I always find anecdotes as interesting as studies, especially since they sometimes reveal activities that haven’t made it onto the radar screens of those doing the studies. Which is why my attention was caught by a letter to the editor in the July, 2011 edition of Money magazine, titled, “How to Nab a Buyer.”
The writer, a certain Steve from Cincinnati, says that, after three months of watching their house sit on the market with no buyer interest, they decided to offer a $1,000 cash bonus to the agent who brought in a buyer. Lo and behold, a half dozen agents appeared for showings, and they sold the house within two weeks.
It’s a sample of one, but a pretty compelling story. Of course, it then raises the question of, where were all these buyers’ agents before? Presumably they still stood to gain their usual half of the 5 1/2 to 6% commission paid by the seller, and were actively helping their clients look for a home — shouldn’t that have been incentive enough to bring them in?
But if you’re read Freakonomics, you may remember that the real estate agent’s commission isn’t what it appears to be. The 3% percent commission that each agent walks away with usually gets split with the agent’s agency, leaving only 1.5% of the selling price for the agent. On the sale of a $300,000 home, that would put the buyer’s agent’s personal take at $4,500. Given that amount, an extra $1,000 bonus might start to look pretty intriguing — perhaps leading some agents to look back over their client lists to ask, “Would this place fit any of my clients needs better than I realized?”
Such a scenario is especially plausible given that buyers are moving slowly in this market. Instead of the once-classic scenario of buyers and agents scouring neighborhoods together, with daily phone calls about what’s hot and what’s about to come on the market, I’m hearing more stories of buyers asking agents to “keep their eyes open,” going through brief flurries of househunting, getting cold feet, wondering if now is really the time to buy, going through another flurry of looking, and so on.
Have you or any other home seller you know tried this bonus strategy? If so, please leave a comment.