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 Urban Living 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.