Buying a home is a time-intensive and complicated process. In addition to the obvious questions about your purchase or sale, there are plenty of other queries you may have, especially about showing a real estate agent your appreciation. For example, I’ve been asked if you should tip your Realtor at closing, whether you should tip the agent that shows you around a home, even if you should tip everyone at the closing meeting. So let’s set the record straight.
Should You Tip Your Realtor? This is an emphatic NO. Any money, or any gifts worth more than $25, you give to a real estate agent must, by law, be paid through the brokerage and recorded in the sales contract. You must also channel any payments or gifts made after closing through the brokerage so it can be registered as an amendment to the original contract.
Still, you may want to show your appreciation for a job well done. In this case, there are ways to do so without placing the real estate agent or brokerage in a complicated legal and ethical situation.
Should You Tip your Realtor?
There are many occasions whether you are a buyer or a seller, when you may wonder, Should You Tip Your Realtor? For example, a buyer may worry that they should tip their buyers agent. After all, your real estate agent may invest a great deal of time and money in finding your potential homes and driving you around all day to viewings.
Should you tip your Realtor at the end of a series of viewings? Maybe you should offer to pay for their gas?
On top of that, there is the actual work a real estate agent does during the purchase process. It’s a lot of hard work. Surely a little gift at the end of all this is OK?
Buyers who do not have a buyers agent or who are viewing a home with the seller’s agent may wonder if they should tip your Realtor after they have shown you a home.
Then there is the seller’s agent should the buyer be giving something to both the buyers and the seller’s agent?
How about from a home seller’s perspective?What if your agent has gone above and beyond in their efforts to sell your home and make it as easy as possible on you in the process? Yes, they are receiving a commission, but can I give them a thank you gift or bonus?
NO, NO, And A Thousand Times NO.
You should not tip your Realtor, in any way. It is neither expected or considered the standard practice. In fact, some real estate agents say that gifts or bonuses make them uncomfortable. Tips can actually cause them extra work to ensure they stay within the law and adhere to their licensing regulations.
How Do You Give Your Real Estate Agent A Tip, Gift, Or Bonus?
What if you insist on going ahead and giving your real estate agent a tip, bonus, gift, or any other token of your appreciation? Is there is a “correct” way of doing so?
Well, if you really must acknowledge your real estate agents’ hard work with a gift, tip, etc. You must do so through the agent’s brokerage. How do you do this? Well, first, we have to look at how agents and brokers work.
In order to operate as a real estate agent, licensing requirements state that a real estate agent must work under the supervision of a broker. This can happen in one of three ways:
- The agent works as part of a real estate business that has one or more brokers and multiple agents. This set up usually has an office, and the agents are supervised as if they were employees. Any process for a gift or tip giving will be clearly defined
- A smaller brokerage, or a one-person brokerage, may take on the responsibility of supervising a real estate agent. In this situation, the agent/broker relationship may be very formal, very informal, or at any point along the “formality spectrum.” In more formal relationships, the broker may treat the agent as an employee. In very informal relationships, the agent will work entirely independently and only check in with their broker for administrative purposes. The majority of agents and brokers in this situation work reasonably closely, but the agent has more autonomy than with a large brokerage. Any gifts must be reported to or given via the supervising broker.
- The agent is a broker and doesn’t need another broker or brokerage. If you do not know the difference between a real estate agent and a real estate broker, it’s like this: A broker is an agent with extensive experience who has also completed additional education, passed their brokerage exams, and met the licensing requirement of the state in which they practice. So, all brokers are also agents, but not all agents are brokers. If your real estate agent is an independent agent/broker, they have to record any gifts with their “broker hat” on, just like the larger firms.
If your real estate agent is supervised by a broker or brokerage, than any gratuity must be given via the agents supervising broker.
On the other hand, if your real estate agent is also a broker and operates independently, you can give them the tip or gift directly, and it is their responsibility to put on their “brokers hat” and record the item in the sale documentation.
Don’t Try To Get Around The Rules – Part One
Some real estate websites and forums claim you can give your real estate agent a tip, a bonus, or other gifts after the sale is complete. The theory is that by waiting until the deal is done and dusted, you are not in danger of influencing your real estate agent to take a particular action in order to receive your goodies.
This is not true. Unscrupulous or criminal clients could easily offer inducements during the sales process, which would only be given to the real estate agent after the sale was finished. For this reason, any payment, gift, or “in-kind benefit” a real estate agent receives outside of their regular commission must be recorded in the sale documentation. This applies if it is given the day before closing or, technically speaking, 50 years later.
Don’t Try To Get Around The Rules – Part Two
Many clients assume it is ok to give their agent a gift to show their appreciation. After all, if it’s not a cash tip, then you’re alright, right?
As I said previously, a gift with a value of up to $25 is permissible; anything else must go the route of every other payment – through the brokerage. This ensures that, should the need arise, the real estate agent can prove they were working without any kind of secret payment or benefit.
And in case you think you can get around that one by giving, say, five $20 gift cards, you can’t. This counts as one payment and must be recorded as such.
Oh, and another thing, you cannot offer items or services-in-kind. For example, if you run a cupcake business and provide your agent 20% off any order or free cupcakes for their open houses, this is a payment, and – you know what I’m going to say now don’t you? Must be recorded as such.
How Can You Show Your Appreciation?
A real estate agent is dependant on the commissions they receive as the result of a successful sale. While some people become repeat clients, or investors who buy multiple properties over time, the majority of an agent’s income comes from the one-off buyers and sellers. As a result, agents are always looking for new clients.
This is how to show your appreciation
Either during the process, after the sale has completed, or both, visit review sites and forums to leave an honest account of your Realtors fabulous attitude and exceptional skills. Highlight the times they go above and beyond to help you find the perfect home or buyer for you. Tell the world that this agent is someone you would work with again and that if they need a personal recommendation, you would be happy to give it.
If the agent works for a broker, find out who their direct supervisor is and let that supervisor know how excellent your agent was. In the case of a larger company, be sure also to contact the regional or even national office to sing your agent’s praises.
If your agent has a website of their own, you could offer to write a testimonial for them to publish on their site, but be careful. If you promote your real estate agent to family and friends through a personal social media account, that is permissible. If you have ever received any payments, from anyone, to post information online, if you are a social media influencer, or if you publish through a business account, you could be offering the agent an in-kind service.
If you are confused about whether or not you should tip your Realtor, the answer is always NO. If you do give any form of tip, bonus, gift or service, about the $25 gift limit, you must always do so through the agent’s broker.
If you try to circumnavigate the rules and either give something directly to your agent or give something worth more than $25 in a way designed to get past the value limitation, you will put your agent in an awkward position. Ultimately this action could put the agent and their broker’s licenses and livelihoods at risk.
Instead, let anyone and everyone know how fabulous your real estate agent is. Give out their cards or contact details to friends, colleagues, and neighbors. Write reviews anywhere a person may be looking for an agent, on real estate forums, and on review sites like Yelp.
Sharing your experience and encouraging others to sign up with your agent is all the tips you should ever consider giving.
Do You Have To Pay A Realtor If You Decide Not To Buy A Home? If you withdraw from a sale after making an offer, for a reason not covered by a contingency in your offer to purchase, then yes, you may have to pay your real estate agent if you decide not to buy. If you withdraw because of a reason covered by contingencies, then, generally, no, you will not have to pay your Realtor.
What Do You Do If Your Real Estate Agent Doesn’t Respond To You? If you have a real estate agent who doesn’t respond to you, your next steps depend on the reasons for their lack of response, whether you can contact them to discuss the issue, and how you feel about continuing your working relationship.
This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.