Some real estate agents earn thousands of dollars in bonuses or free trips on top of a commission. Home buyers often aren't aware of the incentives and potential conflict of interest.
The problem with agent incentives is that consumers may not know their agents have a potential conflict of interest when they show and discuss certain properties. Of course, agents can't make buyers want to buy an unsuitable home, and most buyers have strong ideas of their own. But agents can have a big influence on which homes consumers see.
Builders are offering bonuses of as much as $15,000, trips to Hawaii or jumbo commissions of 10% or more for the buyer's agent. Some sellers of previously occupied homes also use bonuses to draw attention from agents. The bonus "has certainly piqued interest when agents realize it's there," says Cindy Souza, an agent representing the sellers.
It's less clear that consumers realize what's going on. Bob Poirier, an agent at VIP Realty Group in Naples, FL, who calls himself "Boston Bob," recently earned a 7% commission for finding the buyer for a condo that was listed by the brokerage firm where he works. He says he didn't discuss that big commission with the buyers. "That's just something nobody ever discusses with buyers," Mr. Poirier says.
Some agents argue for disclosure. "Ethically, if you are representing the buyer and taking the buyer to a place where you are getting an increased commission, the right thing to do is tell them," says Danny O'Sullivan, a senior vice president with Long & Foster Real Estate Inc. in Fairfax, VA.
Source: The Wall Street Journal, November 9, 2006
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