Residential Real Estate
October 14, 2004
Brokers Say They Don't Pay Attention To Sales Incentives
By Marilyn Bowden
With large numbers of new condominiums competing for a piece of the market, some developers are offering incentives to brokers to bring clients. But some brokers say they aren't motivated by such rewards.
"An agent is more focused on getting a client into a unit," said William Meyersohn, a top producer at Coldwell Banker who has been in the market for 38 years. "By the time you sit them down and cycle through their needs, it's not hard to pinpoint an area, and they're not going to want to look somewhere else."
Kevin Tomlinson, an agent in Esslinger Wooten Maxwell's Miami Beach office who specializes in condo sales, said an escalating package for brokers who sell multiple units is the most common type of incentive.
"It might be that after five sales, you get a three-year lease on a Jaguar," he said, "or after the fifth or sixth sale in a building, you get an increased commission retroactive to the first sale."
"But does it work, No. The reality is if I've got a client who wants to buy at a project offering a 3% commission, I'm not going to lead him to one offering 4% so I can make more money.'
Incentives, Mr. Meyersohn said, have to do with availability. They tend to arise in oversupplied markets.
"Right now, that would be Dadeland and downtown," he said. "Coral Gables will never be oversupplied, and when developers are in the driver's seat, they don't need to offer too many incentives."
Those who have multiple projects and want to establish rapport with brokers may offer incentives on an individual basis, Mr. Meyersohn said, but they won't publish them.
'For agents who sell to investors, there may be some benefit," he said, "especially if they do multiple sales."
Patrick Orloff, a principal at Prudential Florida WCI Realty's Orloff & Raymond International Group, said, "We don't do that. We're loyal to our customers. We have to be because our customer base is repeat Latin American investors who buy many units per year."
"We have to rent or resell them for our customers. So if we brought them into something that was not a good project, we would have a problem when it was finished."
Mr. Tomlinson said developers tend to offer concessions in the second phase of sales, when the initial frenzy has died down.
"It's fiercely competitive out there," he said. "The most interest comes in the first two weeks. Developers shun brokers during that time. But once the flurry is over, then they go to the broker community and offer them incentives to sell the less-desirable units."
Lenders are putting safeguards in place to prevent a surplus of condo flipping, he said. "In some projects," he said, "units were selling two and three times before the building was even up. So the banks are reining in developers to keep them from selling blocks to investment groups and restricting the buyer's rights to resell before completion."