's best for the client," Bobbie Noreen, managing broker with Village Real Estate Services in Nashville, told Inman News. "That's the problem with any incentive, whether it's a fur coat, a trip, or a $2,000 bonus. Our code of ethics says we are not allowed to participate in self-dealing. To steer them (the client) is against the Code of Ethics. It's borderline illegal."

But some agents say the incentives don’t break any rules and can help sellers attract extra attention to their listings. Plus, if any agent is uncomfortable taking a pricey bonus for selling a home, they could always negotiate a lower sales price on behalf of their buyer for the amount being offered instead, says Frances Flynn Thorsen, a real estate educator and consultant in Tucson, Ariz. 

"If a property is priced right, it's going to sell,” says Doreen Roberts, president of the Bay East Association of REALTORS® in Northern California. “I know sometimes sellers do offer higher bonuses to entice agents to show the property. But my personal experience is if the price on the property is right, you will get multiple buyers and that will generate competition and that will make the property sell for the correct price,"  

For real estate professionals who are offered an incentive, Susan Wachter, professor of real estate at University of Pennsylvania, says it’s important for the real estate professional to disclose the incentive to their buyer client. 

Source: “Incentives to Buyer’s Agents Raise Steering Concerns,” Inman News (May 14, 2012)

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