New York City luxury agent and Bravo television star Ryan Serhant found a straight forward way to drum up interest in a New York City development: $50,000 cash. Since announcing the offer, the hefty cash prize has shined a light on agent incentives, a topic about which real estate agents are currently split.
Serhant announced the incentive in a post on Instagram four days ago. The first broker to bring him a new buyer to 196 Orchard Street, a development in New York City’s trendy Lower East Side neighborhood, would get a $50,000 bonus on top of a standard commission, he pledged.
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I’m giving $50,000 in cash to the first broker in 2020 to bring a new buyer to our amazing Lower East Side new development, @196orchard. This is a bonus on top of a standard commission. This is for the sale of a 2 bedroom or larger. Watch the video above for more details, go to 196Orchard.com, and head to my YouTube channel for this week’s Vlog about it that just went live. We’re getting crazy in 2020. Ready? Set. GO 🔥
Serhant, a reality television star on Bravo’s Million Dollar Listing New York, in addition to working as an agent affiliated with NestSeekers International, is no stranger to drumming up interest in new ways. Just a few days earlier, he announced a contest wherein he plans to pay one New Yorker’s rent for the entire year.
But Serhant’s announcement of a massive incentive, which was first reported by The Real Deal, on top of a buyers’ broker commission also shined a light on the topic of agent incentives, which are legal in New York City and common for new developments, Nikki Beauchamp, a real estate agent at Engel & Völkers NYC and occasional Inman contributor, told Inman.
“They often ebb and flow with the velocity of the market and there are offerings to the buyer or the buyers’ broker,” Beauchamp said. “It is bringing attention to a new development that some may have overlooked and it may make people revisit it.”
“In the last year I have seen more developers offered incentives to buyers including offering to pay transfer taxes, or common charges for certain units for certain periods of time,” Beauchamp added. “Also, other developers have offered incentives for specific time periods to brokers — I believe I remember when [Greenwich West opened] over summer an additional bonus for contracts signed to brokers who I believe attended a particular event.”
Not all markets are the same, however. In New Jersey, incentives have to come from the seller and not the agent or brokerage, according to Tiffany Kjellander, the owner and CEO of Better Homes and Gardens Real Estate PorchLight Properties.
“In New Jersey, it is not legal to incentivize from the brokerage perspective,” Kjellander said. “So I imagine Serhant is not writing a check to the agent, more than likely coming in the form of a cooperative split shift. I think its an important distinction.”
Despite that distinction, Kjellander believes you need to do whatever it takes to get the property sold.
“My job is to get the most exposure for my seller clients, in order to get an offer for the most amount of money in the shortest timeframe that meets my client’s needs,” Kjellander said. “If my seller is able or comfortable incentivizing — right on. Let’s work together to get the job done.”
Still, not all agents are thrilled with the idea of such a significant incentive, including Shaun Simpson, a Realtor with Cutler Real Estate.
“It’s fair if disclosed (differing in different states and associations) but does concern me when it’s significant,” Simpson said in a comment on Inman Coast to Coast. “If something goes wrong, does it open you up to litigation with the perception that you are steering a client due to fee? Much like not showing a property due to compensation offered. I’d make sure to document communication.”
The discussion also comes at a time, in general, when buyer broker commissions have been a hot topic in the industry, especially on the heels of two class-action lawsuits aimed at changing the way buyers’ brokers are compensated.
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