Free Beer With Home Purchase!
| September 23, 2011
By now, many people in the Calgary area (and likely in other parts of the province) have read or heard news stories about the Calgary real estate associate whose seller clients are offering an incentive of $1,000 worth of beer on possession day if you purchase their home.
The Real Estate Council of Alberta (RECA) has fielded questions from industry professionals and media about whether or not this incentive is allowed under the Real Estate Act and Rules, so perhaps this is an opportune time for a reminder on what is allowed with respect to incentives.
Under section 1(1)(o) of the Real Estate Act Rules, an “incentive” is anything that is advertised, communicated or offered by a brokerage to the public or a person for the purpose of attracting business to the brokerage and includes a promise, good, service, game of chance, contest or anything else of value.
Only a brokerage can offer incentives to the public such as travel miles, gifts, contests, gift certificates, games of chance or anything else of value to attract clients to that brokerage. Incentives can be advertised or communicated in any way, including word of mouth, television, Internet advertising, websites, newspapers, flyers, brochures, radio and mail outs. There are no restrictions on how incentives can be communicated to the public except that industry members must only advertise incentives on behalf of the brokerage with which they are registered.
The bottom line is that RECA doesn’t regulate or govern sellers (or buyers, for that matter); only the industry professionals with which they work. Sellers are free to offer their own incentives in order to attract potential buyers to their property; however, anytime an industry professional wishes to offer an incentive, it must be offered by the brokerage and advertised on behalf of the brokerage. Individual brokers, associate brokers and associates are prohibited from offering their own incentives; that is, incentives whose sole purpose is to attract business to them personally.
A word of caution to industry professionals, though, if you want to suggest your seller clients try a similar marketing technique, ensure it truly is an incentive being offered by the seller – and not by you personally. That means ensuring you are not funding the cost of the incentive being offered. A seller-offered incentive should be 100 per cent paid for by the seller. And, any communication or advertising about the seller-offered incentive should be clear that it is an incentive being offered by the seller and not from the brokerage or the individual industry professional.
If you want to read more about incentives, check out RECA Information Bulletin: Incentives.
Seller incentives are not uncommon and, in fact, become more common in less robust markets. But, do they work?