Buyers must know if their agent is eligible for a higher than agreed commission. It’s the law in North Carolina.
And we local Realtors in the Raleigh-Cary, NC, area are seeing more and more of these promotions in our email Inboxes:
Lennar March Mania Slam Dunk Savings Event! Up to 6% Commission!
I see nothing wrong, unethical, illegal, or devious about these marketing promotions. It is a promotion by the builders to draw traffic, and one more way to get eyeball exposure in the real estate community. But, I do wonder if some agents drag clients out to homes that pay bonuses and high commissions to cash in, i.e., in their own self-interest.
The law states that you and your Buyer’s agent will agree on a base commission expected and that the agent will inform you if a home pays a higher commission before you are in a position of making a decision on writing an offer for the home. That disclosure of Additional Compensation must be in writing at time of offer and, of course, the North Carolina Association of Realtors has given us a form for disclosing Additional Compensation to our clients.
Buyers, you need to know if you are seeing selected homes only because the commission level enriches your agent, or because the homes fit the description you gave your agent of your desired home to purchase.
This is a great reason to formalize your relationship with a Buyers’ Agent early on. Set the expected compensation. Be routinely informed on any potential Additional Compensation. And don’t sign an Agency Agreement that doesn’t allow either side to terminate, “No Fault.”
You then have engaged an agent to work as a fiduciary for you, to place your interests ahead of their own. Be proactive. Make them toe that line, and assure that you are seeing homes that meet your needs and will serve YOU rather than your agent.