It's a Bonus, Not Blackmail

Q Our house has been listed for sale for more than four months. Early on, our real estate agent hosted an open house for real estate agents and brokers. At this meeting, someone suggested to our agent that we offer a bonus to the selling agent. Afterward, our agent pushed this idea, saying that the bonus would put our house at the top of the list for showing and that without it we would get no action. I considered this blackmail and refused. We have had only one showing since then. What is your opinion about the ethics of this practic e?

AWhenever I write something critical of real estate agents, I get many complaints that I am not being fair to that industry. So, in fairness, unless your agent has stopped actively marketing your property, I do not blame her. I believe she was merely providing you her opinion of how her industry would respond.

In today's sluggish market, many sellers offer an incentive -- a bonus -- if their house sells quickly. Some sellers will agree to pay one or two percentage points more in commissions to a listing agent, but often with a time limit. For example, I recently learned of a couple who have offered to increase the commission by two percentage points if the house goes under contract within two months, but this will drop to one percentage point thereafter.

Other sellers will offer a bonus to agents who bring in eventual buyers.

Everything in real estate is, or should be, negotiable. If sellers are prepared to offer a bonus, that is their absolute right. And if real estate agents want to show those houses to their prospective buyers, that is also their right.

But is it ethical? Is it legal? If an agent shows his client only those houses where a bonus is being offered, I believe this violates the code of ethics of the National Association of Realtors, as well as state laws that regulate the conduct of the real estate industry.

According to that code of ethics: "When representing a buyer, seller, landlord, tenant or other client as an agent, Realtors pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors of their obligation to treat all parties honestly."

The law in the District, which is similar to laws and regulations throughout the country, states: "A licensee shall exercise fidelity and good faith to a client in all matters within the scope of the licensee's employment."

Buyers are entitled to be shown all houses on the market that meet their needs -- not just those houses for which the agent will get a higher commission. If all such houses are made available for inspection, then I have no objection.

I am not sure that I would agree with your characterization of "blackmail," but I agree that the practice of offering a bonus raises ethical issues. I think you should discuss your situation with your agent and her manager. I cannot believe they are not interested in selling your house.

Find out what their concerns are and why there have been so few showings. Have you overpriced the house? Is there something you can do to make the house more presentable? If you cannot get answers to your questions and reach a satisfactory resolution, I would recommend looking for another agent.

Benny L. Kass is a Washington lawyer. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036. Readers may also send questions to him at that address or contact him through his Web site,http://www.kmklawyers.com.