Incentives and Inducements


Real estate professionals work to separate themselves from the crowd and attract new clients. Sometimes this means offering incentives to attract new clients or inducements to complete a sale.

Consumers should know what types of incentives or inducements are allowed, and what they can expect.

Incentives and Inducements
An “incentive” is anything a brokerage advertises, communicates or offers to the public to attract business. This includes travel miles, gifts, contests, gift certificates, games of chance or anything else of value.

An “inducement” is anything a brokerage offers or gives to a person who is, or could be, a party to a real estate or mortgage transaction, meant to assist, persuade or cause that person to enter into a particular real estate or mortgage transaction. Inducement examples include when a real estate brokerage offers to pay a buyer’s legal fees to induce them to proceed with the purchase of a particular property or when a mortgage brokerage offers to pay for an appraisal to induce a borrower to enter into a mortgage deal.

In other words, a brokerage uses incentives to attract consumers to the brokerage, and they use inducements to get a specific consumer to enter into a specific transaction or deal.

Incentives must be brokerage-wide
Any incentive must be offered by the brokerage, not the individual person. Brokerage incentives must be available to all clients or potential clients of the brokerage, regardless of which professional from the brokerage that they’re working with

That means if you see one real estate professional offering an incentive – and you want to work with a different professional from the same brokerage – it should be available to you. If it isn’t, talk to the broker.

Inducements must have broker approval
To offer an inducement, a real estate professional must:

Changes to commission are NOT inducements
Commission rates are subject to negotiation, and subject to the terms of a written agreement between brokerage and a client. A commission rate is a contractual matter and can be renegotiated at any time between the parties. An inducement is something a real estate professional offers or gives that is outside the bounds of a written service agreement. A commission reduction or a renegotiated commission is not an inducement.

Incentive Examples

Acceptable, Brokerage-Wide Incentives

Unacceptable, Individual Incentives

While these incentives may be allowed if they are actually offered by the brokerage to all clients or potential clients, the advertisements themselves could be a problem because they make it sound as if the individual real estate professional is offering them.

Inducement Examples