Bonus or Bribe?

In today's market I'm seeing "over the top" incentives to real estate agents to encourage them to bring their Buyers to see properties - primarily new construction - based on the co-broke being offered.  I've seen one builder in our area offer as much as 12% to the agent!  Yes - TWELVE PERCENT!!

Should the Buyer purchase a home based on what they want/need - or based on what the Seller is offering to pay their agent?

I believe that a Buyer should buy the home that's best for them - regardless of the co-broke offered to the agent.  That's where Exclusive Buyer Broker Agreements come in.  If you negotiate your compensation with the Buyer, then regardless of the co-broke, you know what to expect in terms of compensation.  If there is a difference between the co-broke and the compensation negotiated with the Buyer, the Buyer either makes up the difference OR you can rebate the overage to them to the extent permitted by the Lender and/or the Builder. 

Don't forget - any rebating of commissions MUST be disclosed on the HUD-1.  Any other way and you risk your license and a spell in the pokey!

These "Bonus" commissions - make that "Windfall" commissions - are in my opinion a sign of desperation on the part of the Seller, and effectively represent an attempt to bribe agents who have their eye more on their checking account than they do on their fiduciary responsibility to their client. 

For home buyers who work with The Marriott Group to buy a home in the Phoenix area we have a team policy of rebating any commission offered by the Seller over and above the amount agreed to in the Buyer Broker Agreement to the Buyer, to the extent permitted by the Seller/Builder and the Lender.  Not only does that provide a benefit to the client, but it also precludes future claims of "You persuaded me to purchase THAT home because it was in YOUR financial interest to do so".

Bonus or Bribe?  You decide.  Thoughts and comments welcome!

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If you are considering a move to Phoenix, or buying Phoenix Real Estate, you owe it to yourself to talk with The Marriott Group at Keller Williams Realty Professional Partners to determine whether Tony Marriott is the best real estate Broker in the Phoenix area to help you buy or sell a home.

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