This site is about the overreaching political power of the NC Association of Realtors flush with money from cashing in your equity 6% at a time, leaving you to pay for growth with property taxes, year after year, with or without cash flow. In the last few years NCAR has pumped millions of dollars into NC political campaigns at the state and local level. They have spent millions more to defeat Local Options for Local Governments with misleading ads.

Wednesday, October 24, 2007

Bonus Round

The North Carolina real estate industry has a little secret that may get a little sunshine, or not. According to the Carrboro Citizen 10/11/07 real estate brokers are not required to notify buyers in writing about bonuses paid to the broker by a seller in addition to sales commission.

The North Carolina Real Estate Commission voted last week to convene a task force to determine whether homebuyers in North Carolina are being made sufficiently aware when the real estate agent showing them a home is being offered a bonus by the seller. As the regulations now stand, agents must tell buyers of such financial incentives but are not required to notify them in writing. Many sellers, particularly homebuilders, pay a bonus to agents in addition to the sales commission.
However the task force will be comprised of "representatives from throughout the industry" so don't hold your breath for full disclosure. An earlier Charlotte Observer story (via N&O 10/11/07) notes that:
The panel was responding to an Observer investigation of Realty Place, which received millions of dollars in bonuses from home builders in exchange for finding buyers for their homes.
In more than 50 interviews with Realty Place customers, the Observer found no one who was aware of the bonuses.

The original Charlotte Observer Investigation 9/30/2007 shows:
Realty Place worked closely with the builders it had vowed to beat up. The company funneled buyers into low-priced starter-home developments, many of which are now plagued by foreclosures.

Realty Place's marketing, sometimes subsidized by builders, regularly and dramatically understated the cost of buying a home.

What kind of bonuses are we talking about in the Charlotte area? The sidebar of the Charlotte Observer Investigation goes into detail on real estate bonuses and practices in Charlotte which "are offered on about 40 percent of newly built homes and about one-fourth of existing homes". The following slideshow of images from the current Charlotte realtors' publication will give you an idea of some broker incentives beyond standard commission splits:

Next time a realtor complains about a commission, commission split or, a transfer tax, don't forget to ask about the "bonus" (or property tax).

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