Please note that "splitting the commission" is effectively the same as "offering a rebate" as far as the buyers are concerned. To the real estate professional (Bill Wootan) who wrote that such rebates are illegal, and anyone else who might be wondering whether they are, I would like to point out that the Antitrust Division of the US Department of Justice has a list of states (10 total) that ban these rebates: see
In all other states except these ten, splitting the commission or giving rebates to buyers is legal; also, the Dept of Justice has a very interesting and informative page regarding these rebates and related issues: see http://www.usdoj.gov/atr/public/real_estate/rebates.htm.
Hope this is useful information for all. Another point: even though technically "the seller pays the commission" - it comes from what the buyer pays, so it is part of the purchase price after all.
And is is accurate. I looked up my own town and the surrounding towns on Trulia. One home sold in my town in the past 2 months, therefore the average price of ahouse in my town is totally inaccurate. In the next town, the information is even more incorrect, if it is possible to be wronger than wrong.
I think that it's definitely fair to ask the question "Where's the value-add of a real estate agent?" And I totally agree that the internet is transforming this industry (for the better I believe). It will be interesting to see how this business looks in five to ten years, but I don't believe it will be diminished like the travel agent business or car dealerships.
The biggest difference is that real estate is not a commodity like autos and travel. A home's value is affected by so many more factors that will never be successfully "computerized" (I believe). As a consumer, you have access to tons of data, but can this tell you what a specific home is worth? Or, for how much you could purchase it? Zillow is not a substitute. To really know home values in a market, I believe you have to see a lot of them - in the physical world - to be good at this. And, there is no substitute for the experience of actually working lots of contracts with buyer and sellers. I find that internet consumers today can be overly confident of their mastery of internet-based data and frequently miss the mark on home values.
Another big difference is that you are working with people on both sides of the transaction with a ton of emotion invested in a home sale. Getting a deal to work often requires a lot of hard work and creativity. A sales contract in Montgomery County is often over 50 pages. If your representative doesn't structure a deal to your interest, it could cost you thousands. It's not as easy as offering a price and throwing it over to the seller.
It will definitely be interesting to watch this industry evolve. I believe that more and more transparency will definitely benefit the educated consumer. Does this mean that the role of a real estate agent and the current commission structure will go away? It sure isn't trending that way. Redfin is a great example. They have a fantastic website, but their business model isn't making any money. They simply don't do a speck of business in our market.
You want experienced, competent representation and you believe that you can get this with a rebate back from your agent's commission. Right now, that's not where our industry is.... maybe in the future?
In my opinion, the Internet has ultimately transformed the business models of intermediaries. This has happened not only to real estate brokers, but also to travel agents and car dealers. The fact that you are posting here is a testament to the power of the Internet. Please don't misunderstand me, full-service brokers will not go away, there is still a need for them. But discount brokers will have a significant market share. The more information people can get through online listings, the more compelling your other services have to be to justify your commission. Travel agents used to get a percentage of the ticket price as commission, then it was a flat fee, now they don't get a dime and have to charge for their service (or get revenues through advertisement). That's because customers now do most of the work that travel agents used to do (finding the right flight at the right price). To use the analogy of repairing your car, if you change the brakes yourself (btw, it's not that difficult) then you will only have to pay for the brake pads.
I personally would not mind to see full-service brokers that only represent buyers (or sellers) and get paid a fee for their service independent of whether a transaction occurs or not. This would align the incentives of brokers with their respective party. Sawbuck Realty's (sawbuckrealty.com) has innovated on the current business model; while not perfect, it is an improvement.
I wish you well.
PS - Don't call me!
Most discount brokers are new agents/brokers - those of us with years of experience mostly get full commissions for our services - we really earn our commissions if we do a good job for out client.
Bill Wootan - 30+ years in real estate
I'm proud of my buyer and seller agency services, and I can statiscally prove my performance. Rather than shop based on price, I recommend you interview an agent (or three) and look for the best value-added service.
Good luck with your home search.
Because of the changed market, commissions are irrelevant and are not built into the sales price of a home. And, as a buyer's agent, the buyer's side of the commission is split with the buyer agent's broker. There are also legal issues concerning giving a client money as an incentive for services rendered. Since I specialize in foreclosures and bank-owned properties, the commission is set by the bank and the bank has restrictions on how these funds are distributed. If you would still like for me to send you some listings, let me know. :-)Christine
I am interested in enlisting the service of a broker who is willing to split the buyer's agent commission with me.
Christine Sherrod, Realtor
Cabin John Potomac Office