Builders, Florida Mortgage Brokers Offer New Wave of Incentives
A new rash of incentive programs that offer Realtors prizes ranging from higher commissions to a new Mercedes-Benz for closing Florida real estate deals is drawing criticism from many industry professionals.
At issue is whether the incentives will encourage Realtors to only push houses with rewards attached.
“If someone is looking for a home of up to $500,000 in this ZIP code and 20 homes fit that, we’re supposed to show all 20 homes to a prospective buyer,” says Pam Bozkurt, Florida mortgage broker and owner of Ocoee-based Gosselin Realty. “We’re not supposed to just show the five that have the incentives.”
Marty Hunt, a Realtor with Realty Executives Orlando and president- elect of the Mid-Florida Regional Multiple Listing Service, says choosing to show one home over another based on higher commissions or a bonus not only borders on crossing ethical lines, but could violate the agent’s real estate license.
Hunt gives any prizes or non-commission awards to his clients. “If it’s a bonus — even cash — I would not keep it.”
However, a number of local firms think the incentive programs work just fine, and they’re already seeing upturns in business as a result.
“The most successful agents are money motivated,” says Elliot Melement, franchise sales director for West Palm Beach-based brokerage firm Exit Realty Florida.
Incentives have become more of an issue thanks to the Central Florida housing market slowdown.
Home builders initially tried landing sales by offering prospective home buyers thousands of dollars worth of upgrades for free or other rewards. And now builders and Florida mortgage loan brokerages are targeting Realtors with incentives, such as higher commissions and gifts.
“It’s a really competitive market, and I don’t blame the sellers for offering higher commissions and bonuses,” says Hunt. “That’s what you do in a competitive market.”
One example is Exit Realty Florida, which this week expects to announce its first Orlando real estate winner in a statewide contest, dubbed $50-G for its $50,000 prize.
Sellers participating in the program pay a $500 fee at closing, which goes into a pool. After 100 closings in each market, agents who sold a $50-G home participate in a real estate trivia contest, and the winner gets a $50,000 check.
Further, Daytona Beach-based ICI Homes Inc. recently gave every agent who closed a deal on an ICI home a chance to win a Mercedes-Benz.
But Bozkurt says it’s ethically wrong for Realtors to push homes where rewards are attached.
Instead, she says, home sellers should drop their prices. In fact, homes are still 10-12 percent higher than they should be, thanks to the housing boom that took place two years ago, she claims.
However, Nancy Campiglia, a real estate attorney at Akerman Senterfitt law firm’s Orlando office, says Realtor incentives are legal.
Moreover, they aren’t just a practice adopted to respond to a slower Florida housing market, but also are a form of marketing used by sellers to unload homes, she says: “Even when the market is at its best, [some] sellers will offer a bonus to the selling Realtor because they want that additional marketing tool.”
