Home Buying in San Francisco>Question Details

Pc, Home Buyer in San Francisco, CA

Buyer's rebate?

Asked by Pc, San Francisco, CA Wed Feb 4, 2009

I was wondering what metrics are used in determining the rebate from an agent when buying a home. I have a friend that got around 70%.

Do you take into account how much work the actual agent has done? How would the sliding scale work?

Also what's typical these days? I've heard a few people say 50-70% but would like to know more about this.

Help the community by answering this question:

Answers

49
Patrick:
Don't let these agents lie to you. rebates are typical and part of doing business as buyer's agent these days. Any agent who claims this not to be true is simply lying to protect their antiquated business model. In cases where the buyer is doint he majority of the work and requires an agent to simply write up an offer, you should ask for at least 50% of the buyer's commission back, although 66% if a more realistic number. the agents here on trulia will always try to sell the same old story. "Would you ask for a rebate from your lawyer/surgeon/attorney?" these people are not professionals. Most do not even have college degrees.
~~~~~~~~~~~~~~~~~
I have a college degree. Of course that doesn't matter, really, it's just a red herring. I'm glad I don't practice real estate in WA or CA, though. I don't see why I should kick my own salary in to someone who is buying a home. Why? I can't remember when the last time was that anyone contributed part of their salary to me. Oh wait, yest I can, it was never.
4 votes Thank Flag Link Thu Feb 5, 2009
Keep in mind that though stats are great, they can be very misleading. Before receiving any rebate make sure you have an experienced agent for sure. Though folks make claims for past clients like maybe they got buyers into homes for half of assessed value, make sure you understand those details. There are properties where I live for sale for $10k though their assessed value is $100k. Meaning if an agent sold this home for list price they could claim they got their buyer a home for 10% of assessed value, where in actuality any agent could have done that. Also, there are home in my area that are assessed at $200k that are likely worth $300k, again outdated assessed values due to maybe the home not being sold more recently or not.

I know this is an old thread, but hopefully buyers know they don’t always get what they pay for. In fact, if folks always got what they paid for I wouldn’t have to pick my friends up from their luxury auto dealer due to new car malfunctions.

Good Luck Home Buyers!
2 votes Thank Flag Link Thu Dec 16, 2010
Every time this topic comes up the same giant leaps in logic occur. Namely, paying more commission as a seller (or receiving less/no rebate as a buyer) equates to better service... and that better service undoubtedly will secure you a better deal to more than compensate. There's really no factual basis for these claims, just supposed testimonials and anecdotal claims. That's not to say paying 'full rate' will *not* get you the best service -- perhaps it will -- but it's by no means a guarantee, nor will necessarily increase the likelihood of getting the best service.

Put another way, were I too believe what I read in these threads... if I'm on one side of a real estate transaction and want to maximize my return I should:

a) Hire a full service agent at 'full commission' (or, perhaps, at a premium) -- ignoring, briefly, the "there is no set commission (wink,wink)" mantra.

b) Instruct him/her that I will ONLY consider transactions with with unrepresented, FSBO, discount brokers, etc.

To do anything otherwise would be foolhardy, right? I mean, if I'm selling my home and a potential buyer boasting a full-service agent expresses interest -- I should slam the door in their face. Much better to wait for prospects who are using discount brokers. That way I'll be able to sell the home for considerably more thanks to incompetent/disinterested negotiations from their agent, won't have to worry about the costs of fixing up my home because their agent won't bother doing their homework, etc., etc.
2 votes Thank Flag Link Fri Feb 6, 2009
Seems that Patrick took his answer out.

During the times when buyers had to pay what ever it took to get the house they wanted pc, I could advise them on all the data and give my opinion but it is my job to carry out thier instructions and get them the house they wanted. I could discuss loan options but again I have to let them make decisions. The client is the principal, I am the agent.

I've written often about negotiating fees. If the client is doing lots of the work that goes into the complete process then they shouls pay less. The rub comes in when someone thinks they can get full service and my money. Any agent that is worth a spit is not out there buying your business. The best agents deliver VALUE for the dollars received. So while you boys are clearing out the riff raff of low value agents by only letting them get a pittance for their efforts, the rest of us are happily walking away from you low pay standard.
2 votes Thank Flag Link Fri Feb 6, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
JR. That's fine if you don't ever do it. I'm not here to tell you how to run your business.

But, as Patrick said, if I don't get that rebate then I should move on to someone who does given the current market conditions. That's the beauty of economics. I can find someone who will do it at a price more favorable to me while incurring possible risk that the service and experience I'm getting is not as good as others here proclaim theirs to be.
~~~~~~~~~~~~~~~~~

That right, Pc, you can find an ineffective agent whose only tool in his box is to give away his own salary, or an experienced negotiator such as myself who can save you more than that agent will give you. But you'll think you did well, so that's all that counts.

I've shared this before on Trulia: I used to be in publishing, and got paid by the page. My price was my price. If I had no work at all I would turn down jobs because I knew what was involved in each project and would not waste my time. I would not spend an entire month on a project where I was paid $800 when my usual fee was $2400. If I did, I would not be able to bid or accept other jobs during that time period. I also would not agree to be paid by the hour: I worked fast and clean and would not be paid less than someone slower than I. So you see, Pc, these schemes the public has to cheat us out of our salaries is not something many of us are not already familiar with. There will always be those who have nothing to offer but "cheap", and as I told my publishing clients, you get what you pay for.
2 votes Thank Flag Link Fri Feb 6, 2009
Amen to Jed, you hit it on the head. Pc, I think you would be better off looking for the best agent to represent you instead of who would be willing to give you a higher percentage of their commission.

There's the old saying, you get what you pay for. Or in your case, the best results. Stop thinking so small and look at the big picture.

I recently had a client tell me he knew many agents and some of them would be willing to split their commission. I told him the same thing Jed told you. In the end, the amount I saved him negotiating the contract saved him more than what the commission was.

I'm not putting down any other agents or brokers, but a full time agent more than likely has better skills, more contacts, networks well with other top producers, hears about listings that are not yet on the market, knows the contract inside and out, has long time relationships with home inspectors, and probably has a lot more knowledge.

Pc, what do you think the difference is between a good agent and a great agent? It's their knowledge and their ability to use that knowledge with great skill. A PROFESSIONAL!

I don't care who it is, any agent who has to "BUY" their business, it's not a professional and has no negotiating skills what so ever. I bet those agents who do give back their commission are the ones who expect you to take the first counter offer just to make the deal, or take the first offer that comes in when representing a seller, without having the back bone to fight for the sellers money.

I really don't know any other profession that where people feel they need to get back part of some ones hard earned income. I think the next time I go to the Doctor, or get something to eat, I'm going to ask for a kick back.

Good for you Pc, to at least ask what is right, or how much you should ask for. Your a decent person. The answer is $ 0.

Good luck,

Dave Tap Tapper
Realtor
Cashin Company
http://www.DavidTapper.com
415-370-7195
650-403-6252
Web Reference: http://www.TeamTapper.com
2 votes Thank Flag Link Thu Feb 5, 2009
Caveat Emptor is the way it used to be, at least in California. We are a consumer protection state and there are layers and layers set into law to protect the buyer in real estate transactions.

In many ways while everyone plays CYA the unsuspecting believe that they are covered but the lack of experience and knolwedgable oversight will leave them exposed.

Yes this is the land of the free and the home of the brave. Actually we are over-regulated and only the inexperienced are foolish enough to be brave.

I have heard that there is never any intention to be misleading. I feel misled when it is stated that you refund 100% of something when you don't. But if confusion happens although you didn't intend it yet you can benefit from it - well that's the American way and good salesmanship isn't it. But wait we are agents for principals not salespeople.

The structure of the company is a fee for service real estate brokerage - you are not a full service brokerage. Call it what it is. There is nothing wrong with the model but be honest.

To Pc point - if he signs a buyer broker contract that specifies a fee to be paid to his agent for whatever services he can negotiate for X dollars - fact is it his money that is being brought to the table for the transaction. The contract between the seller and the listing brokerage and the contract between the listing brokerage and the local MLS needs to be dealt with up front before ratification.

I don't know if it was this thread but there was a Trulia thread that was referred to the HUD for RESPA violation because rates were being discussed on line. HUD takes a very narrow view of price fixing in this industry. All commissions and fees paid to brokerages are negotiable in real estate transaction. That is the bottom line.
1 vote Thank Flag Link Mon Nov 30, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Caveat Emptor

ca⋅ve⋅at emp⋅tor /ˈkæviˌɑt ˈɛmptɔr, -ˌæt, ˈkɑvi-, keɪ-; Lat. ˈkɑwɛˌɑt ˈɛmptoʊr/ Show Spelled Pronunciation [kav-ee-aht emp-tawr, -at, kah-vee-, key-; Lat. kah-we-aht emp-tohr

–noun
let the buyer beware: the principle that the seller of a product cannot be held responsible for its quality unless it is guaranteed in a warranty.
1 vote Thank Flag Link Mon Nov 30, 2009
JR-
Most of the people here have been acting professionally. Unfortunately you are not one of them.

First of all, you went into a rant about how people (I guess like me) are trying to "cheat" you of your salary. That comes off as an accusation and is, frankly, false.

Secondly, your second response sounds borderline childish and comes off as passive aggressive.

Like I said before, I understand the sensitivity behind it but I didn't want this thread to become a referendum on whether rebates were right or wrong. Your point of view was clearly represented by Steve, Lance, Jed and David. Now I wanted a balanced response from buyers who have received rebates because they're clearly out there.

After initially posting this, I've done more research and facts are that discount agents DO exist. Lance offered a candid offer on his second response when he said the range he is familiar of is 20-66%. Beyond that, there are independent agent who also offer large rebates. More established agents seem to have more leeway in not offering them.

Clearly there are agents that do well just based on referrals and not giving any rebates. And that is fine with me. More power to them. If that's your case, more power to you. I'm not here to change the way YOU do business. But, beyond that, it seems like you don't have anything constructive to offer this thread.
1 vote Thank Flag Link Sun Feb 8, 2009
b) Instruct him/her that I will ONLY consider transactions with with unrepresented, FSBO, discount brokers, etc.
~~~~~~~~~~~~~~~~~~~
Thereby eliminating 90% of your buyer pool?

Besides, those buyer's agents offering a discount, are offering the discount to their buyer, not to YOU, the seller.

foolhardy? you betcha.
1 vote Thank Flag Link Sat Feb 7, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
I understand this is becoming a sensitive subject but I really think this thread has become a channel for many to air out your grievances.

While I appreciate that, I would like to stay on subject instead of having this become a back and forth debate about buyer's rebates. My original question wasn't whether or not people deserve buyer's rebate. The question was whether buyers were getting rebates and how much they were. So this is a question for buyers, not real estate agents.

I don't mean to sound standoffish but so far the majority of this thread has been agents either giving me the same arguments with the same analogies, agents saying I deserve $0 and other agents saying I'm trying to steal their salary. You've made your point but that's really not what I'm looking for.

If you disagree with the concept of a rebate, that's fine. Please move on. We can agree to disagree. Some of the things I've been reading here are borderline un-professionalism.
~~~~~~~~~~~~~~~
Pc, you asked a question. Apparently you don't like the answers so you're asking those of us who don't give or don't like, rebates to just not answer? LOL!
1 vote Thank Flag Link Sat Feb 7, 2009
I mean, if I'm selling my home and a potential buyer boasting a full-service agent expresses interest -- I should slam the door in their face. Much better to wait for prospects who are using discount brokers. That way I'll be able to sell the home for considerably more thanks to incompetent/disinterested negotiations from their agent, won't have to worry about the costs of fixing up my home because their agent won't bother doing their homework, etc., etc.
~~~~~~~~~~~~~~~~

If you're selling your home FSBO and someone walks up with an agent, yes, you probably should slam the door. From my dealings with FSBOs and sellers represented by discount brokers (do some still exist?) the showings were a fiasco (for the seller), with the seller demonstrating the house as if it were a ginzu knife ("we have 6 POCKET DOORS").
1 vote Thank Flag Link Sat Feb 7, 2009
Pc,

I tried to answer your question early on before this turned into a venting session, so let me speak specifically to your question. Some companies have business models that give rebates. The range I am aware of is from about 20% to 2/3rds. Typically the companies that offer larger rebates also offer less services. There is a company in the south bay that lets you pick and choose what services you want for varying rebate amounts, but to my knowledge they don't operate here.

Companies who do not have business models that offer rebates are unlikely to offer them at all, as you can see from some of the responses here. Even if the agent wants to do it, if it isn't set company policy then the Managing Broker has to approve it, and in those kinds of companies it's unlikely to happen.

In any case, whoever told you the "average" is 50% - 70% doesn't know what they're talking about. Most companies, at least in San Francisco, refuse to do it, and the ones who do don't offer anywhere near that much. I hope that answers your question.
1 vote Thank Flag Link Fri Feb 6, 2009
I understand this is becoming a sensitive subject but I really think this thread has become a channel for many to air out your grievances.

While I appreciate that, I would like to stay on subject instead of having this become a back and forth debate about buyer's rebates. My original question wasn't whether or not people deserve buyer's rebate. The question was whether buyers were getting rebates and how much they were. So this is a question for buyers, not real estate agents.

I don't mean to sound standoffish but so far the majority of this thread has been agents either giving me the same arguments with the same analogies, agents saying I deserve $0 and other agents saying I'm trying to steal their salary. You've made your point but that's really not what I'm looking for.

If you disagree with the concept of a rebate, that's fine. Please move on. We can agree to disagree. Some of the things I've been reading here are borderline un-professionalism.
1 vote Thank Flag Link Fri Feb 6, 2009
If you're purchasing your first home for $600,000, would you rather have:

An inexperienced agent who will give you 50% of 2.5% buyer's commission = $7500 one time

or

An experienced agent who can successfully negotiate a lower price, seller credit, and/or match you with a mortgage broker who will aggressively hunt for a great rate for you?

5% price savings on purchase (common these days) = $30,000 + interest savings on this loan $$
or 3% seller credit toward closing costs (allowed by nearly all lenders) = $18,000
and/or a 1/4 percent lower rate on a $480,000 loan = $100 per month of interest saved

Of course, if you have a relative in the business who will rebate some or all of his/her commission, that's great. If they're skilled enough to negotiate some or all of the other concessions mentioned here, even better.
Web Reference: http://doloresparkhomes.com
1 vote Thank Flag Link Thu Feb 5, 2009
Pc, since it's someone you trust, and they are offering you 70%, GO FOR IT!

All the best.

Dave Tap Tapper
Realtor
Cashin Company
http://www.DavidTapper.com
650-403-6252
Web Reference: http://www.TeamTapper.com
1 vote Thank Flag Link Thu Feb 5, 2009
I think the best analogy is this:

If you want to get Lasik surgery on your eyes, if you're smart you don't choose a doctor simply because they're doing it for $499 per eye. You choose them because they've done thousands of the operations and are highly qualified. Cost is, or should be a distant second.

Another: If you were investing say $750K in cash in the stock market, if you're smart you wouldn't choose your adviser simply because their fees are the lowest. You choose them because they have a track record of positive ROI.

With all the issues in this city and the high cost of Real Estate, in my opinion Buyer rebates should not be the primary focus, especially since the Seller pays the commissions. Even more importantly, you don't want someone advising you who is starving for business. We have always taken the long view in Real Estate, understanding that the sale continues long after close of escrow. Every time they turn the key to their front door they remember their agent/broker fondly, or not. I sincerely doubt that anyone giving away 3/4 of their commission is in it for the long haul.

Contrary to Nova's assertions, we routinely advise Buyers not to make offers on properties, either because there are issues with the buildings or they are priced too high. Making a decision on who to represent you on likely the biggest purchase of your life based solely on how much money they give you back is ludicrous.
1 vote Thank Flag Link Thu Feb 5, 2009
There is no such thing as a buyers rebate. Any agent that can't negotiate thier own income successfully is not capable and should not be allowed to represent the principal as a fiducuiary.
If a buyer or seller wants to work with a fee for service model so that they can pick and choose from a menu what services they want or do not want that is a vastly different business model.
If you expect an agent to be your fiduciary and deliver every aspect of agency then negotiate up front. And I say again that any agent that you can best in striaght up negotation you shouldn't want as you fiduciary.
A case in point. I saved my clients $55,000 in negotation and when asked why I responded simply it's my job. Cost me $1,650 but I represent the principal not myself. So think about how good I'd be negotiating for your money when I can't negotiate for my own.

Simple answer to your question $0.
1 vote Thank Flag Link Thu Feb 5, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
PC, I was wondering what metrics are used in determining the rebate from the job and services in your work that you provide.? JR, ever ask yourself why your NY RE commissions have slid down to the "negotiated "rates you are Now getting? Slippery slope
0 votes Thank Flag Link Thu Feb 3, 2011
Yes 2/3 is most common. You do the math. The higher the better of course.
0 votes Thank Flag Link Thu Jan 6, 2011
I will have an updated article on this matter soon.... we are in the process of getting our name more established in the Washington state area, as well as in California as laws allow for short sale and other property negotiations.

The 2 numbers that matters most in the buyer discount world is the negotiated Sale Price / List Price Ratio and the commission rebate. Please check your agent's track record and view the Redfin site (just as an example of this) to see that they claim the same thing. As of 12-17-2010, from the Redfin website... here is their claim (in the Seattle area) -

"Redfin's Negotiating Advantage: $3,594
Redfin doesn't just refund half its commission. We also perform better, too.
According to the Multiple Listing Services (MLSs) that brokers use to record deals, Redfin agents negotiate a bigger discount off list price than traditional brokers.
In 2007 – 2008, the average difference was $3,594. The average total savings, including the commission refund, was more than $10,000. "

They are a GREAT company, and I would consider working with them if I did not know that another agent could offer double or triple the savings from being an extremely seasoned negotiation expert. We are not yet licensed in CA but my advice would be to look at the SP/LP ratio and pick an agent whose TOTAL discount for the buyer, including rebate, is the highest. If you can get an agent who has a 2-3X higher negotiated sale price:list price ratio discount who is willing to give you a rebate, GO FOR IT!! My goal is to inform buyers on TRUE discounts, like TRUE APR on a loan. I would hope that you do not simply go with the biggest rebate, but spend the time to shop around and do your homework, especially on one of your biggest financial investments! Feel free to email me with any questions (I am a licensed agent in WA NOT CA). Visit http://www.vregroup.net for info about us, and God bless!
Web Reference: http://www.vregroup.net
0 votes Thank Flag Link Fri Dec 17, 2010
Hello Home Buyer,

Check out EmpoweredBuyer.com to find a full service agent in your area that offers home buyer rebates. Home Buyer Rebates aren't very different than the referral fee real estate agents will pay to a relocation company for a relo buyer.

Good Luck!
0 votes Thank Flag Link Thu Dec 9, 2010
Jed, in no way was there any intention of being misleading and not letting anybody know about the flat fee of $2,995 that we charge. In fact, it is mentioned twice in the posting and the first time it is mentioned in the same sentence that that 100% rebate that we provide to our home buyers. 100% rebate, less a $2,995 fee. I don't believe that should be difficult for most people to understand.

In regards to self-promotion - also no intention of that. I set up a link to our site, to explain our services in greater detail, but also mentioned that we do not serve the Bay Area yet.

PC - If you are looking for a company that does already provide rebates in the Bay Area, and have not already purchased your home, I know that RedFin does serve the Bay Area and they provide you a 50% rebate program.

The rebate you asked about does exist.

Good luck on your home purchase!
0 votes Thank Flag Link Mon Nov 30, 2009
OK I had to check. The previous answer is classic. Positive statement leads to self serving promotion with a link to a web site that's misleading.

I was going to cut and paste the text but decided that would be too easy.

To paraphrase; "we give you 100% of the buyer side commission" That's right folks 100%! (oh later there is mention of the $3,000 fee so it really isn't 100%) So let me think about this 100% is all of it or maybe it isn't? Do I want these mathematically challenged running my transaction?

Next that tell you to search the MLS through their web site and then when YOU find your home they will write the contract, advise you and negotiate for you. I can't wait to be in a deal with one of these people!

This is nothing more than fee for service and misleading to boot. Thanks for the laugh.
0 votes Thank Flag Link Mon Nov 30, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
PC - You are 100% correct in your research that there are agencies that give buyers rebates. HouseTech - being one of them. HouseTech, which can be viewed at http://www.housetech.com rebates 100% of home-buying agent's commission, less a $2,995 flat fee. If the buyer's agent's commission is $10,000, then yes, that is about a 70% rebate.

In regards to the recent thread about the commission being negotiated within the contract, you are also right. We have a contract that sates we will give you all of the buyer's agent commission, after we keep our $2,995 flat fee.

In regards to levels of service - HouseTech is a full-service homebuyer's agents, so just because a homebuyer may receive a 70% rebate (many times more), it absolutely does not mean that the homebuyer gets a discounted level of a home-buying service.

HouseTech is currently only providing this service to Southern CA purchases, but will be expanding to the Bay Area where are from very soon.

Diana Breazile
Director of Operations
HouseTech, Inc.
888.525.HOUSE
diana.breazile@housetech.com
Web Reference: http://www.housetech.com
0 votes Thank Flag Link Mon Nov 30, 2009
PC, sports and entertainment managers make a percentage agreed upon when they enter into their contract. It is a percentage of what the client earns. Real estate listing agents enter into a contract with their clients, the sellers. The commission they negotiate is dependant on the selling price, not on what the buyer wants to renegotiate. Managers do not renegotiate their percentage rate. Nor should agents.
0 votes Thank Flag Link Thu Nov 26, 2009
It's nice to hear that you've allowed yourself to be served by a professional. And "going behind" her would really be skanky.
The concept in #1 is a constant. Really Pc if you go forward with an agent using the MLS and the agent is from a full service house you are in deed agreing to allow them the compensation posted ini teh MLS.
As you probably already know the MLS is a clearing house of information that is backed up by contracts amongst the brokers in an area to compensate and cooperate with each other. The seller signs a contract that staes how much of the selling price they will pay the brokerages to sell the house.
Assumptions exist and expectations are in place. It is their money when the transaction closes. It is my money once I get my client into contract. I bank it and plane to use it to pay the college tuition and mortgage on my house.
If I represent myself as a full service agent and you attempt to get me to give up my income you are really talking about my money.
If on the other hand we go into the process with an understanding that you are going to do most of the work and take fiducuiary responsibility for yourself I'd tell you to hire an attorney to do the paperwork.
What is the difference between having an attorney do the paperwork and having an agent? It's the market knowledge which really takes years to build and many hours a day to maintain. It is complete familiarity with all of the disclosures reguired ini the area, it is knowledge of the common practices in the area, it is a through knowledge iof the standard of care for the transaction you are going through - it is the totally informed client.
I have a relative who has bought and sold probably 50 properties. I can't get him to use me because he firmly beleives that he can leverage the motivation of the lisitng agent to his benefit. Having seen the deals he puts together I have to agree. I couldn't do any better for him if I was his agent. If I was the listing agent I could always do better for my client because I can't be swayed by my own gain in a transaction. I work for the principal not for myself.
This is always going to be subject that agents and clients dance around a lot in the coming years. Let us know Pc when you've closed on your new home. I respect the tone you've maintained in this thread and would welcome an opportunity get a beer or walk at Crissy Feild to talk about your experience.
0 votes Thank Flag Link Wed Nov 25, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
This is a pretty old thread and I'm not going to rehash all the old arguments. But here are a few thoughts.

1) I don't agree with this concept of "you giving your money" when negotiating price and commission. Commission, in practically all professions, is never fixed and is something that is agreed upon. Sports agents make a commission % based on what is agreed to with the athlete. Sales people make a commission % based on some contract. In my experience, I've never signed a contract or legal document saying my agent will get x%. So it's not really your money in the first place, just an industry practice that is flexible.

2) I don't see the problem with rebates but I do think agents who do their job deserve to be compensated. If I find the house and do all the legwork, what work has my agent really done for me? Do they deserve to be compensated as much as an agent that did all the legwork, found the house and so on?

Anyway, I think it really depends on the situation and, as Jed showed, honesty. If I end up doing all the leg work and research and all I need an agent is for representing me and doing the paperwork, then I'm going to look for that rebate. But if I end up using an agent (and I've been working with one) and she does a good job then I won't go behind her back. In fact, because I like her and consider her honest and worth her salt, I've already pushed business her way.
0 votes Thank Flag Link Wed Nov 25, 2009
jr we all work for nothing sometimes. You just did it when those clients closed with someone else.

I had a situation where I was working with a couple and then I don't hear from them, as I run my farm for a mailing I see they bought a house in my neighborhood and were represnted by one of my office mates - who I had taken to a different listing of his. He sees me with the client, sees them again at an open house and swoops in on them.

Another situation with one of the top agents in my market - my clients make a very nice offer with a fast close on a condo. Oh, sorry he received a "very compelling offer" before responding to our offer. When it closes I see that the compelling offer was dor the same money but the buyer was represented by his wife.

According to Rudy this was a top viewed thread back in Feburary or March. The subject will always come up and as independant contractors and licensed professionals agents will always be able to negotiate. If you business model is to be discount there is business out there that wants that. There is a person on this forum who asks the most basic questions, most recently "what happens if he removes his inspection contingency - could he lose his good faith money"? These are the people that think they can go it discount and save a few grand, but are really messing up.

I remember when I was getting my SRES and we were learning about the differences of the generations. It seems to me that "greed is good" generation still believes that "what's mine in mine and what's yours is mine too". My first rainer used to say to respond to a request to help close the gap in price, that always gets down to being a commission apart, by asking which room would be mine? If I'm putting money into buying the house I expect to have a piece of it. Personally I say No. I dont give up my money. If we are at an impass I'll go back to the other party and get the price adjusted. If they say no then we will walk away and I'll find you another house that you want enough to do what you have to do to get it.

Here I am giving away my secrets. But I really don't worry about the discount houses or the fee for service menu plans. I know I can control the process better than most and I always have fully infomred clients that make thier own decisions in the transaction process and I usually win in negotation which gives me very satisfied clients.
0 votes Thank Flag Link Wed Nov 25, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Who in the heck would give 70% of their paycheck to their customer?! I just noticed today on our MLS, a buyer I had just closed on a house (with a different agent). I got paid 0%. I worked with this couple for months but they got their nose out of joint because a listing agent lied to them, and took it out on me too. So I was paid ZIP for 3 months work. Very glad I do not work in California. Me and rebates just would NOT get along. I work too hard sometimes for NO pay, no way.
0 votes Thank Flag Link Tue Nov 24, 2009
PC,
In addition to any rebate you may get from the agent, you can also get a Freebate from the loan officer who is working on your financing of the home. With new RESPA rules going into effect January 1, 2010, the yield spread premium that used to be paid to a loan officer must now be given back to the buyer as a credit toward closing costs. A vehicle to get this Freebate has been available for sometime called RateWindow. If you go to http://www.ratewindow.com, you can see how the Freebate works. It's a chance for the buyer to see everything that the loan officer sees, and then choose the best alternative by balancing rate, payment and freebate according to your individual needs. Just another way to get some additional funds into your hands to reduce the cost of closing a loan.

Bruce Bills
RealESpace, LLC
401.829.1550
Web Reference: http://www.ratewindow.com
0 votes Thank Flag Link Tue Nov 24, 2009
Yes,

If the agent did not show any house or you purchase the first house he showed you, 70% is fair.
If he showed your many homes the I would say 50%
Web Reference: http://www.adrealty.us
0 votes Thank Flag Link Tue Nov 24, 2009
PC - I'm curious how your friend was able to get a 70% rebate from his agent.

Assuming this particular agent works for a brokerage with 80/20 split on a $600,000 home purchase at 2.5% commission, the total of the commission would be $15,000 with $10,500 (70%) to your friend and the other $4,500 (30%) to your friend's agent. Now that agent has to give up another 20% to his boker, some brokers also have a franchise fee of 4-7% up front cost before split, assuming the agent is with a smaller firm and just pays the $900 (20%) split without the franchise fee to his broker, that would only leave him with $3,600 pre-tax. So how much is the agent making after tax? Like $2,100 for a $600,000 home purchase? Maybe there are agents out there think that this is a good deal in tough times like these, in my opinion however, the time and effort and the risk that the agent is exposed to is far greater than his less than 30% commission. I doubt any true professional experienced RE agents would take on such a client. I'm sure there are agents out there that will take any deals regardless, but you know the saying, you get what you pay for...If I come to you and ask you to rebate 50-70% of your hard earned money back to me, what would you say? Will you still give me 100% of your ability? Just something to think about, but best of luck to you Pc for finding a good qualified agent that will discount you that deep.
0 votes Thank Flag Link Mon Sep 21, 2009
Good morning all!

This was last weeks most viewed thread on Trulia Voices. Although things can get heated from time to time, it's great to hear everyone's perspective on the this.

I highlighted a few of you on our Trulia Corporate blog:

http://sn.im/real-estate-rebates

Everyone's Voice Counts!

Rudy
Social Media Guru at Trulia
0 votes Thank Flag Link Mon Feb 9, 2009
Wow Pc, that's the first time I've ever been accused of PASSIVE aggression, LOL. :)
0 votes Thank Flag Link Sun Feb 8, 2009
Wow. Patrick hit that nail on the thread.

JR. That's fine if you don't ever do it. I'm not here to tell you how to run your business.

But, as Patrick said, if I don't get that rebate then I should move on to someone who does given the current market conditions. That's the beauty of economics. I can find someone who will do it at a price more favorable to me while incurring possible risk that the service and experience I'm getting is not as good as others here proclaim theirs to be.

Also, in any type of industry competitors will always compete based on price. When buying a home, this is the buyer's agent's commission. Why should that be the exception?
0 votes Thank Flag Link Thu Feb 5, 2009
Patrick-

Thank you for your answer! I am getting tired of these analogies although I'm reading some new ones that I find quite amusing. :)

I have heard the same in terms of 50%/66% rebate. And I think you had a really good final point in that the more work an agent actually does, the more they should be compensated for that. I totally agree with this. It doesn't make sense to me that an agent would make a flat amount regardless of how little or much work they put in.

I'm thinking of at least having a baseline expectation of a rebate percentage and then adjusting based on how much work is put in by the agent (eg. we spend months and months looking around and she spends a lot of time with us) and how useful her contacts turn out to be.

Btw I forgot to mention to you all that I'm not buying in the SF market. I'm looking in San Mateo or Santa Clara county.
0 votes Thank Flag Link Thu Feb 5, 2009
Ugh. This thread is quickly becoming a rehash of real estate agents talking about the general housing market.

The 70% was not a lie. This is a family member (well, in law). The people knew which house they wanted so they only needed to have the paper work completed. The first agent offered 50%. The second one offered 70%.
0 votes Thank Flag Link Thu Feb 5, 2009
PC, if it was not clear, I am working with an agent on 50% rebate. But, he serves santa clara county, so not very useful to you. He is a great guy, and I can refer him if you are intertested.

Nova, I know you dont have crystal balls. But, many of realtors did tell people they had crystal balls when market was going up. And, people believed too. Poor people! Kudos to you anyway for telling the truth to your clients!
0 votes Thank Flag Link Thu Feb 5, 2009
PC - any chance your friend was stretching the truth? If that agent gave up 70% to your friend, and that agent's firm took a mere 10% off the top, that means the agent worked for 20% of the commission or about a 1/2 percent. And that's the best case scenario.... if the agent works for a full service firm, chances are their firm takes at least 30% off the top, so the agent worked for free.

Even discount firms like Redfin only rebate 50%... Zip only 20%. So I think your friend is telling tall tales. If you think they are telling the truth, I'd be curious for more details... like what kind of property did they buy, what area, how much did they spend?

In San Francisco, homes are far too expensive to take a chance on a budget agent or firm... if you make a mistake because you didn't have an experenced, full time agent, who has evaluated hundreds, if not thousands of homes, and can help you steer clear of major mistakes, help you negotiate the maximum amount in price as well as terms and conditions, help you find the best lenders, the best inspectors, help you evaluate the disclosures, etc, etc, etc.... you are risking far more than your rebate.

If you haven't found an agent who demonstrates day in and day out that they are MORE than worth the "cooperative" commission, then you should keep looking for one until you do. There simply is no substitute for experience... you don't know what you don't know until it's too late. A rebate firm agent who sits in their office simply has no comparable expertise in evaluating the properties.... and that's probably fine in the suburbs where homes are very similar to each other.... but SF is far too unique.

In addition, I can almost guarantee you that they Seller has hired an extremely good negotiator, and if your agent can't stand toe to toe with them, you will leave money on the table that is worth far more than 50% of a 2.5% commission.

So, to answer your question of "what's typical" or "what metrics".... I completely agree with everyone below... this is not typical.... not with full service, experience agents in San Francisco.
Web Reference: http://www.SFisHOME.com
0 votes Thank Flag Link Thu Feb 5, 2009
Nova. I see your view point but please give it a rest. I'm hoping that this thread doesn't become a big back and forth between you and agents defending their line of business.

I'd just like some honest answer of what's happening with buyers right now.. from actual buyers.

I'm not interested in hearing the typical selling points and analogies. No offense. I do think there is a difference between pros and beginners but that is really besides the point. When it comes down to the economics of any profession, prices are always determined by demand and supply.
0 votes Thank Flag Link Thu Feb 5, 2009
So to all of you real estate agents who say you've never had anyone ask for a rebate or say that the answer is $0: I wish you good luck in business. I thank you for your advice. Now I'd like to see if there are any other answers out there.

Like Nova, I've also heard of 50%+ rebates.

I'm not interested in debating with real estate agents why they deserve this or that. I understand you're making a livelihood and I understand your selling points. Several of you have made the same points and I've heard you. So, like I said, I wish you the best of luck but now I'd like to hear from someone who is NOT a real estate agent.

I'm interested in hearing from home buyers and people who have recently bought a home.
0 votes Thank Flag Link Thu Feb 5, 2009
Why is rebate wrong? It too is negotiated upfront. You guys telling PC its very uncommon to expect 50-70% rebate is plain lie - you may not do it, but plenty of full service brokers out there do all the time. I got unsolicited offers. These brokers too said they were teh best in the job.

And, you telling me brokers were right in not advising people of risks of buying at the top is new to me!!
Can you tell what services should a buyer expect from a full service top of notch broker like you?
0 votes Thank Flag Link Thu Feb 5, 2009
Nova,

You miss the point completely. It is a free market and you can use who you chose. It serves no one to think that I should be entitled to what my dentist makes. If I want a deal on some service or product I negotaite up front before I use the service. Hence rebate is wrong.
Blaming the agents for buyers buying at the height of the market is also off the mark. Money was available in ways that it isn't now. That my is the crux oi the situation. It wasn't agents saying buy it was Wall Street and money lenders saying here borrow. The credit pendulum swung too far, granted and now it's swung too far the other way and look at the mess we're in world wide. That isn't the fault of Real Estate agents.
0 votes Thank Flag Link Thu Feb 5, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Real estate pros,

How about instead of making 2.5%, taking my offer of 4.5% commission? Why no responses to that?

It's free market guys. Not only you get what you pay for, but also you make only as much as you provide value for.

How many of you professionals advised people to buy at the top? And, how many of them kept telling people to buy all along last year? How many of you tell people this is the best time to buy? All of you!!

PC, I have gotten unsolicited offer from realtors for full service buyers agent who offered to return 66% of their commission. Too bad I threw away the flyer.
0 votes Thank Flag Link Thu Feb 5, 2009
Hi PC,

50% is the least you can get with a very good realtor. Just post a message here on trulia that you are looking for such an agent and many people who are saying it's not possible will rush to reply you.

Not only is the market tough right now, but also things have changed quite a log. Most of the info is online and buyer does (and would better do) most of the work finding house himself.

OTOH, I can pay 2% commission out of my (buyers) pocket on top of whatever they get from seller side (typically 2.5%) if the realtor finds a house to my liking and guarantees that I'll be able to sell my house at +5% 3 years from now, failing which realtor will have to compensate me for that. Any takers from reatlors?

Agents claim to do that all the time but will never take the responsibility. So, why should I pay you the fortune (it's not the seller that gives u commission, it comes out of my pocket straight)?
0 votes Thank Flag Link Thu Feb 5, 2009
Dear Real Estate Pros,

I appreciate your feedback. However, people I know are getting rebates on the order of 50% or more due to the tough time in the market.

I understand your analogies but you're totally ignoring the market right now. Times are tough and there's a glut of real estate agents.

I'm currently working with a real estate agent and she's good but she is nowhere near a heart surgeon (in terms of expertise required to do her job). If you also consider the advent of online tools, there's even less that buyer's agents have to do. Don't get me wrong: I appreciate her work and her experience. But, as a friend said, "you'd be a fool to not ask for a rebate in this market."

Anyway, since I've heard that other people are getting rebates and both of you seem to imply that this is not the norm I'm feeling that there's a little candor lacking here.
0 votes Thank Flag Link Thu Feb 5, 2009
Pc,

First, there is no "standard" metric for a rebate program. Second, you can ask an agent for whatever you want, but it is the Managing Broker who makes the decision to cut commissions, not the agent. Most companies who do not have a rebate program in place are very reluctant to do this.

You should also recognize that most discount and/or online companies who offer high rebates are typically not full service companies and some don't offer much in terms of service at all. It's important to have someone really knowledgeable representing you if you buy here because there are a lot of issues and disclosures you don't have to deal with anywhere else.

On a $700K purchase, the average sale nets the buyer's broker about $17,500. A 50% rebate of $8750 isn't much good if you end up buying into a bad building or pay $20K, or $30K, or $50K more than you should have You're making a large investment, you want to make sure you have the best in representation.

Our company is a full service company that does everything, with a team of experienced pros and negotiators, some with construction backgrounds, and a ton of knowledge who will make sure you get the best deal and do whatever we can to make sure there are no issues with the building or unit you want.

We offer an across the board 20% rebate to all our buyer clients.

If you would like to know more feel free to contact our office and/or visit our website - http://www.fixedrateproperties.com

Best Regards,

Lance King/Managing Broker
415.722.5549 Cell
lance@fixedrateproperties.com
Foregoing aside, our business model is different than other full service
0 votes Thank Flag Link Thu Feb 5, 2009
Hi Pc, what is typical is that Buyer's Agents do not rebate commissions; at least those that offer full service. Why? Well, would you choose a heart surgeon based on his rebate? Perhaps a stretch in comparing two professions, however, useful to make a point.

Best Regards, Steve
0 votes Thank Flag Link Thu Feb 5, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer