From the Trenton Times:
Considering all the noise consumers made in recent years about home sale commissions being too high, the last thing you’d expect to see is people throwing even more money at real estate agents.
But apparently, that’s exactly what is happening.
In the face of declining home sales and rising inventories, real es tate brokers and agents in New Jersey and across the country are reporting that desperate sellers are upping the ante and offering them everything from cash bonuses and higher commissions to elaborate lunches and raffles to drum up interest in their homes.
The idea: dangling a bonus in front of agents, theoretically, will give them more reason to push your home over others in the stock pile.
During the housing boom when sellers called the shots and multiple offers rolled in soon after homes were listed for sale, the idea of lur ing buyers’ agents with perks was practically unheard of. But bonuses ranging from $1,000 to $25,000 to agents who find a willing buyer are now fairly routine, according to data found on multiple listing services.
They said the number of sellers offering selling bonuses has risen dramatically in recent months be cause those homes tend to sell faster.
“As a Realtor, you are not sup posed to bring clients to a home based on commissions or bonuses, but I certainly see the listings that pay out more commissions sell be fore the listings that give lower commissions,” said Linda Lordi. “They get more showings. It’s just a way to bring attention to a property. There is so much inventory on the market now and you can’t possibly show everything and this sort of thing brings it to everyone’s attention.”
In a typical transaction, most traditional brokers charge commis sions equal to about 5 percent of a home’s sale price, with half (2.5 percent ) going to the seller’s agent and the other 2.5 percent going to the buyer’s agent. But these days its not unusual for consumers, who paid an estimated $65.7 billion in residential real estate brokerage fees in 2005, to pay 3 percent, 4 percent or even 5 percent in commis sions to a single agent who brings in a much-sought- after buyer.
For his part, Les Newlands, senior vice president of sales and marketing at West Long Branch-based Foxtons, a low-commission real es tate company, said he is distressed by the trend — especially because buyers typically don’t know what incitements are being dangled in front of their agents.
Newlands likens the practice to bribing Realtors to show some properties over other properties and said his company discourages sellers from engaging in the practice.
“Realtors have a fiduciary responsibility to show buyers any and all properties that meet their criteria, regardless of the commis sions being offered. If they do their jobs in terms of providing maxi mum exposure to the seller’s home, then buyers will know about that property.”
The good folks over at the New Jersey Real Estate Report (read: me), decided to do a little data digging to see just how commonplace these incentives are. After going through 4 records I had just had to share some of these with everyone here.
These go from the basic:
$$$$$3,000 bonus to S.A.
$3,000 BONUS TO SELLING AGENT AT FULL PRICE.
$5,000.00 *BONUS* IF IN CONTRACT BY 11-15-06- SHOW M-F 10:00-6:00 S & S 11:00 TO 3:00- MUST SELL
To the more interesting:
$10,000 AMERICAN EXPRESS GIFT CERTIFICATE BONUS TO SELLING AGENT.
$6500 commission + $10,000 bonus to selling agent – must have $5000 deposit and credit report!
$10,000 bonus to selling broker. Call listing agent Nanette 201-###-#### for more details
To the jaw droppers:
$20,000 BONUS to SELLING AGENT for full price offer!!!!! $10,000 towards the BUYER’S CLOSING Costs
$25,000 BONUS at closing to selling agent
$25,000 bonus payment to selling agent / broker for acceptable offer.
Ah heck, I might as well just put them all in a spreadsheet and let you take a look. After all, what good is having this data if you can’t share it..
North Jersey Incentives Spreadsheet (Large XLS)
jb (aka Grim)