Home Buying in Oakland>Question Details

honuhomes, Real Estate Pro in San Francisco, CA

Seeking buyer's agents in California Bay Area who would be willing to credit back 50% of commission to an independent, experienced buyer.

Asked by honuhomes, San Francisco, CA Wed Oct 10, 2012

I'm actively searching on my own for a condo in the $200k range. I would pay all cash, and I'm capable of doing the financial analysis, writing the offer, arranging for inspections, etc. etc. myself. My proposal would be to split the coop commission in exchange for a few hours of an agent's time to complete the transaction. Desirable properties move fast in my area, so I'm looking in advance for connections to some agents able to work on this pay-for-service basis, so that I can reach out on short notice when I identify the right property. Thanks in advance.

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As a point of information, Matthew is wrong about rebates - they are perfectly okay in california. What is not okay is giving direct kickbacks to other businesses such as title companies to try and corner the market or edge out competitors.
0 votes Thank Flag Link Sun Aug 25, 2013
Just because our industry has made "rebates" acceptable here, that does not change what the payments really are, an unethical means to "corner the market and edge out competitors". What is an improper kickback in one industry is still ethically wrong, even if it is deemed acceptable in another. There are levels of corruption inherent in every economy and this is one example. A payment without any quid pro quo is illegitimate. An unlicensed buyer has no *legal* claim on a dime of a cooperating agent's fee.
Flag Sun Aug 25, 2013
I would say that your proposal violates a basic business principle, as do all "buyer rebate" schemes. They are all essentially forms of unethical corruption or kickbacks, if you will. Why? Because there is no "quid pro quo", or exchange of a product or service for your proposed payment. What product or service are you proposing to provide to your agent? A true rebate would be a full or partial refund of monies actually *paid*

Buyers do not customarily pay for the services of their agent, who is normally paid by the seller, as specified in the *listing contract*, a legally binding agreement.. An arrangement as you describe would constitute a infringement of the terms and intent of the listing contract by co-opting fees designated *by the seller*, who is paying them, to the cooperating broker and agent by a binding contract. This kind or practice is prohibited by the REALTOR Code of Ethics,
0 votes Thank Flag Link Sat Aug 24, 2013
A buyer "who shoulders most of the work" is still not entitled to any commission. Only licensed agents can *earn* a commission from a seller. While the industry has accommodated "buyer rebates", a euphemism, as an acceptable practice (with W-9) (Redfin as an example), there is no way to accurately characterize these payments as other than a kickback, since there is no legitimate basis (quid pro quo) for the payment. Kickbacks are, indeed, a form of business corruption, whether or not they are deemed acceptable or called by a more politically correct name like a "buyer rebate", an oxymoron since buyers pay nothing to get a rebate from. There IS corruption in our economy and this is an example. The model for *all legitimate business* is payment *in exchange* for products or services rendered. A transfer of monies without a corresponding exchange is simply illegitimate and corrupt.

How do you claim rights to someone's legitimate earnings? If you want to earn a commission, get a license.
Flag Sun Aug 25, 2013
my God, this is the most factually false, disingenuous blather I've ever heard from somebody claiming to be a realty professional. A rebate to buyers is not only NOT banned by the code of Ethics, but is even part of the underlying model for Redfin, one of the fastest growing real estate brokerages. It is just outlandish to describe as corrupt a cooperating broker willing to share some of the fee he receives for representing the buyer, with a buyer who shoulders much of the work involved. I respect differences of opinion and many brokers' preferences to defend the traditional model, but you're spouting nonsense. Anyway, I've found no shortage of highly regarded local professionals willing to consider supporting the transaction with a portion of the sales fee.
Flag Sat Aug 24, 2013
I think Eric has it right. Since you seem to think that you don't need the expertise of an agent and all you need is paperwork filled out, use an atty as it will cost less. 1/2 commission on a $200K deal isn't even worth answering the phone for as far as I'm concerned.
0 votes Thank Flag Link Wed Oct 10, 2012
this advice doesn't make sense. As you have pointed out, it doesn't "cost" me anything to have buyer representation. If my bid is successful, my agent will rebate back half the commission to me, thereby reducing the net cost of my offer. This isn't the case with an attorney, though as I'm sure you're well aware, that would work out wonderfully for the listing broker, as they would keep the entire commission. I'm glad you're so wildly successful that $2500 isn't enough compensation for the 1 hour of work needed to prepare the offer, and the other 5 hours of work required if it's successful. If your time is so incredibly valuable, it's amazing that you find time to rail against other more flexible business models on internet forums.
Flag Wed Oct 10, 2012
Good luck. You get what you pay for.
0 votes Thank Flag Link Wed Oct 10, 2012
Honuhomes:
Now is the time that buyer need MORE representation.
I really do recommend that you, yourself. obtain a real estate license.
This would allow you to represent yourself and get paid your own commission.
Flag Tue Oct 16, 2012
this isn't always true. sometime you pay full commission, or get no rebate, and wind up with a mediocre agent. Every agent likes to think they're God's gift, but on average, they're...average. In a way you're right though. I don't need a lot this time, so I'll get a little less and I'll pay a little less. Next transaction, maybe when I'm buying the short sale 4plex I have my eye on, I'll reward the same broker with repeat business, paying significantly more when I need significantly more service. All these platitudes about "anybody who doesn't charge full fee is unprofessional" or "you get what you pay for" are very misguided. Times are changing. The old way is dying. Tomorrow's successful brokers will be those who offer expert service in whatever amount is needed, and can adapt and tailor their business model to fit a wide range of transactions and customers.
Flag Wed Oct 10, 2012
For others with similar requirements to mine, a few minutes of googling located a broker more than willing to split the commission with me on transactons where he does not need to do anything other than write the offer and cover his actual time invested and his E&O insurance for the transaction (which is very cheap).

Don't be discouraged by all the stuck-in-the-mud brokers who are so terrified of change and flexible business models that they get their panties in a twist anytime somebody mentions the word rebate. If you need a lot of help, you should pay a fair price for that. If you are an experienced buyer needing only minimal representation, you can easily find enlightened, intelligent, experienced, and skillful brokers willing to work with you.

Any agents or brokers who try to demean the professionalism of other agents willing to offer customized fee for service models are simply showing their true colors and should be avoided at all costs. If they're not worried about the competetiveness of agents offering rebates, then why are they so angry?
0 votes Thank Flag Link Wed Oct 10, 2012
Since you seem to be so set upon doing it all yourself, why don't you just hire a real estate attorney for a few hours to create the contract. It is not ideal, but you strike me as the type of person who does not appreciate the work and advocacy a real estate agent would do for you. That is fine. Not everyone wants to work with an agent.
0 votes Thank Flag Link Wed Oct 10, 2012
Your advice makes no sense. I deeply respect the value of the work a good agent does. If I were engaged in a complex transaction, or needed months of ongoing relationship attention or a meaningful investment of an agent's time, I would be (and have been in the past) glad to pay for that. If I find a property myself, and make a competitive no contingency cash offer, then I don't agree that the time my agent is involved in that is worth $5000...sorry, it's just not. It would be subsidizing all the other buyers you invest time in without a return..that's not my problem. Finally, an attorney can't rebate commission back to me. Although that would be convenient for the listing broker as they would keep 100% of the commission, it wouldn't do me any good. I will use the broker who had the vision necessary to customize his model to fit the transaction. Next time I'm involved in a more complex transaction, I'll use him again and he'll be paid more for more service.
Flag Wed Oct 10, 2012
I can see that my colleagues have some strong feelings about this proposal - and it's understandable. Maybe this is a good time to explain a little about what we, as realtors, do for our commission.
There are very few jobs where one can work hard, daily with the utmost diligence and not earn one penny for a year or even more! And yet, that happens to us. Sometimes a client who we’ve worked with will decide that they can’t actually afford to buy what they’ve dreamed of – after we’ve shown them 50 or 60 properties. Sometimes they decide on another town, again – after seeing many properties. Sometimes we drive to dozens of homes, showing properties and writing offers for our clients and it just doesn’t work out. We do not earn anything for that work.
We also may have a long relationship with the sellers of a property, where it may appear that in 2 months we’ve sold a home.
I think it’s important to point out that, while it looks like Realtors may earn a large commission on a single sale – most people have no idea what went into the experience and expertise, the many properties they’ve shown or the months the Realtor has been sending comparable sales to the sellers and in discussion with sellers as to how to best present their property for sale.
And then there is our liability. We carry expensive insurance that helps protect us against lawsuits, but it doesn’t cover everything. I’ve never been sued, but I worked for a company where the manager used to talk about “when,” not “if” we’re sued.
We pay for marketing ourselves and the properties we list for sale. We pay for fees to the local, state and national associations and membership to the multiple listings we can access, and our key codes to let you into the property. It would seem like offering a 50% “deal” for doing our part in obtaining your property is fair, but when you look at the whole picture – that commission you’re talking about on a $200K property is a small compensation for all of the work that will go into the whole process.
0 votes Thank Flag Link Wed Oct 10, 2012
thanks for your reply; I appreciate your politeness :) However, the other way of looking at your analysis is that while it is completely true that often your valuable services go to waste when a buyer uses your time for months and then never makes a successful offer, on the other hand it is not my responsbility to subsidize that by paying for services I don't use. If you spent months driving me around, or found off-market listings for me, or were prepared to negotiate hard for a discount off asking price in a situation where that had a chance of working, I would never dream of asking for a rebate. In this case, I'm offering full market value (over asking price) all cash, no contingencies, 10 day close. A few minutes on google led me to an intelligent, candid broker who readily agreed to a 50% split; the $2500 he would receive is plenty of incentive for him to write an offer for me. It's not the case that I undervalue agents' services, I just want to pay for what I use.
Flag Wed Oct 10, 2012
How would you feel about going to your job and getting paid 50% less????
0 votes Thank Flag Link Wed Oct 10, 2012
The typical, silly response. Your job is not constant; you provide a different service for each buyer. Some buyers you provide a lot of value by either investing months showing them homes, or providing leads to off market properties, or by handling a complex and drawn-out transaction. You should get paid your full value in those instances. In my case, your job would be to spend an hour writing a contract. You would not need to leave your office, not even to show me the property. There would be no appraisals to track, no inspections to manage, no financing to hassle with, no counteroffers or other negotiations to contend with, etc. This is a different job, and one that would be adequately compensated by a couple thousand dollars net commission.
Flag Wed Oct 10, 2012
Would pay 50% for a surgeon a dentist a lawyer? Would you agree to get paid 50% for ehat you do?
If you don't want to pay your agent, get your own license.
Any one Shi offers you this deal is not a professional.
Tsk tsk
0 votes Thank Flag Link Wed Oct 10, 2012
Your claim that anybody offering this rebate is not a professional is both untrue and obnoxious. My lawyer charged much less to review documents I'd prepared online than he charges if he needs to write them all himself. A doctor will offer a discount for patients who pay all cash up front. As to professionalism, you can't even write a reply without spelling and grammar errors...what kind of attention to detail can I expect from you on a transaction???
Flag Wed Oct 10, 2012
good point, carl. I forgot they toned down their rebates.
0 votes Thank Flag Link Wed Oct 10, 2012
Ironically, even Redfin won’t touch this – it doesn’t fall into their profitability window. Which should be a BIG clue …
0 votes Thank Flag Link Wed Oct 10, 2012
Your proposal might seem reasonable to you at first glance but there are some realities you are not accounting for. And so as not to be perceived as one of the rebate haters, I make the caveat that our business model is to rebate a portion of our commission to our buyer clients, albeit a MUCH smaller one.

1. Finding properties is not where the skill comes in. It's once you get the property

2. it's NEVER as easy as you outline here, because the agent has to cover his/her liabilities so they aren't going to submit an offer you wrote, and they have to review all the documentation regardless of your involvement

3. Why would you try to do what someone who's a pro already knows how to do much better than you when you don't even have to pay for it?

4. A knowledgeable and experienced agent will save you more than the rebate you ask for.

Essentially what you are asking for is an agent to cut their fee in half on a tiny deal that they're still going to have to do most of what they normally do anyway. I doubt you will have many takers.

go to redfin - I think they have the largest rebates
0 votes Thank Flag Link Wed Oct 10, 2012
1) I respect that, but you need to accept that every transaction is different, and you should have different pricing models to reflect that. I have done multiple transactions, and I know what's involved. On an offer like mine, your invested time would be guaranteed less than 10 hours. Why should I pay the same rate as a buyer for whom you've invested dozens of hours? It's not my responsbility to subsidize other clients who are a major time sink for you. 2) this is nonsense. again, I've done multiple transactions, and sometimes it is hard, and sometime it is very easy. it takes less than an hour to verify that a written offer is sound. it takes less than a few hours for an all cash, 10 day close transaction to go through, esp. with no contingencies. Your liabilities are adequately covered. 3) I DO have to pay for it; if one broker will offer a rebate and one will not, then I AM paying if I don't get a rebate. 4) not on a highly competetive, all cash offer with 10 day close.
Flag Wed Oct 10, 2012
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