I'm wondering if anyone came across buyer's agents who are willing to give back part of commission to buyer

Asked by Sean, 19044 Fri Jul 4, 2008

One of my colleague's agent offerered to do it for him if he chose her as the agent. Is this normal or unusual?

Help the community by answering this question:

+ web reference
Web reference:

Answers

27
Vicky Chrisn…, , 20176
Fri Jul 4, 2008
BEST ANSWER
There are so many variables here. I could happen, and could be reasonable and legal. Commissions are negotiable -maybe he's buying something where they're paying a bonus, or maybe she is part time and knows that he's gonna have to do a lot because she won't be able to. Or, maybe she works with a discount broker that builds their business by that model, and then charges a la carte for other things are typically "standard" service... nothing wrong with any of this, just different choices.

It's like shopping at Nordstrom's vs. Target. You can get a good deal on good stuff sometimes - depends on what you need.
2 votes
The Hagley G…, Agent, Pleasanton, CA
Sat Jul 5, 2008
I feel that the newer, desperate agents do this.....not necessarily the successful, seasoned Realtors. I am worth every penny I earn....I add value to the negotiation and ultimately save my buyers money. If your buyers agent is willing to give up part of their paycheck so quixkly...how much of YOUR money are they willing to give up to the sellers agent on your behalf. You get what you pay for.......
Web Reference:  http://www.cindihagley.com
5 votes
____________…, Home Buyer, Texas
Sat Jul 5, 2008
I am sorry, but I have to post this here. Lynn 911 and Donald Bradbury: your posts are meaningless and provide no valuable information. Do you just sit around and wait for someone to post and then attempt to "bait" the buyer/seller? In my opinion, your accounts should be suspended.
4 votes
Chris & Step…, Agent, Philadelphia, PA
Sat Jul 5, 2008
I just had an offer submitted on one of my listings where it was disclosed that the buyer agents would be giving a rebate to the buyer from the buyers agent co-op commission. So it is happening here and there. My opinion is that as a buyers agent the resources that a buyers agent are invaluable, from the negotiation to the consulting, from the recommendation of home inspectors and conractors, and the list goes on and on, I believe the buyers agent deserves to get compensated. Especially since in many places, due to competition, the total commission may be going down slightly. Further, since the buyer does not have to pay the commission, why would the buyer want a rebabte ? I would think in those cases the risk would be "you get what you paid for" or perhaps " buyer beware of discount representation" .

Good luck in your search. For more helpful hints, visit our website below.
Web Reference:  http://www.thesomersteam.com
4 votes
;, , Riverhead, NY
Sun Jul 6, 2008
Bryan, no problem. We opened our own company in order to do things in a way that permits as much change or flexibility in keeping with what is current, and in line with consumer expectations. As mentioned, my issue is not so much with what anyone chooses to charge, as it is with the gang up philosophy of real estate agents defending what they DO choose to charge, at the expenses of differing philosophies. I also respectfully disagree with any agent that, in the absence of the same flexibility, repeats over and over the antiquated notion that top service is unavailable should a consumer decide that they might want to explore available, equally effective,and perfectly legal, alternatives. So, there we have it- consumers will make the call, receiving both viewpoints. That's what this forum is about, right?
Web Reference:  http://optionsrealty.com
3 votes
Deborah Madey, Agent, Brick, NJ
Sun Jul 6, 2008
All transactions of trade of money for services or products are about value. As consumers, we all want value in exchange for our money. This applies to the $200+ evening dinner vs. the grab-and-go box lunch. It applies to the designer dress from a boutique vs. the knit dress from a discount chain. It applies to the attorney who charges $400/hour vs. the attorney who charges $100/hour. All of us, as consumers, make price/value decisions every day.

Consumers determine whether the services for higher fees will bring them enough value to justify the investment. When in comes to real estate transactions, there is no way to do it both ways and compare the outcome on the exact transaction.

Those who provide full service real estate at higher fees will maintain that the investment is more than offset in higher sales prices for the seller with a higher net to the seller, or lower sales prices for the buyer with a better bottom line. This, along with reduced liability, time savings, stress reduction, information, referrals, contacts, education and solutions are the arguments for full service. Is it OK for this business, this person, this advocate, to say that they offer a good value in exchange for the fees invested? Of course it is. It’s not different than Lexus telling us why it’s worth it to pay more for their car than Kia. It’s no different than a restaurant telling us why a fine dining experience has enough value for us to part with $200+. And, some consumers will opt for the Lexus, while others opt for the Kia. We don’t hear Kia saying, “Lexus dealers are a bunch of rip off artist”…..do we?

Those who provide discount, limited service, or rebates in real estate service transactions will maintain that the consumer can save money. It gets a little tricky, when the discounter claims an exact dollar amount of a higher net sale proceeds, or lower net dollar purchase because we don’t know if the buyer could have purchased for a lower price or the seller could have sold for a higher price under a different sales model, or with a different agent. It’s fair for a real estate service discounter to say “we charge less” if they do. It’s fair for a real estate service discounter to say that the consumer will pay less fees by doing some of the work themselves.

All forms of goods and services sell either “we will save you money” or “we are worth the higher investment.” All forms of goods and services sell either price or value.

It is certainly respectable for advocates of various business models to present their perceived benefits to the consumer.


Agents who work for limited service companies are not always inexperienced. Some have chosen this type of business model because it affords them the opportunity to work structured business hours without having to be on-call every evening and all weekends. They offer less service, less availability and less guidance for lower net fees to buyers (usually via a rebate),, and sellers (via a lower listing fee.) Buyer agents who are not previewing homes and are not familiar with the streets and competing properties are not going to have the same input and advice for the buyers as the agent who attends broker opens, previews and studies the market every day. Some buyers may feel they don’t need this guidance, and be willing to forfeit the assistance for a rebate. That’s fair. It is wrong, however, for a buyer to lie to a full service agent and use them for their knowledge, then abandon them for a rebate. It’s a form of theft by deception.

I have a problem with bad attitudes, underhanded tactics, lies and poor manners…..but, I don’t have a problem with informed consumer choice. Honest pay for hones work is ethical.

Deborah Madey - Broker
Peninsula Realty Group
3 votes
Sylvia Barry,…, Agent, Marin, CA
Sun Jul 6, 2008
Hi Sean:

There are agents who will offer rebates that are good, but there are some that is how they get their business, sometimes from under other agents. I only have true stories to tell.

One was actually my buyer, whom I showed many properties, and then suddenly stopped calling me right after I emailed him a perfect property. I called him and he said his job was in danger and decided not to buy. I watched that property went into escrow quickly and found out that indeed he bought the house. I called him and he was relieved that I found out - yes, he said felt very guilty - He actually told me that his agent said I would never found out. HA! … He said that when the agent offered him a $5,000 rebate, he decided to stay with me because I was worth that additional $5,000, but when the agent offered $10,000 rebate, he could not resist. Well the kicker is, he offered full price, $30,000 more than I would have suggested. I told him that.

The other two are my listings and I dealt with discount / rebate agent,

One buyer who worked with an agent who belongs to a nationwide discount brokerage kept on emailing me while negotiating credits for repairs. I told both him and his agent that I represent seller and he should talk to his buyer agent. Turns out his agent did not give proper advice and negotiate for him. The company had to send the broker out for walk through, settled on certain terms with their buyer at last minute before buyer would sign off. The agent actually told me during the transaction that the buyer should not complaint because of the rebate. The buyer called me a year ago when they were thinking about selling. I don't think he thought the discount company was worth the rebate and settlement they got.

One other buyer was represented by a mortgage broker/agent who gives rebates. I was personally amazed by how she did not negotiate for certain repairs when inspection time came. It also amazes me at how quickly you can tell by the tone of voice and emails on how desperately she wanted to close the deal. The agent's brokerage is a firm in a different area in the Bay Area and from what I saw, she did not know much about a lot of things. I think the buyer thought he got a good deal because of the rebate but he really did not know the kind of credit he might have gotten if his agent had the knowledge and tried harder on his behalf.

Many things I would not have done or I would have done much differently if I was those buyers' agents. I have other stories, but that's that for now and you be the judge.

Sylvia
3 votes
Bryan Sereny,…, Agent, Miami Beach, FL
Sun Jul 6, 2008
I can’t resist: The old adage “you get what you pay for” rings true in every industry. Would you go to the best cardiologist and ask for a discount? How about the best attorney? Not all professionals are equal. A seasoned buyer’s agent adds value and ultimately will save the consumer more than the 1% credited back from a less qualified Realtor.

Sean: a) a buyer’s agent is supposed to “negotiate” on your behalf b) if you feel as though your buyer’s agent’s interest is to maximize the sale price, you are working with the wrong Realtor. As a buyer’s agent I ALLWAYS work towards negotiating the absolute lowest price with the most concessions possible. When selecting an agent to represent you, ask them to show you their recent closed sale history and pay close attention to the spread between the list prices and the closed sale prices. The Realtor with the highest average spread clearly is worth their full commission.

A friend of mine in Boston used a Realtor that gave a 1% rebate. By my estimate, he ended up overpaying 4% to 7%.
3 votes
Sylvia Barry,…, Agent, Marin, CA
Sun Jul 6, 2008
Hi Billy:

I am in a hurry to go - appointment and open house, but I want to stop by quickly because I really don't want you to feel sorry for me, not my purpose for posting below.

Don't worry about me, I did not write this to get sympathy, but just want to have buyer beware - These are very good people but they were just enticed by certain things which they thought they'd sure get a great deal on. I don't blame them they want to get the best deal, just like all of us. I feel bad for them because THEY were the ones who got burned, I am sorry to say.

The tiered compensation will be difficult to say, who is to say a certain percentage is the best for a certain deal? is 10% really a great deal or is 20% a great deal? Each transaction is different. Sometimes, just finding and getting the house is the best deal for this one buyer.

The proposal sounds good but I don't think it'd work very well realistically.

Sylvia
2 votes
Billy, Home Buyer, hong kong
Sun Jul 6, 2008
Hi Sylvia: I am disappointed to hear that you were burned by some buyers in the past. This is one reason that a performance based buyer agent agreement makes sense for everyone. First of all, it provides incentive for the agent to get the best price for the buyer. Secondly, the buyer has no reason to renig on a deal, because the agent only gets paid what they are worth, based on pre-negotiated price triggers in the transaction. For instance, if the agent negotiates an effective price for the house that is 10% below asking price, the agent gets 1% of the commission, 15% the agent gets 1.75%, etc.... and the remainder is rebated back to the buyer. The price triggers depend on the market of course, and could be higher or lower.

Sean, I would write the state representatives, as well as the Attorney General in your state if they do not allow Real estate rebates on commissions. I read through the previously posted link to the DOJ website and was very impressed. Unfortunately, the state I am moving to does not allow rebates (Mississippi)! I have already written the AGO office in Mississippi about the clause in the Real Estate Commission's rules that prohibits this, and hope that they will do some research and work to delete this clause. I will also write my future state legislature's in the next day or so. There is no reason that Mississippi should needlessly be protecting Real Estate brokers margin in a transaction.
2 votes
;, , Riverhead, NY
Sun Jul 6, 2008
Bryan, you're assuming incorrectly that all companies offering rebates aren't "seasoned", or competent. Pretty smug of you, don' t you think? You are neither the 'BEST CARDIOLOGIST, BEST ATTORNEY, or, in all likelihood,"best Realtor"- hardly a sensible comparison, even though you may have exceptional competence.
Tired argument that sounds more and more ridiculous every time I've heard it in the over-20 years that I've been in real estate.
Web Reference:  http://optionsrealty.com
2 votes
Billy, Home Buyer, hong kong
Sun Jul 6, 2008
Good link to the DOJ website. Clearly, there needs to be progressive compensation written into a buyer's agent agreement that motivates the agent to abide by his/her fiduciary duty to get the best deal for a buyer.
2 votes
;, , Riverhead, NY
Sun Jul 6, 2008
http://www.usdoj.gov/atr/public/real_estate/index.htm

Sean, go to this site to check your state re. the legality of rebates, and the reason that the Department of Justice feels that consumers should have this available to them.
They are working diligently to include this practice in all states, because the feeling is that consumers deserve choice. I agree. I'm guessing that all states, in fairly short order, will be required to offer alternatives to consumers.
Web Reference:  http://optionsrealty.com
2 votes
Sean, Home Buyer, 19044
Sat Jul 5, 2008
Cindi,
No one can deny that
a) the deal can happen only if the seller and the buyer agree on a price.
b) technically it is in the interest of both the agents to sell the property at the maximum price possible because their commission is based on the selling price.
So, I don't know how much influence the buyer's agent can have in negotiating the price; ultimately its the seller who has to accept the offer.
2 votes
;, , Riverhead, NY
Sat Jul 5, 2008
Sean, offering a rebate (when legally done) is a good opportunity for you- I'm perplexed as to why agents dismiss a practice that favors buyers. It does NOT necessarily mean that the Realtor is less than full service- it can simply indicate that the agents acceptable commission is lower than what other Realtors deem acceptable. As it becomes more prevalent, perhaps this false assessment will go away- until then, you have the ability to check the history of the Realtor involved, and make your own assessment of their competence (which could well be a higher level of service than some of those that refuse to consider a growing practice). If your investigation uncovers a "problem agent", use someone else, but until that is proven to your satisfaction, take advantage of the savings. Don't buy into arguments intended to discourage an advantage for buyers until you've determined that it's not SELF SERVING on the part of the accusers (Realtors) that eschew the practice.
Web Reference:  http://optionsrealty.com
2 votes
Dallas Texas, Agent, Dallas, TN
Tue Aug 12, 2008
You can have an excellent buyers agent that contributes certain % of their commissions back. WHY in some instances we are used as professional representation on new construction frankly dont feel as though we did all the other additonal work for the norm to earn 3% when the buyer did majority of all. It all depends on circumstance.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference:  http://www.lynn911.com
1 vote
David, Home Buyer, Pennsylvania
Wed Jul 9, 2008
Its survival of the fittest, not the fatest. In the glory housing bubble days, realtors made many times over your current salary, in these days they are more like a chicken on slow roast.

It is absolutely normal to get back some commission. Its called a 'housing depression', and in a depression you as a buyer get the most of the deal.
1 vote
;, , Riverhead, NY
Sun Jul 6, 2008
Deborah, the issue (and I agree) of a rebate agent "stealing" a buyer would be less prevalent if all real estate agents made the decision to view things case by case, rather than blanketing their marketing with an "I'm worth more" attitude. Frankly, it's too subjective. I'd add that Lexus does not make critical and often untrue generalizations about Kia the way I see done here with such frequency re. any offering below a perceived (by agents) "norm". Advertise your MO without disparaging alternative methods, and your value proposition will go one way or the other based on the needs of the consumer, not the needs of the real estate contingent on EITHER side of the fence. As a Lexus owner, it's up to me to define quality, and if I can pay a Kia price for what I view as Lexus quality, as is possible now in real estate, we all have to deal with it with an open mind. While we do not advertise rebates, my mind would be open to any circumstance in which a consumer, as my fiduciary dictates, seeks a solution. It just makes more sense than tired arguing with nonsensical comparisons.
Web Reference:  http://optionsrealty.com
1 vote
Eric Bouler, Agent, New Orleans, LA
Sun Jul 6, 2008
Sylvia, I thought that was a great answer. Personnel experiences are things we can all learn with. Keeping it simple is the best way to go. Just think how much better off the housing market would be in if the mortgage industry has kept things simple.

Several US Senators kind of got a rebate from Countrywide to help us all out. Sometimes it is just better to have something straight forward. Have we really gained that much by having lawyers ads on TV. Have we gained by seeing Viagra advertised 20-30 times per day. Its freedom but we need some common sense.
1 vote
;, , Riverhead, NY
Sun Jul 6, 2008
I can't resist: since when is a real estate transaction all about what an individual REAL ESTATE AGENT thinks they are "worth"? Such a tired argument, and without merit in an evolving industry. Charge what you feel that you are "WORTH", by all means, but don't insult consumers by expecting them to buy into it, if there are other alternatives available to explore. If you're 'WORTH IT", consumers will figure it out, and use your services.
Web Reference:  http://optionsrealty.com
1 vote
Donald Bradb…, , 18951
Sat Jul 5, 2008
Hi Sean: First of all, as a Buyer, you get all the Realtor Services for free. The Seller pays the commission to the Broker, who has to split the commission with the Agent. Your agent should help you choose a home that fits your needs. Then your agent should help you negotiate a good price for you, that lives within your means, and your pre approved status with your lender. When you find a good agent, he will get you a good deal, and the commission he receives from the seller at closing does not enter into the picture when you are the buyer. As a buyer, you should concern yourself with the inspections, the fact finding, etc, to ensure that you are making a "smart" purchase that will fit your needs. Thanks so much. Don Bradbury 215-536-6777 x 329 http://www.bradburyteam.com
Web Reference:  http://www.bradburyteam.com
1 vote
Court, Home Buyer, Boston, MA
Sat Jul 5, 2008
Redfin is a company that does this. However, I don't think they operate in LA.
Web Reference:  http://www.redfin.com
1 vote
Eric Bouler, Agent, New Orleans, LA
Sat Jul 5, 2008
The correct ansswer should be to charge you less in the beginning and there would be no need for a rebate. If I did enough business with you over and over again I would take less on the listing side as it is the much easier side to handle. As a buyers agent it is illegal to induce or pay a rebate in Louisiana. Know the history of our state you would see that this is a good law.
1 vote
Eric Bouler, Agent, New Orleans, LA
Fri Jul 4, 2008
In Louisiana it is illegal to do that. The commissions are rarely over 5% here and prices are much lower than the average. I get asked I tell my cleint , NO. However in almost 500 sales I have never been asked.
1 vote
Cheryl R. Su…, , Schwenksville, PA
Thu Aug 14, 2008
I work in relocation, so my part of my commission is almost always given to the client. It depends on the home price, how quickly you are moving, and what amount you are trying to get. Let me know if you want to meet to discuss further.

-Cheryl
0 votes
Bryan Sereny,…, Agent, Miami Beach, FL
Sun Jul 6, 2008
Deborah, I agree wholeheartedly with your analogy/comparison and your thought that, “it is certainly respectable for advocates of various business models to present their perceived benefits to the consumer”.

Cindi, I also would have to agree with your comment that successful, seasoned Realtors do not necessarily do this.

Billy, I have to agree with Sylvia, a tiered compensation system sounds good but likely would be difficult to implement.


Laurie, I respectfully disagree with much of what you have to say on this subject. As a general rule, the most skilled people in ANY industry tend to seek employment where they receive the greatest benefits. On that same token, the most skilled agents will gravitate towards a brokerage with a full service model and away from those with a discount model. At least that is the way it works in Southeast FL. Maybe things are different in Long Island. Not being smug, just pointing out the obvious.

In Southeast Florida (my market), there is a group called “Master Brokers Form” which is comprised of the top 250 real estate professionals in each county. None of these elite agents work for a limited service company or discount broker. Enough said?
Web Reference:  http://www.bryansereny.com/
0 votes
, ,
Fri Jul 4, 2008
Hi Sean,
More and more agents in our area are doing this. I from Horsham which is pretty close to you.
Feel free to send me an email or give me a buzz so that I can explain some the options agents are using.
Web Reference:  http://www.LeeStiber.com
0 votes
Search Advice
Search
Ask our community a question
Home Buying in Lansdale Zip Codes

Email me when…

Learn more