For the next six weeks, buyers who sign contracts on homes at 235 Van Buren in the Loop will receive as much as $5,000 in closing credit, according to CMK Realty.
The deal gives buyers up to $2,500 in closing credit for one-bedroom / one-baths, up to to $3,500 for two-bedroom / one-baths, and up to $5,000 for two-bedroom / two-baths through January 31. For the same period, a special co-op incentive will give agents commissions of 2.5 percent and $5,000 American Express gift cards for secured contracts.
One-bedrooms in the 46-story, 714-unit tower currently start in the $190s. Two-bedroom / one-baths start in the $240s, and two-bedroom / two-baths start in the $280s.
Let me give you 2 scenarios:
1. an alderman accepts an incentive (bribe) to recommend and push for a zoning change
2. an RE agent accepts an incentive (gift card) to recomend a push a certain developement to their clients
Why is one concidered fraud and one considered normal business practices? These types of shady practices are why RE agents/Realtors reputations, in general are sinking, and why more and more buyers/sellers are moving to ala carte/ limited brockerages.
A buyer agent’s responsibility is to their client and there should be no undo influence onto that agent. Take for example a $300K unit. The buyers agent’s takehome is ~$4500 (60% of 2.5% buyers side; 40% to the brockerage). The $5K gift card gives the agent twice the financial reason to ‘steer’ their client to this developemnt over a similar developemnt or resale.
Of course not all agent are this unethical. But the appearance and the oppertunity is enough to cast doubt on any involved in this developement.
-appologizes for any misspellings-
Tom,
There are too many flaws in your argument to even think of addressing them all.
Start with the fact that the alderman has broken a law and the agent hasn’t. Continue to the fact that the agent’s incentive is publicly discoverable and often explicitly disclosed to the buyer and the alderman’s isn’t. Proceed to the common scenario that the incentive is often passed through to the buyer rather than retained by the agent. Take into account the fact that the incentive, when it doesn’t go to the buyer, is frequently split between the broker and the agent rather than going entirely to the agent. In any event, the final decision to purchase rests with the buyer regardless of any incentives to the agent.
The legal, ethical and practical considerations are far from what you paint them to be. What you’ve sketched is a naïve bias against real estate agents rather than a real-world problem.