Bonuses are a Hot Topic - Are They Ethical or Not?
Saturday November 11, 2006
There's a blogging debate going on about the ethics of offering bonuses to real estate selling agents for selling certain listings. Some believe that they shouldn't be allowed at all and are unethical, while others are more concerned with if and when they're disclosed to the buyer clients.Wherever you fall in this discussion, we'd like to hear your opinions. Either comment on this post, or we'd really like you to join the discussion thread on this subject in our forum. The forum link is near the bottom of the left frame below the categories. (c) Photo: sxc.hu
Incentives in and of themselves are simply marketing devices. The ethical problems arise not from the incentive but how brokers (mis)use that incentive in ways contrary to their clients’ best interests, eg. showing only homes that provide the broker with an incentive.
Consider a broker who takes a monetary incentive and offers to share same with his buyer (rebate) AND also shows the client other non-incentive properties. The buyer makes his choice. Disclosure & attention to fiduciary duty to your client makes incentives perfectly OK, and, if used innovatively, beneficial to the buyer as well. Just MHO.
Maybe we need a cliche like “incentives are not unethical, brokers misusing them are unethical”.
Joseph:
I really appreciate your comment and agree. There has been a great deal of back-and-forth on this recently, especially in light of less than flattering press coverage that we sometimes garner.
Comments from premier bloggers in this industry such as yourself are always appreciated. That also brings up a grievous error I made on an earlier post. I subscribe to Sellsius Real Estate Blog in my news reader and simply spaced on getting it into my blog roll the other night. It comes from working 12 hours a day trying to beef up content on this site. I’m getting it done right now and it should be there shortly. Thanks again.
Jim
My pleasure to add to the discussion on an important topic. Thank you Jim for adding Sellsius to your blogroll. We are honored. I quite understand the grueling work. Much success to you. I warmly welcome you to the fantastic community of real estate bloggers and am happy to add you to our roll. All the best.
Who’s to say what the commission should be. If variations in the commission either + or -, weren’t allowed, we’d be dictating that all offers of cooperation must be the same. I see 1.5%, 2.0%, 2.5%, and much more commonly 3.0% commission offered to the selling agent. But I also see a 3.5% or even a 4.0% commission pop up, more so in this slower market. In my opinion, the higher than ‘normal’ commissions indicate a seller who is probably more motivated, and an opportunity may exist for the buyer to make a better deal, and it can be a win-win situation for all. If the buyers agent does as JF indicates above, and shows properties offering incentives as well as those that do not offer incentives,and discloses, the buyer will choose based on what is most attractive to them, not on how much commission the agent is making.
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