Agents And Incentives Question
I have an agent working for me on negotiating a piece of property with the listing agent. Is it legal/ethical to offer him bonus money for good negotiating? For instance, I put an offer in for $600k, asking price is about $660k. Seller didn't even counter. I was thinking about offering my agent $1k for a successful buy at $640, $2k for $630, etc... give him some incentive to work the listing agent for a counter. Is this typically done?
-j
Sure. Your salesperson will likely have to split whatever "bonus" you give him/her with his broker unless the broker agrees otherwise. Nothing unethical about this. Its a private agreement between you and your salesperson.
The reality is that your agent 99% of the time just gives your offer to the selling agent who presents it to the seller. Your agent doesn't negotiate with the seller except via the seller's agent.
I don't know what the laws are in your state, but in NY, if the agent is yours ( a buyers agent), then this is ok. If the agent found the property through the MLS and he intend to collect a fee ( i.e. a commission) from the seller, then he/she is practicing dual agency. There is nothing wrong with this as long as he reveals this to the seller. Even though the agent is not the listing agent, he is in essence a subagent of the seller, his client. You are merely the customer in this case.
That's correct! As long as this inst a 'Dual Agency" situation, this would be a great idea for you.
Also that was a good point by sammyvegas. However, it is important to understand the if your agent can sell the price offered to the listing agent, it may be just as good. The owner is sure to ask the agent for suggestions, and if the agent said that ......................
"yes, this is a lower amount than we were looking for, but based on the influx of houses in this price range, or the soft market, etc, you should consider this offer as significant!" It may work in your favor!
Best of Success!
BAMZ
Another word of caution for you: If you give your agent a bonus of $$$, just make sure it's payable to his RE Company and NOT him/her indivually.
Since ALL his income from RE sales & consulting belongs to that company and its broker, if you did give the agent any money paid to him/her, you could be a party to any effort to circumvent that broker or company and that broker's lawyer, if he/she ever learned you'd paid the agent directly, might include YOU in a lawsuit for damages.
These are fun deals for the lawyer, because he/she can name both the agent and his customer in the lawsuit and then let them fight each other over who owes the lawyer's client.
Why not do your own negotiating with the selling agent? There is nothing stopping you from picking up the phone before your agent sends over the contract and discussing it with the selling agent.
Nobody is ever going to have as personal attachment to negotiating the deal successfully as you are yourself.