Incentives

Purpose:  To help industry professionals understand brokerage incentives.

This bulletin applies to all real estate broker and mortgage broker industry professionals.

Only a brokerage can advertise incentives to the public. Industry professionals must not directly or indirectly, advertise, communicate or offer to any person their own incentives whose sole purpose is to attract business to them personally.

An “incentive” is anything a brokerage advertises, communicates or offers to the public to attract business. Examples of incentives include travel miles, gifts, contests, gift certificates, games of chance or anything else of value.

Brokerages may advertise or communicate incentives in any way.  This includes word of mouth, television, internet advertising, websites, newspapers, flyers, brochures, radio and mail outs. A brokerage incentive must be available to all clients or potential clients of a brokerage.

To determine if an offering is a brokerage incentive, the Real Estate Council of Alberta (RECA) considers the following:

What is the difference between an “incentive” and an “inducement”?
Some industry professionals confuse “incentives” and “inducements.” An incentive is something a brokerage offers to consumers to attract business. It does not relate to an actual or particular real estate transaction or mortgage deal. An inducement is anything a brokerage offers to a person who is a party (or potential party) to a real estate transaction or mortgage deal. An inducement is to assist, persuade or cause that person to enter into a specific transaction or deal. One example of an inducement is when a real estate brokerage offers to pay a buyer’s legal fees to induce a buyer to proceed with the purchase of a particular property. Another example is when a mortgage broker offers to pay for an appraisal to induce a borrower to enter into a mortgage deal.

Examples

NOTE: Only a brokerage may offer an incentive. An individual industry professional may not offer an incentive that is not brokerage-based. This example is not a brokerage-based program.

Practice tip
When a brokerage offers an incentive, the brokerage should have written policies and procedures regarding the incentive offering. The brokerage must communicate all policies and procedures to the industry professionals and applicable brokerage staff. The broker should have a system in place to ensure compliance with the incentive policies and procedures.

The policies and procedures should require a clear description of the incentive program including details, advertising, terms, conditions and exclusions.

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