Friday, April 27, 2007

Bonus To The Buyer's Agent - Money Well Spent?

I was talking with one of my listing clients over the weekend and the subject of offering a bonus to the buyer's agent came up.  And here's my opinion.......It's better spent elsewhere.  The explanation behind that statement is this.......If you are willing to contribute a set amount of money into the transaction we need to offer it to the individuals who have the most say in the decision.  Sure, in most cases the agent has the say on which homes they show their clients, but, of course, it's the buyer who has the final say on which home they actually purchase. 

If I am showing a home to one of my buyer clients that is offering a bonus to me at close of escrow, do you think that the buyer really takes that into account when making their decision on which home to buy?  NO!  What will affect the buyer's decision on which home to buy is if the seller is willing to contribute towards the buyer's closing costs, or something along those lines.  If it affects the buyer's bottom line it will be much more effective than if it affects the buyer's agent's bottom line.  My client's response to that was, "Well, if the agent is going to make an additional amount of money if their client buys my house, won't they try that much harder to sell my house?"  And the answer is "Yes!".  However, if the buyer feels they're getting a better deal on the house around the corner, or the house around the corner fits their needs better, then there is no amount of "selling" any agent can do to convince a buyer otherwise.

This subject is something that comes up quite often in Phoenix's ultra-competetive real estate market.  I've seen seller's offering everything from paying a portion of a buyer's closing costs, to offering cars and/or motorcycles, to offering vacations to try and entice the buyers in today's market.  Seller's are getting more and more creative.  And will probably have to continue doing so until our market gets back into a more balanced state.

-Steve Nicks