A recent Wall Street Journal article raised the question as to whether or not real estate agents have a secret agenda in steering buyers toward properties that will put more money in the agent’s pocket.

Certainly the idea of pocketing an extra $10,000 on a purchase has a lot of appeal to an agent as does a cooperating commission as high as 10%.   But the National Association of Realtor representatives say the Realtor Code of Ethics should keep buyer agents away from steering. 

Laurie Janik, NAR’s general counsel comments that the  NAR “group’s code of ethics requires members to show customers properties that meet their needs, regardless of the compensation offered to agentsâ€?.   

And Danny O’Sullivan, a Senior V.P. for Long and Foster says “Ethically, if you are representing the buyer and taking the buyer to a place where you are getting an increased commission, the right thing to do is tell them.”  More:

And for those Buyer Agents who have had training such as is given in the ABR designation program (which is one of the courses I happen to teach), there is a strong emphasis to disclose and gain the permission of your client to accept such a bonus.
 

But one might ask the question if it is at all appropriate to accept such compensation.  Some builders are builders are offering the buyer’s agent jumbo commissions of 10% or more.  Some bonuses offered to buyer agents are premised on the condition that the buyer pays the full asking price.  Can a buyer’s agent in a fiduciary relationship with a buyer take advantage of these lucrative offerings? 
 

It seems pretty clear to me that anything that would entice a buyer’s agent to have their buyer purchase one property over another is dead wrong.  In fact, it might even be a crime.   While this may have been an acceptable enticement to an agent working as a seller’s subagent, an agent working for the buyer it is just not acceptable.
 

This speaks to the importance of a home buyer contracting with their buyer’s agent and agreeing upon a fee to be paid the buyer’s agent at closing.  Why should the Listing Broker or the seller determine how much compensation or how much additional bonus a buyer’s agent should receive?   They shouldn’t.
 

The way I see it, any compensation or bonuses offered in the transaction above the amount agreed to in the buyer agency agreement should go back to the buyer.  To quote Tom Early’s words in the WSJ article, “It’s their money�.