Home-selling incentives give agents a nudge

SMART MOVES

December 22, 1991|By ELLEN JAMES MARTIN

Two tickets to the theater. A color TV. A four-day trip to Cancun, Mexico. Tangible gifts like these could be the answer to unloading a hard-to-sell home.

In the real estate game, they're known as "incentives" and they're usually given to the selling agent. In a slow market glutted with properties, offering such a reward will spark the extra attention needed for a quick sale, real estate specialists say.

"Isn't it human nature for a sales agent to work harder if he gets an extra reward? This is no different from an executive at a major corporation being provided a bonus or a compensation package based on the results he gets his client," says Gene Gallagher, principal broker at ERA-Gallagher & Co. in Bethesda.

To be sure, tangible incentives aren't foolproof. They can cause a sales agent to pressure a seller to accept a less-than-perfect sales contract. The agent may be so eager for the trip to Cancun that he loses his professional perspective and makes a recommendation contrary to his client's best interests.

And some real estate agents resent the use of tangible incentives. "They feel that incentives cheapen the product being sold and diminish the professionalism of the agent involved," says Karl Breckenridge, author of the book "Stay on Top in Real Estate," published by Dearborn Financial Press.

Still, even those who dislike incentives allow that they can be very effective in selling a home -- particularly one located in a neighborhood with an abundance of "For Sale" signs and a dearth of buyers. "Anything you can do to differentiate your property from another house is good," Mr. Breckenridge says.

Of course, the length of time it takes to liquidate your home depends on many factors -- including condition, location and pricing. But another key variable is the number of showings the home receives.

Incentives encourage agents to work harder to sell your property than other homes on the market. Agents usually will phone more potential buyers and schedule more appointments to see the property.

"We believe that if a property is shown 20 to 40 times, someone is going to buy it," says Mr. Gallagher, the Bethesda broker.

"Suppose you were a sales agent with six properties for sale, one of which had a Caribbean cruise attached to it. Wouldn't you make more of an effort to show that property with the cruise?" he adds.

Yet fewer than 5 percent of home sellers offer tangible incentives, estimates Daryl Jesperson, senior vice president for the RE/MAX International realty chain.

The idea doesn't occur to many sellers and others balk at the cost of an incentive.

"It's hard for sellers to get over the hurdle that they have to give away a bonus to get something they dearly love. Selling their home is a very personal thing to most people -- almost like selling their dog or their children," Mr. Gallagher says.

Mr. Gallagher suggests that sellers distance themselves from the marketing process. "You should look at this as a business decision and realize that the longer you hold the property, the more out-of-pocket expenses you'll have to pay to carry the house."

For those sellers interested in providing such incentives, realty specialists offer these pointers:

* Offer your incentive to any agent who could sell your house.

Although most home sellers engage the services of a "listing agent" to market their home, it's very possible for the property to be sold by a "cooperating agent" who learns of the property through the Multiple Listing Service. The MLS allows agents from competing firms to share listing information. Make an incentive available solely to your listing agent and you could weaken its impact considerably, Mr. Jesperson says.

* Don't be bullied into accepting a contract by an agent eager to gain your incentive.

"Remember you always have a right to reject a contract. You have to stand back and resist the pressure that can come with offering an incentive," Mr. Jesperson says.

* Be sure that the incentive you offer is handled through official channels by the realty brokerage with which you're listing your home.

Often there are tax implications for the agent who captures the reward, says Dorcas Helfant, president of the National Association of Realtors. Also, agents must follow state licensing regulations that relate to tangible incentives. A good way to be sure the game is played by the rules is to have your incentive handled through a realty firm.

* Don't inflate the price on your home to cover the incentive's cost.

Hoisting your price above competing properties will fool no one, least of all your best prospects. It's an especially poor strategy if your home is a virtual carbon copy of others on the market -- making comparison shopping easy.

"Inflating the sale price today is simply naive," Ms. Helfant says.

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