Do Realtor Sales Incentives Work?

 

My gut tells me that Realtor sales incentives don’t work, based on the following, three-step logic:

1) Anything effective tends to be copied in the marketplace;
2) Empirically, home sellers (and their agents) seldom offer sales incentives;
3) Ergo, the industry consensus, at least, is that they’re ineffective.

My more considered (cynical), veteran Realtor take?

It’s hard to tell if sales incentives work, because they’re invariably offered on overpriced listings.

Call it, “sales incentive guilt by association.”

Cheaper Than Price Reduction

I certainly understand the financial logic of homeowners offering the Buyer’s agent an extra $5,000 or $10,000, in lieu of reducing their asking price $25,000 (or more).

Unfortunately, all the sales incentives in the world are unlikely to get Buyers excited about a conspicuously overpriced home.

Especially when Buyers know** that the Seller is dangling a fat selling bonus to help move the home, I’d argue that the negative association may even be counter-productive.

**Buyers’ agents are supposed to disclose to their clients how much they’re being paid (by convention, by the Seller).

Just to make sure, though, when I show properties to clients, I always provide them with the MLS “Agent Full” report, that explicitly shows what the payout commission is.

See also, “Realtor Sales Incentives: Best (& Worst) Uses“; “Realtor Sales Incentives: Too Much of a Good Thing?“; “The Limits of Sales Incentives“; “Will a Fatter Carrot Boost Open House Traffic?“; and “New Year . . . New Realtor??”



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