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Real Estate Fight Club

Jan 2020

Episode 14: Should You Offer a Buyer Agent Incentive on a Listing?

January 2, 2020

In Episode 14 of the Toe-2-Toe podcast, hosts Jenn Murtland and Monica Weakley duke it out over whether you should offer a buyer agent incentive on a listing. Hear why both hosts think this is an ill-advised idea. Then hear some great tips on how to handle condition issues and why the real target is the buyer, not the buyer’s agent.

Episode Highlights: 

  • Should you offer a buyer agent incentive on a listing?
  • Jenn thinks that is stupid. She doesn’t think you should even offer buyers incentives.
  • An incentive is the value of the house which is the price and the condition.
  • What if someone added a luxury vehicle like a Ferrari?
  • Jenn says that's just weird.
  • It's not a marketing field online.
  • Instead of offering a buyer incentive, adjust the price of the home.
  • A Ferrari is not really going to entice someone to buy the home.
  • Monica asks Jenn if she looks at the buyer’s agent percentage.
  • Monica doesn't look. Jenn looks.
  • If the percentage is lower than 3%, Jenn wants her clients to know they are on the hook for the rest.
  • Monica doesn’t look because she doesn’t want it to persuade her either way.
  • Monica also does not hold her clients to the full 3% in those circumstances.
  • Jenn feels that this situation is similar to when carpet allowances are put into listings. Just replace the old carpet.
  • We have cookie-cutter homes because the majority of people like the majority of the same things. This is a reason to install neutral carpet.
  • Dirty carpet can be a condition issue that you can offset with price.
  • If you paint a house you can paint it for a few thousand dollars. If a buyer sees your house and sees it needs to be painted, they're going to take off five times more.
  • Sometimes people have different motivations for selling. That's where agents come in.
  • You're doing a disservice if you don't know all the ways that you can sell a home.
  • Offering a buyer's agent incentive is not a way to sell a home in their market.
  • Monica thinks that what they're trying to do is make their house be appealing in some way.
  • Many people don't read all the comments and they should.
  • The target is the buyer, not the buyer’s agent.
  • If you're offering something like a carpet allowance, remember that it's hard for retail buyers to imagine the new carpet. Consider including carpet samples at the house.
  • When Monica was selling her house, she had a room for her dogs and the carpet needed to be replaced.
  • She offered an allowance for the carpet or offered to install new carpet in that room that they could choose.
  • Realtors they asked on Facebook felt this was not the best way to entice a sale.
  • Donna Drake provides excellent advice on this subject. When she sees this offered she writes in the contract that the bonus shall be applied to the buyer's closing cost paid by the seller.
  • It's really hard to try to figure out what people will want.
  • Jenn is always a proponent of more communication vs. less.

3 Key Points:

  1. The real incentive should be the value of the house, which is based on the price and condition.
  2. It’s often less expensive to fix a condition issue than to let condition influence price.
  3. When you consider offering incentives, remember that it can be difficult to predict what buyers actually want.

Resources Mentioned: