True or False

On top of the “payout” commission listed on MLS, Sellers will sometimes dangle an extra incentive for Buyers’ agents.

The most common (and straightforward) is simply a cash bonus, payable upon successful closing.

How smart is that ” and in what situation(s) is that most effective?

Read through the following three scenarios, and guess “True” or “False” whether a selling bonus is a good idea.

Three Scenarios

Scenario #1: the home in question is competing with lots of similar inventory (price, neighborhood, features, etc.)

Answer: True.

Especially when Buyers ” and Buyers’ agents ” are confronted with lots of similar choices, bumping the commission can be a smart way to stand out from the crowd (and presumably, generate showings).

Scenario #2: the home is overpriced.

Answer: False.

While it would certainly be nice to pay another $2,000 (or $10,000) in commission in lieu of dropping the home’s price a multiple of that amount, unfortunately, that’s not how it works.

Overpriced is overpriced, no matter how “incentivized” the agents are.

A Buyer’s agent who puts their financial self-interest ahead of their client is violating their fiduciary duty, not to mention jeopardizing their credibility if not the relationship (note: I provide my Buying clients with the “Agent Full” report on MLS, disclosing the commission being offered by the Seller, so they always know what I know).

Scenario #3: the home is especially unusual or unique.

Answer: true.

Maybe the home’s floor plan is unusual, or its decor is, or there’s something else about the home that makes it a more challenging sale (note: in Minnesota, calling something “interesting” is a dis).

Offering a sales bonus is an excellent way to raise a home’s profile, and encourage busy Buyers’ agents to: a) familiarize themselves with the home; and b) educate their client(s) about it.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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