Realtor Bonuses....Tell Me More!

Imagine the following scenario. You have been working with a realtor you know and trust and he/she is trying to help you find a home. You have looked at home after home and finally your agent frantically calls you and says ……“I found it! The right house for you and your family. This is the one!” You see it, like it, buy it and then find out at the settlement table that your realtor not only received the commission as buyers agent for the home, but they also received a $3000 bonus the seller was offering to the buying agent. You begin to get a pit in your stomach. Did you choose the right house? Were there other homes you could have and should have seen? Did your realtor purposely steer you to this house based on the $3000 bonus they hoped to receive?

In our current market, I have noticed more and more these types of bonuses offered with current homes listed for sale. Both new home builders and existing home sales agents are using this bonus to help “reel in” the buyer. The problem in this bonus goes to the beginning paragraph of my blog. Do agents have a potential conflict of interest when they show and recommend properties to their buying clients? While an agent cannot force you to buy a house, he/she can have a large influence on your decision by their actions and/or words. “Oh you will love it here….this house is perfect for you…..etc.”

Does an agent have to inform his/her client about the bonus? The answer, believe it or not, is “no.” There is no obligation for an agent to inform their buyers in advance of the commission. However, the information will be on the settlement documents, namely the HUD-1 form. However, some buyers might not even see this nor know what it is.

Have I, Kristin Burns, ever taken a bonus before? No, not yet. However my policy is as follows:

• Inform my client of the bonus prior to any contract writing. I believe that ethically I should inform them. It is the right and proper thing to do.
  
• Offer the bonus, or a portion of the bonus to my clients if allowed by specific lender regulations.

• I will only show my clients homes that I think are right for their needs and family. To steer someone towards a certain home based what I will earn is not how I run my business.

I have walked clients through houses that have healthy bonuses attached and have recommended they look at the next house because this house is not right for them. I will never steer a client to a house that is not right for them just for a bonus. Since I make my living in the real estate business, it would not do much good to have a nice sized bonus and a dissatisfied client who would not want to recommend me to their friends and family.

A large Fortune 500 company has the following in their Business Conduct Guidelines --“Honesty is integral to ethical behavior, and trustworthiness is essential for good, lasting relationships.”At the end of the day, my professional reputation is very important to me as is my relationship with my clients. I feel it is vitally important to be upfront about any bonuses that come with a house.