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Curious How You Would Look At This. . .

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MamaBear

Thread Starter
Sophomore Member
Joined
Feb 26, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
Of course I will defer to my mentor, who is out right now, but I'm curious how you all would handle this. I'm working on a residential, I try to always find six comps, so I have a few to toss. This is not a mortgage job, we are a commercial firm and usually don't do those.

One of the comps is what I would consider to be a very good. Same lot size, near the subject, same square footage within 100 sf. The house settled for $1,970,000. When I look at the agent remarks, it states the following:

"$100,000 buyer broker bonus bonus paid at settlement only upon the successful closing of an accepted offer by the sellers (in addition to the 3% broker co-op.)"

I haven't heard back from the agent. The lucky guy was the listing agent and the selling agent! I guess it was a good year for him.

No concessions are noted and no target number is listed, but that's a pretty big chunk of money that the sellers would have parted with. Just curious what you all think and how you would handle it. . .

Suz
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
I don't believe the bonus to agent qualifies for a concession from seller to buyer.

However, it is saying something about the ethics of the agent. :shrug:
 

MamaBear

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Sophomore Member
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Feb 26, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
I was thinking the same thing, I'll bet selling that house was his top priority!!!!!
 

Paul Isolda

Senior Member
Joined
May 20, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
I would expect the seller, when the agent came and said I have a buyer and I'm representing them, said you're getting both sides already. You don't get the bonus too.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
Commissions, along with any selling bonus, are a selling cost to the seller and have absolutely nothing to do with value. Concessions can only be given to the buyer. The agents are not participating parties to the sales transaction but only act as intermediaries in bringing the buyer and seller together. They are yenta's; matchmakers. Their fees have nothing to do with the value of the real estate. If the $100,000 were paid to the seller, yes; then you have a concession. But if the $100,000 is paid to the broker or the termite inspector or the ice cream man, it has nothing to do with the transaction other than as a means of motivating someone.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
MamaBear,
First, you don't at this point know anything about the $100K other than
it was on the listing. So let's wait until the broker tells you all about the
negotiations, who paid what and what was unusual or typical. I'd also
be curious about the 'appraisal' on the comp, if the agent knows, did
the buyer know there was a $100K bonus and whether the property
appraised out even though it had the 'bonus.'
 

Mountain Man

Elite Member
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Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
There sure is a lot of wealth envy on this forum. :roll eyes:
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I have found that many of thse types of bonuses are at least partially given back to the buyer. A small bonus is OK and should not be a problem. However, a $100,000 bonus might be considered unearned enrichment and violate CA agency laws.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I have found that many of thse types of bonuses are at least partially given back to the buyer. A small bonus is OK and should not be a problem. However, a $100,000 bonus might be considered unearned enrichment and violate CA agency laws.

I assume this was in Pennsylvania, not California. If the seller willing gives such a bonus, how could it be an unearned enrichment? What about Lawyers who make millions in a class action suit where the "class" that is the subject of the lawsuit get peanuts?
 

MamaBear

Thread Starter
Sophomore Member
Joined
Feb 26, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
Don,

You are correct, the sale did take place in Pennsylvania, in a very wealthy Philadelphia suburb. Funny thing is, when I drove by to photograph the comp, there was a huge rehab going on, so someone spent nearly two million on a property that needed lots of rehab to be their dream.

Actually, I think it was Richard who said that unless it goes to the seller it shouldn't be treated like a concession. That is a good rule of thumb to follow, I never really thought about it that way.

I appreciate everyone's opinion, it was just a situation that I wasn't quite sure about.
 
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