Should You Offer A Selling Agent Bonus When Selling Your Home?

This is another one of those topics where there are plenty of varying opinions however, for the sake of this article I’m going to take a look at it from purely a data-driven standpoint which, perhaps, is a little more objective approach.  While it’s not that common, especially in a sellers market like a huge chunk of the St Louis real estate market has experienced for some time now, there are currently just 185 active listings in the St Louis MSA offering an agent bonus so just a tad over 1 percent of the 15,546 active listings in the St Louis MSA. So, it’s pretty easy to establish that, currently, agent bonuses do not appear to be that common or popular.

But, do agent bonuses work?  Will my house sell faster, or for more money?

So let’s look at these questions now, all valid questions a seller may ask or consider when contemplating whether or not to offer the selling agent a bonus.  To do so, let’s again look at the data.  Since we have already identified the fact that listings with agent bonuses are a minuscule part of the overall supply of listings, it is really hard to do an “apples to apples” comparison of those listings with a bonus versus listings without, since the latter dwarfs the former in size as well as depth and breadth of market coverage, however, I’ll do my best.

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First, let’s stick with the St Louis MSA as a whole and see how things look.  As the tables below show, there were 36,734 homes sold in the past 12 months that did not offer an agent bonus.  These homes sold in a median time of 26 days, for a median of 96.88% of their original list price (98.36% of the list price at time of sale) and for a median price of $114.39 per square foot.  There were just 312 listings offering an agent bonus in the St Louis MSA sold within the past 12 months and those homes sold in a median time of 81 days on market, for a median of 92.27% of their original list price (97.38% of the list price at time of sale) and for a median price of $96.75 per square foot.

So, to summarize:

  • Listings without an agent bonus sold in 68% less time, received over 4% more of their original list price and sold for more than 18% more per square foot than listings with an agent bonus.

Clearly, from the data here, agent bonuses didn’t appear to benefit the sellers in any way.  Part of the reason I believe there is such a disparity here between with and without bonuses, is the reality is, (now I’m getting subjective) if an agent bonus is being offered it is usually an indicator of an underlying problem…an over-priced listing, poor location or condition, or something else that is impeding the sale.  Rather than wasting money on an agent bonus, I would suggest the sellers either apply that money toward fixing whatever the issue is with their home, including the list price.

 

Current Listings in St Louis MSA Offering Selling Agent Bonus

Current Listings in St Louis MSA Offering Selling Agent Bonus

Current Listings in St Louis MSA

Current Listings in St Louis MSA

Listings Sold In Past 12 Months in St Louis MSA Without a Selling Agent Bonus

Listings Sold In Past 12 Months in St Louis MSA Without a Selling Agent Bonus

Listings Sold In Past 12 Months in St Louis MSA With a Selling Agent Bonus

Listings Sold In Past 12 Months in St Louis MSA With a Selling Agent Bonus