Transparency about agent incentives

There was a fascinating article in the WSJ the other day on the topic of agent compensation disclosure, Do Real-Estate Agents
Have a Secret Agenda?

Slow sales have prompted builders and some individual sellers to offer unusually generous incentives to agents whose clients buy a home. Sellers normally pay the buyer’s agent 2% to 3% of the home’s price. Now many are offering thousands of dollars or other rewards, such as travel vouchers, on top of the normal commission.

I find this particularly disturbing:

Las Vegas builder American West is offering agents a $15,000 bonus to sell homes in its Glen Eagles development, provided they come in with a full-price offer within 30 days. The bonus drops to $10,000 for negotiated offers and those that take longer. “The goal is to try to push them to make a full-price offer,” says Jeff Canarelli, vice president of sales at the builder. It is up to the broker to decide whether to give the bonus back to the buyer, he says.

Now what’s really exciting (disclosure: I work at Redfin) is that Redfin will be transparent when dealing with these types of situations. From the Redfin blog, Show Me The Money:

Redfin is just as transparent about incentives as we are about commissions. If the incentives are monetary, we share them with our clients the same way we share our commission –a two-thirds refund to our client. If the incentive is something else like a vacation or free homeowners’ dues, we directly pass them along to our client.

And of particular interest to Urbnlivn readers is that Redfin will be blogging about Seattle new construction developments offering incentives. They start this off with a post about incentives at Kirkland’s Waterview.

About Matt

Matt , Urbnlivn's publisher, has a love for lofts, floating homes and mid-century moderns.

For years Matt resisted becoming a real estate agent preferring to be an executive in the startup world but he recently caved in the spring of 2014 and became an agent.

You can also find Matt on Twitter or skiing.

  • jo

    Who cares what the agent gets in incentives? It’s up to you, the buyer, to ultimately make the decision to buy.

    Get an agent you trust and you won’t have anything to worry about.

  • jo

    Who cares what the agent gets in incentives? It’s up to you, the buyer, to ultimately make the decision to buy.

    Get an agent you trust and you won’t have anything to worry about.

  • http://twitter.com/mattgoyer mattgoyer

    The problem here is the lack of disclosure, not whether or not they get incentives. Yes the decision is ultimately up to the buyer but many buyers are fairly uneducated and may not even know to ask about incentives, never mind that the agent’s aren’t even required to be up front of them. If the buyer’s agent’s interests are not aligned with those of the buyer then the system is fundamentally flawed in favor of the agent’s and not their customers.

    And finding an agent you trust is easier said than done.

  • http://blog.mattgoyer.com Matt

    The problem here is the lack of disclosure, not whether or not they get incentives. Yes the decision is ultimately up to the buyer but many buyers are fairly uneducated and may not even know to ask about incentives, never mind that the agent’s aren’t even required to be up front of them. If the buyer’s agent’s interests are not aligned with those of the buyer then the system is fundamentally flawed in favor of the agent’s and not their customers.

    And finding an agent you trust is easier said than done.

  • Melissa Ahlers

    I am an agent who showed some clients a place in Kirkland with a 4% commission. I told them up front that I would get a 4% before we even walked in the door and would kick it back to them if they chose to buy there so that there would be no weird motives. In fact, that could have potentially incented them to buy there. Ultimately, after a good discussion on the real estate industry as a whole, their investment and lifestyle goals, they chose a different location. Most agents would rather have a happy customer…and happiness comes from transaprency of all facts and figures…

  • Melissa Ahlers

    I am an agent who showed some clients a place in Kirkland with a 4% commission. I told them up front that I would get a 4% before we even walked in the door and would kick it back to them if they chose to buy there so that there would be no weird motives. In fact, that could have potentially incented them to buy there. Ultimately, after a good discussion on the real estate industry as a whole, their investment and lifestyle goals, they chose a different location. Most agents would rather have a happy customer…and happiness comes from transaprency of all facts and figures…