Home Buying in 94025>Question Details

Michael Fox, Other/Just Looking in Atherton, CA

Can I expect the same results from an Agent who offers a commission Discount (rebate) compared to the traditional agent’s full-commission?

Asked by Michael Fox, Atherton, CA Tue Jun 18, 2013

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Times are changing; so is the business of real estate. Buyers are searching for homes online and prefer to visit open houses without an agent. Buyers are looking for an agent to bring their expertise to the critical junctures of the purchase process and don’t see much value in being driven around to see homes. With my business model I reward buyers for searching for homes on their own online. My clients don’t feel they are getting a lower level of service, because they are not! I provide all of the same services full-commission agents do except I don’t tour around showing homes.
0 votes Thank Flag Link Wed Jun 19, 2013
Why would you ever expect that?
If you bought a loaf of bread for a $1, you wouldn't expect it to taste like a $7 loaf from a bakery.
If you buy a yugo, you wouldn't expect it to drive like a Mercedes.
If you bought a Timex, you wouldn't expect it to worth what a Rolex is.

Come to think of it; you "expect" yourself till you're blue!
2 votes Thank Flag Link Tue Jun 18, 2013
In your area I would have more faith in someone who has experience understanding codes, prices as opposed to someone who has a license.
1 vote Thank Flag Link Sun Oct 12, 2014
Would you expect a rebate and the same service from your dentist or brain surgeon?
Hey you all, I don’t work with any Realtors that offer rebates, are they taxable income to the party receiving them?

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
Web Reference: http://jamessimms.com/
1 vote Thank Flag Link Wed Jun 19, 2013
no, rebates are not taxable events. the IRS has posted a ruling on this subject.
http://www.redfin.com/about/press/releases/pr-irs-ruling
Flag Wed Jun 19, 2013
1 vote Thank Flag Link Wed Jun 19, 2013
That's a great question, and I'm sure you are going to hear all kind of answers, but I've always thought this, why would any top professional in any field of business reduce their fee or commission if they are very good at what they do, and it's usually one who can't compete with other top professionals on a level playing field. Instead they need to buy your business. I mean, if they can't negotiate for themselves, what are they going to do when it's time to negotiate for you?

If you were going to the dentist to get a cavity filled and the the dentist's assistant said she would be wiling to do the work for half the cost, would you let her? No, the dentist is a professional with tons of experience and knowledge.

In my opinion, the difference between a good agent and a great agent is their knowledge and their ability to use that knowledge to their advantage. One who will also fight for your money like it's their own.

I'm sure there are some good agents who will discount their commission, hopefully you will get lucky and find that person.

Good question, and I'm sure lots of debating.

Best,

Tap
http://www.DavidTapper.com
http://www.TeamTapper.com
1 vote Thank Flag Link Tue Jun 18, 2013
MIchael,

Typically speaking, the answer is no. Most firms that I am aware of offer lower prices also offer less services in exchange for their reduction in price - see Redfin as a prime example - especially ones that offer significant discounts or rebates..

My firm is an anomaly - we are a full service firm and frequently do things for our clients that other full service firms don't, but we do offer a 10% rebate of our commission to all our buyer clients. There are lots of reasons why we do it - we've done it since the inception of the company - and happy to share those with you offline if you like.

Best Regards,

Lance King/Owner-Managing Broker
King Realty Group

lance@king-realtygroup.com
415.722.5549
DRE# 01384425
1 vote Thank Flag Link Tue Jun 18, 2013
Absolutely Not. There are discount brokerages and there are full service brokerages. Its like shopping at a Walmart where you expect poor quality at a cheap price and shopping at a Bloomingdales where you get wonderful attention, customer service and quality.

In our market it is crucial to have an active, respected agent who works hard and has an excellent reputation. Your offer with them will be seen much higher than if you are offering with a discount agent. The seller's agent knows they are hard to work with and thus run the risk and liability to the seller that the transaction could fall through. In our market, it is not worth it.

Happy Hunting.

Brett Caviness,
Broker Associate

Coldwell Banker Menlo Park

https://www.youtube.com/watch?v=JN2Kbf7q7lM
0 votes Thank Flag Link Thu Mar 19, 2015
It's hard to say, and it probably depends upon what services the discount agent is omitting from the transaction. Most Realtors work on a sliding scale and have lower or higher commissions depending upon what work is required
My personal experience has been low prices equal poor results.
0 votes Thank Flag Link Fri Oct 17, 2014
If you think about it, the fact of a buyer rebate should not affect whatsoever the service you receive. The rebate certainly does not affect the duties of a broker as required by law. You might think that an agent working for less would be less motivated. But are they working for less? Consider the traditional (non-rebate) model: a broker is paid only for successful transactions, so those transactions must effectively subsidize all of the unsuccessful transactions. A typical agent spends an inordinate amount of time with "shoppers," and that time is not compensated. Instead, they are overcompensated for transactions that actually close. If you are a serious buyer who will close a deal, you are a better client.

See, eg. http://www.propertyrevivalrealty.com/pages/14762/probuyer-bu…
0 votes Thank Flag Link Fri Oct 17, 2014
Hi Michael,

You asked a question that is going to touch a sore spot with most real estate agents, so you are likely going to get some biased opinions. Realtors have a vested interest in protecting the "no rebate" model, and ensuring that all agents follow the unspoken "rules" with respect to this. This is simply because most are afraid of a world where agents are competing on "price", and forced to undercut each other by offering a higher rebate than the next guy (i.e. "Agent A told told you they would you $1000? Well, I'll rebate you $1500 then" etc. etc.). Once this scenario happens, it would simply force many out of the industry - because the cost of doing business would be too high relative to what agents would "net" after fees, brokers splits, and now an additional rebate to the client.

At the end of the day, there are good agents that don't rebate, bad agents that don't rebate, bad agents that do, and good agents that do. The function of offering a rebate to a client does not automatically equal discount service. The quality of the agent and their level of service is really the only thing that matters.

I know agents that are on 100% commission plans, that offer a small portion of their commission back to their clients, because they don't have to pay the large broker splits that some other agents do. Instead of the inflated desk fees, advertising fees, and 60/40 broker splits that some agents pay to work for a company that has the overhead of TV commercials etc. - they simply pass a small portion of the 100% commission they earn onto their clients, and end up netting more at the end of the day than some of the non-rebating agents on traditional broker commission splits.

An example is - Agent A doesn't rebate, but forks over 40% of their commission to their broker. Agent B earns 100%, and gives 20% of that to the client. At the end of the day, often the "discount" broker is earning more money after the rebate, because they are on a more lucrative commission plan. So, it really depends on the commission model that your agent is on - if your argument is that rebaters "earn less so they will cut their service".

Choose your agent based on the quality of their service. If you can find it at a value because of a commission rebate - then all the better for your bottom line.

Hope this helps!
0 votes Thank Flag Link Wed Jun 19, 2013
Michael,

I don't think there is one answer that fits all agents. I know of agents who discount their services and still do a great job on behalf of their client and there are also agents out there who charge full commission and don't represent their clients well. So, you have to find the right agent first before thinking about getting a discount on fees. There is also more than one way to get a discount as some agents will pay for staging, moving costs etc., but not offer a cash rebate.

So, my advice is to find the right agent first who will do the best job for you, then discuss any potential discounts. You might find an agent you like and are so confident in their abilities to get you a great deal that you don't worry about any discounts.

Gary Kurtz
gkurtz@apr.com
luxuryrealestateinsider.com
650.543.1202
0 votes Thank Flag Link Wed Jun 19, 2013
Depends not all agents are created equal, therefore choose your agent with care and not by commission alone...
0 votes Thank Flag Link Wed Jun 19, 2013
When my buyers are with discount agents, I can tell. These are the buyers who are asking ?? Of me that a full price agent would have covered.
If you discount your services whatever they are, are you motivated to the best job you can? You are probably thinking why would I take less for my job? I'd still be doing g the same amount of work.
This is the largest purchase of your life: get a professional.
You wouldn't want to fly with a discounted pilot or have surgery wi a discounted doctor or even go to a discount hospital.
Discount means disregard. Don't leave yourself feeling that way!
Treat yourself to top quality, you will get top shelf service.
0 votes Thank Flag Link Wed Jun 19, 2013
I would follow up with this. Anyone who bases who they choose as their agent/broker based solely on their fees is making a mistake. With so much money on the line you need the absolute best you can get. If that happens to be a broker/company that offers better rates, even better, but you don't want to skimp on services as those are tied to results.
0 votes Thank Flag Link Wed Jun 19, 2013
You asked about "RESULTS" rather than "SERVICES", but they are linked.
Since a discount broker provides a different set of services than a full-service broker, we have to assume that the results will be different, too.
If we were to write a list of the measurable results wanted by a home buyer or seller, we could then draw a line from the broker's list of services to each desired result. With a full-service broker, we'd see that there is a specific service available to achieve just about any result. With a discount broker, we'd see that many of the desired results would have no line to a service that could support achieving it, therefore those results can't be achieved.
In short, if you want fewer results, go with the discount broker who provides fewer services.
0 votes Thank Flag Link Wed Jun 19, 2013
Services produce results, right? The question a little more defined is can I get the same result (the purchase of a home for my family) with a discount broker verses a traditional Realtor who keeps all the commission money? Who doesn't want to save a buck?
Flag Wed Jun 19, 2013
Sadly, the level of service between agents varies considerably. I'd suggest you interview agents and ask questions about our previous deals. Talk to potential agents and judge your comfort level with them and their length of time in the industry.
0 votes Thank Flag Link Wed Jun 19, 2013
Are you buying or selling? The commissions arrangement is quite different for listing/selling agents. Anyway, it depends on the agent. The best in the business are usually not discounting...
Web Reference: http://talisrealestate.com
0 votes Thank Flag Link Tue Jun 18, 2013
This question says you are home buying not home selling. The Seller pays the commission not the buyer so what are you complaing about?

Susan Penn, PA, SFR, CDPE
EWM Realtors® | A HomeServices of America Company | An Affiliate of Berkshire Hathaway
2000 Main Street, Suite 103 | Weston, FL 33326
T: 954.306.7337 | C: 954.557.5993 | F: 954.515.0200 | penn.s@ewm.com
0 votes Thank Flag Link Tue Jun 18, 2013
I think real estate commissions are negotiable. Regardless of local customs, almost all real estate fees are up for discussion. Some agents will agree to a fee reduction right off the bat or some may not be. A top-producing agent who closes 100 transactions a year is paid more, a higher split, than an agent who closes one deal every couple of months and they are the one who will basically not open for negotiation. As a buyer, one should always try to negotiate the commission. advancewindowsanddoors.com
0 votes Thank Flag Link Tue Jun 18, 2013
There is a phrase that said "you will get what you pay for" which it's always true!
Further more if an agent compromise on his own money that he put in his pocket
what it's make you think that he/she will not compromise on your money? instead
to negotiate on your behalf and get you the best deal...
0 votes Thank Flag Link Tue Jun 18, 2013
Michael,
There is no hard and fast answer to that. Some agents advertise a discount and some will give it if you ask. Some discount brokers offer more service than others. Some full service brokers give you the moon and some give no more than a discount broker.

If I were a buyer in this market I would look for an agent who can get offers accepted and then listen to that agent's advice. This is a tough market for buyers and getting an offer accepted to so hard you need every advantage you can get.

If I were a seller in this market I would look for an agent who I would trust with my money and reputation. Any agent can get offers on a house in a seller's market, but there is a lot more to selling a home than getting offers. If you can not trust the person you are working with to look after your best interest than move on. There are many ways that your interest can be compromised from having the medicines in your bathroom stolen to being pressured to accept an offer where your agent gets both sides of the commission and you do not get the best advice and possibly price and terms.

So I would suggest you interview several agents and look at what they can do for you as well as how much you can trust them and then discuss money.

Marcy Moyer
Keller Williams Realty Palo Alto
marcy@marcymoyer.com
DRE 01191194
650-619-9285
Web Reference: http://www.marcymoyer.com
0 votes Thank Flag Link Tue Jun 18, 2013
Hi Mike,
Just remember that you get what you pay for. If they are offering you a break on commission you need to ask what you are giving up in the service that they are providing. Typically how this works is the less you pay the less they are going to do. They might not host open houses now and in some programs they want you to field all calls and set-up the showings yourself. Hope this helps and good luck with the sale of your home.
0 votes Thank Flag Link Tue Jun 18, 2013
Of course you can EXPECT it, but don't you wonder why someone who does good work would want to be paid less?

We all want to believe that there's a Coupe de Ville in a Cracker Jack box, but at some point, when a person realizes they can earn more money by doing the same amount of work - or less - then, no surprise, they move to the more profitable model.
0 votes Thank Flag Link Tue Jun 18, 2013
YES, and I even offer credit to buyer... And working 100%!
With respect
0 votes Thank Flag Link Tue Jun 18, 2013
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