Yesterday’s The Wall Street Journal article – “Do Real-Estate Agents Have a Secret Agenda?” – reported on the well-known, but often undisclosed, practice of sellers offering buyers’ agents additional incentives to close a deal.
Sometimes when properties, typically new developments, are not selling as fast as the builder had anticipated they offer additional incentives. Similar to a car manufacturer’s “0% financing” or “Friends and Family” programs, sellers will offer buyers incentives such as a granite counter upgrade package, free closing costs or a year of free homeowners” dues.
Other times the incentives are hidden. Just like when you pay the invoice price on a car, the dealer still gets paid. The same thing happens in real estate. As the WSJ article points out, there are some pretty serious incentives being offered to the buyer’s agent such as 10% commission as opposed to the usual 3%.
Redfin is just as transparent about incentives as we are about commissions. If the incentives are monetary, we share them with our clients the same way we share our commission –a two-thirds refund to our client. If the incentive is something else like a vacation or free homeowners’ dues, we directly pass them along to our client.
Jing Feng, a Seattle-area, first-time homebuyer used Redfin to purchase a condo this summer. She used the $6,000 commission refund to pay down her closing costs. A week later, we received a $2,000 bonus check from the builder and cut Jing a check for two-thirds–an extra $1,334. Jing was shocked and excited to hear she was getting even more money back from Redfin that she decided to go to New York City with friends this weekend. She just called form Fifth Avenue and told me, “I just bought a coat that I wouldn’t have been able to afford otherwise.”
Starting today there is a new category in our local blogs (San Francisco and Seattle) called “New Construction” that will highlight any promotions we are aware of. If you are a seller that has an incentive and want to get the word out, please let us know by e-mailing firstname.lastname@example.org.