Increased Bonuses And Commissions To Agents During Slow Market

(It seems as though we’ve seen it all with today’s housing market. )

Sellers have officially thought of everything to get their house off the market.

First there were the cars and trips thrown into home sale transactions as a substitute to lowering the actual sales price.

Now, sellers are offering increased commissions and bonuses to any agent who brings in a buyer for their home, condo or apartment.

A November 19, 2006 article by Dinah Eng of The Los Angeles Times, “Buyer’s-agent bonus is latest selling tactic,” discusses how many sellers are offering increased monetary amounts to agents who find them a buyer.

“Curt Cassingham's Studio City house sat on the market for a month with no offers. To stimulate some interest, he announced that he would pay a $3,000 bonus to the realty agent who brought in a buyer for the three-bedroom, two-bathroom house listed for $949,000. Four weeks later, he upped the bonus to $10,000 to the selling agent, to be paid on top of the commission.”“‘I decided, instead of dropping the listing price, to entice the Realtors to bring someone in,’ Cassingham says. He had a property that wasn't moving in a competitive market and responded accordingly. But does the practice have a downside for buyers? If the agent showing a listing stands to gain something extra for selling that particular home, as opposed to a property up the street, will the buyer even know?”

Of course when any talk of increased agent commission comes about, these types of questions are going to come about. Everyone begins to wonder if these inflated bonuses and commissions will hurt the relationship between the real estate agent and the buyer. Are agents going to only show properties that yield them a greater-than-normal sum of money, and steer their clients away from other suitable properties?

Most agents say that this is not the case at all, and buyers are going to buy whatever property they feel is right for themselves. If a buyer is going to be that influenced by what an agent has to say about a particular property, they probably have no business buying a house whatsoever.

Real estate agents are supposed to be a buyer’s guide in the home buying transaction – not the decision maker.

“‘You're not going to be able to sell a buyer something they don't want just to get a bonus,’ says Joan Shultz, a Realtor with Keller Williams Realty in Marina del Rey. ‘A seller will definitely get more showings by offering the bonus, but buyers are not being led away from properties that might work for them.’”

Most bonuses on a property that is worth around $750,000 to $1 million are about $2,000; so this is usually not enough money for an agent to jeopardize their relationship with a client just to get that extra paycheck, says Kendyl Young, an agent with Coldwell Banker in La Canada Flintridge.

“‘Buyers and sellers today are more sophisticated,’ Young says. ‘I don't think the bonuses impact the buyer's experience. The worst that'll happen is they'll get shown a house they don't want to buy, and since a lot of inexperienced Realtors don't listen to what their clients want, that happens anyway.’”

In the end, it seems as though the number one thing that will get a house sold in today’s market is the right price.

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