It just came across in an email:  "$2000 Realtor Bonus on Move-in Ready Homes"
How does that benefit my Buyer clients?  If I am given a financial inducement "or bribe" to drag them out to a new home neighborhood, am I taking them out because the property suits them, or because the bonus suits me?
Should they wonder about it?

Now, in North Carolina, it is required for a REALTOR® to disclose any compensation in addition to that predicted in the Buyers Agency Agreement.  That disclosure must be done prior to writing an offer, and preferably when initially showing the property.
We REALTORS® even have a document to document the disclosure, Form 770.
It isn't a matter of tripping over nickels and dimes, but of additional compensation in the form of bonuses, high Buyer Agent co-broke commissions, and spiffs like Ipads, points that let me build a higher commission for multiple sales or earn a cruise, or other attractive inducements.
It all seems to present great opportunity for conflict of interest for the agent.

The cure?  Bonuses and other inducements are here to stay.  So, I think it is incumbent on real estate brokers to be transparent regarding their compensation, comfortable in discussing it, and willing to answer client questions regarding compensation. 

This consumer-oriented rule was put into place to protect the client, to allow the client to be informed regarding their agent’s level of compensation in real estate transactions in North Carolina.
This rule was made due to the possibility of agents neglecting their fiduciary duty to their clients, by steering clients to homes where Sellers or Listing Agents are offering the most money to Buyers’ Agents.

This new rule pertains mostly to Buyers’ Agents, but can also pertain to Listing Agents in some circumstances.

When a North Carolina agent is engaged by a Buyer, the parties will agree on the level of compensation the agent expects to receive in the transaction, commonly from the Listing Agent. This level of compensation is called the “Baseline.”
They will also agree whether the client will make up any shortfall if the Seller or Listing Agent are not offering compensation equivalent to the “Baseline” to a Buyers’ Agent.

Should the agent show a property to the client with a different level of compensation offered than that which is established as the Baseline, the agent is compelled to disclose the amount of compensation to the Buyer before the Buyer makes a decision on the property.
This disclosure may be done verbally at time of showing, but disclosure will be confirmed in writing prior to the time that an offer is written.

“Additional Compensation” may take many forms.
It may be a co-broke commission offer from a Listing Agent that is higher than the agreed Baseline compensation.
It may be a Buyers’ Agent bonus offered by the Seller or Listing agent.
It may be as simple as the kickbacks offered by home warranty companies for selling their warranties. This is one disclosure that is required of Listing Agents or Buyers’ Agents, i.e., additional compensation from a third party.
Additional compensation may be as intangible as the possiblilty of the Buyers’ Agent getting a free cruise holiday from a builder as a reward for selling multiple homes in a community. Prizes such as this must be disclosed to every client an agent brings to the community, not just the client who finally enables the agent to claim the prize.

Disclosure rules regulate “firm level” disclosure, since commissions and other compensation are paid to the firm or Broker-in-Charge.
This may prompt smart Buyers to ask a few questions that dig a little deeper than the legally mandated disclosure.

They might ask their “Individual Agent”:
1. Will you make more money personally if you sell me one of your firm’s listings?
2. If “Yes,” how much more money will you make?
3. If “Yes,” will you disclose this additional personal compensation to me when you show me your company’s listings?
4. Will you also show me homes I want to see that are listed with other firms?

Realtors, members of the North Carolina Association of Realtors, must now define the “baseline” compensation in NCAR Standard Form 201, “Exclusive Right to Represent Buyer,” revised 10/2008.
Earlier versions of this form are now obsolete, and NC Buyer clients under earlier agreements must be notified of any compensation for every home shown, since no Baseline was established.
“Notification of Additional Compensation” can be done using the newly introduced Form 770, also dated 10/2008.

With some huge Buyers’ Agent bonuses being offered currently, as well as Buyers’ Agent commissions as high as 6% or 8% by some builders in the Raleigh Cary area, I embrace the new rule and the transparency it will create.
Clients deserve to know if they are being steered to high agent compensation homes rather than to properties that fit their needs.