Is Your Real Estate Agent Getting A Bonus If You Buy The Home
What is an agent bonus incentive or commission incentive?
An incentive is given to the agent in addition to the commission being offered on the home. It can be tied to list price vs. offer or even a timeline. These incentives are usually found in the MLS's private remarks section, meaning agents can see the incentives, but consumers cannot.
A few examples of recent agent bonuses and incentives:
This agent wants to offer a higher incentive if the home goes under contract by a certain date, even though it was overpriced and underwhelming.
This was found in the private remarks of a listing. The agent was offering a high commission if the home is sold for the list price. If the home sellers for lower than the list price, the agent's commission will be lowered.
Incentives can also be based on quantity, especially when looking at homebuilders or companies like Opendoor, who want to encourage agents to have their clients sell their home to them instead of putting it on the market.
While we have heard of builders offering bonus incentives to agents when multiple clients build with them, we are now seeing new incentives.
This builder in Houston is offering $5,000 to $15,000 in agent bonuses if their client buys from a specific set of homes.
Opendoor offers agents an additional $5,000 for every 5th home they get their clients to sell to Opendoor.
How do I know if my agent is being offered an incentive?
Good agents will be upfront about incentives before you even tour the homes. Some even rebate the incentive/bonus (or part of it) back to their buyer to help with closing costs. A not-so-good agent will likely wait until you are ready to sign to mention this, if at all.
While state laws may vary, most require buyers to sign something stating what your agent's compensation. If not, the amount your agent receives will show up on your closing disclosure. But whether it’s when you make the offer or when you get ready to close, either way, it’s too late.
As a buyer, you need to look out for yourself and ask your agent if there are any additional incentives being offered when looking at homes.
Extra tips:
As mentioned previously, some agents don’t agree with hidden incentives and would rather rebate you a part (or all) of the incentive to help towards your closing costs (buyer rebate). Buyer rebates are legal in 41 states and occur when your real estate agent gives you a flat amount or % of their commission which typically gets applied to your closing costs.
If you discover an incentive while getting ready to close and were not made aware of it, we suggest contacting your agent’s broker (or broker in charge) and making them aware of the situation. Not disclosing incentives to you is unethical, and the broker should hold the agent accountable and potentially work with you to help cover some of your closing costs.
