When Do Real Estate Agents Offer a Selling Bonus?

More and more, Realtors are seeing listing agents offering bonuses to buying agents if homes are placed under contract by a certain date. Bonus opportunities are not permitted to be mentioned in the “Public Remarks”. Rather, they can only be found in the “Broker’s Remarks”. This is a seller’s market and, with such a depleted inventory of homes, why are agents offering a selling bonus?

If you peruse the Multiple Listing Service, you will find offers in the Broker’s Remarks that read,

“$2500.00 bonus to the agent who has this home under contract by August 31, 2019.”

Generally, these bonuses are paid by the seller. But it is becoming more common that the bonuses are being paid directly from the listing agent’s commission.

Why?

Listing agents are under a tremendous amount of pressure from their sellers to get their home sold rapidly that many sellers have unrealistic expectations of the selling process. Sadly, the rise in popularity of HGTV has given the general public the impression that homes sell within twenty-four hours of being placed on the market – for above list price, and in a multiple offer situation. When that doesn’t happen, listing agents find themselves backed into a corner and are forced to either “think outside of the box” or be terminated for non-performance.

There are a variety of additional reasons as to why bonuses are being offered:

• The sellers need to relocate quickly
• The house has sat idle on the market for too long
• The house failed the home inspection or appraisal
• The commission being offered to the buyer’s agent is minimal
• The seller/agent are overzealous in their marketing approach

“Who gets the bonus money?”

The bonus money can be disbursed one of three ways, depending upon the brokerage.

1. The broker could allow the buyer’s agent to have the full amount in addition to their regular commission split
2. The broker could keep the bonus money
3. The broker could split the bonus based on the commission split arrangement with the agent

For example, if the agent is on a 50/50 commission split, then the bonus would be split the same way. Sadly, when agents are interviewing brokers, no one thinks to ask about transactions involving bonuses nor have the agents even been schooled to do so.

One final consideration about the word “bonus” where the Multiple Listing Service is concerned–Agents may not use the word bonus in their Public Remarks when describing a property. For example, “This home includes a bonus room that could be used as a study”, “A separate two-car garage is an added bonus for car enthusiasts” or “The brand-new built-in swimming pool is a bonus for the new owners”. The Multiple Listing Service automatically flags that word under the assumption the “bonus” being described has to do with money. The agent will have a set period of time to rephrase the description or be required to pay a fine.