Real Estate agent returns 80% of the commission to buyer

Asked by Seattle, Seattle, WA Tue Feb 2, 2010

http://www.shopprop.com/client/public/buyers.aspx

If this company represents a buyer, they return 80% of the commission back to the buyer. Kind of like refin, but offers a much better deal. What do you all think? Is this trend catching up?

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28
No Name, , Seattle, WA
Wed Feb 3, 2010
I have a hunch that "Seattle" is the broker and is probably spam anyway.
4 votes
Mack McCoy, Agent, Seattle, WA
Tue Feb 2, 2010
It's a trend that's fading away.

Redfin, when I last checked, had less than 1% of the market share of the NWMLS last year. They've spent over twenty million dollars, and as of a couple of days ago, had thirteen listings.

What I think the discounters are doing is illustrating how little extra it would cost to have the best agent you could find. For this, I say, Thank You.
2 votes
Leanne Finlay, Agent, Kirkland, WA
Mon Feb 22, 2010
Hi Seattle, I've seen the shopprop stuff come up as spammy comments on many websites, unprofessional to say the least, especially when the senders don't participate in the discussion, simply posting the spam.

It's a shame that the real Spam food brand has gotten associated with this kind of crap.
1 vote
No Name, , Seattle, WA
Sun Feb 7, 2010
I'm not convinced that this (or any discount) business model is flawed given certain boundaries and expectations on the part of the consumer. I also believe that discount servies will always be around. This is actually a good thing.

I think it's good to have competing services like this in a market. It certainly keeps *me* on my toes and makes me think very clearly about how I offer - and how I describe - my services.

I'd rather compete with this entrepreneurial model than a large bank (say) who offers free or discounted brokerage services in return for loan revenue. That's a HUGE looming danger to this industry.
Web Reference:  http://www.dugaldallen.com
1 vote
Sally Bostwi…, , 98109
Wed Feb 3, 2010
If you think you're getting a good deal, trust the reputation of the agent and the reputation of the company, then I'd say "go for it". We're all looking for a bargain in this economy.

BUT, I doubt the agent that is working for the company nor the company it's self will be in business long. Expenses are high in this business, and something has to be left out of the budget when you give 80% of the fee back to the client. My guess is it would be the on going training and education needed to stay on top of current issues (including legal) that affect the success of the transaction.

I wouldn't trust the success of what is probably largest financial transaction I make in my life to anyone I didn't considered the best trained, most well informed and who I trusted completely.
1 vote
No Name, , Seattle, WA
Wed Feb 3, 2010
Hi Seattle,

If you're looking for a deal, then go for it. If you're looking for representation, then think about this:

A lot of agents are (rightly) concerned about this style of representation in that the person representing *you* has to take on more business than other agents to make the same income. In this case an 80% rebate down to 20% of the listed commission. OK, so they have to have 5x as many clients to make the same amount of money.

Even with efficiencies in handling paperwork (e.g. electronically) that means that you're dealing with *either* low-paid (and likely low caliber) people OR you're dealing with someone who is split seven ways from Sunday.

Jirius below makes an excellent point, though. 80% of a "typical" King County listing commission is 2.4% (it can be less, and often is!). If an agent can save you more than 2.4%, then which is better? Full representation by someone who can afford to spend the time with you (because they are being compensated) OR potentially lower end / unfocused representation?

I happen to like the free-market approach that companies like MLS4Owners, shopprop, Redfin and others take (just to name a few) because it gives you the ability to choose. ...to "pick your poison" as it were.

:)

I hope that helps
Web Reference:  http://www.dugaldallen.com
1 vote
Jennifer Oha…, Agent, Bothell, WA
Wed Feb 3, 2010
If they can't even negotiate their own commission, how well do you think they're going to negotiate for you?
1 vote
Karissa Webs…, Agent, Seattle, WA
Wed Feb 3, 2010
As many an experienced agent can tell you, working with companies like Redfin is high stakes gambling at best. The last deal I closed with one of my buyers on a Redfin listing, the Redfin agent cost his seller $5000 in special assessment fees that a knowlegable agent would never have lost. He also overpriced the listing so it sat for months, also costing the seller (who had already moved) thousands in monthly mortgage payments and potentially more in missed oportunities to sell.

On the buying or selling side, do you really want someone representing you who is not rewarded for being educated, motivated and professional? Do you want McDOnalds to cater your wedding? You absolutely get what you pay for.

Oh, and so as to avoid ugly surprises at the eleventh hour, talk to your lender before you enter into a deal with a company like this & ask how that cash coming back to you at or after closing affects the transaction. Their answer may well surprise you.
1 vote
How much did the Redfin agent save his buyer? More than $5000?

6% tax on a real estate transaction is worse than the government could do to us.
Flag Tue Apr 8, 2014
Steve McDona…, Agent, Seattle, WA
Tue Feb 2, 2010
All bias aside, I truly believe 'you get what you pay for'. As a realtor who spends hours and hours working from my clients, staying on top of industry issues and researching market trends I provide value-added services that warrat compensation for the level of professionalism that real estate transactions deserve. You'rel likely buying the most valuable single asset you will ever own. Doesn't that deserve a little more than bargain basement shopping. And when buyers don't actually pay the commission for their agent in most circumstances why should the buyer feel a need to confiscate a well deserved salary.
1 vote
Dan Tabit, Agent, Issaquah, WA
Tue Feb 2, 2010
There have been many companies who have tried similar models and most fail. From what I gleaned looking over their site, you do the bulk of the work and hope they are good contract writers and negotiators. If you plan to buy a specific house and are comfortable with your own market knowledge of that area, can understand and interpret an market analysis and fairly judge comparables it might be worth a try.
Full service companies have survived for a very long time because good agents can provide outstanding service and are worth more than their commission.
Companies like this exist because of agents who don't live up to full service models and still want full service commissions.
I'm a consumer and would want to know the pros and cons of this type of company and others too. Before you decide which direction you will take, get some referrals to quality agents and sit down in person and see what they have to offer. All too often focusing on the commission misses the larger picture. Not all agents are worth 3% on a side, but a good one is worth quite a bit more and can save you money in countless other ways than commissions. If you are like most of us, this is a huge investment and you should obtain the best representation possible.
1 vote
Dianne Hicks, Agent, Rancho Bernardo, CA
Tue Feb 2, 2010
I work way to hard to give 80%, I would go back to computer programming or choose another career. I work about 80 hours a week. As it is, when we take shorts sales, it can come down to a couple dollars an hour by the time it is completed on some. There is an agent in the office on her 5th buyer for a short sale. I wish that people who think we are rolling in the dough would walk a mile in our shoes. Calling the banks, getting put on hold. They loose your file, our last one had to be faxed more than 11 times before it actually stayed where it should.

Find another profession that is willing to give 80% of their pay to someone who uses them. I do not think it is a trend. We pay thousands a year just to be a realtor and we do need to pay our bills to. So many Realtors can't even make it in this market. I cannot tell you how many homes that I have viewed that are Realtors homes. I spent enoromous amount of time and money educating myself (and still do) to be good at what I do. I think it will benefit newbees and Realtors that are not successful otherwise.
IT WILL NEVER BE FOR ME!!!
1 vote
Patrick Beri…, Agent, Seattle, WA
Sun Feb 27, 2011
To each his own. There will always be buyers who will go for this sort of thing, even if they end up paying more for the house. Just as there are sellers who let agents "buy" their listings with overinflated list prices. Some people want to hear certain things to feel like they got the best deal. Smart buyers and sellers worry about their bottom line more than they worry about what other people are making.

I'll say it again--Your concern as a buyer or seller should be to MAXIMIZE what you're getting out of a specific transaction. MAXIMIZE gain and MINIMIZE loss & liability. That's why you work with an agent to facilitate this.

Let's say you want to buy a house at $200k. If redfin gives you $4800 back, your net offer is $196,200. What If I negotiate better and you get the house for $182k and some new windows, the couch you wanted and a closing date that's more convenient for you? Still think the discount broker is a great idea? If so, you're not the kind of client that I want to work with anyway--But I'd LOVE to have you on the other side of the transaction.

I'm not knocking discount brokers, but I don't shop at Walmart either. If the biggest advantage a broker can offer you is a discount of their commision, how valuable is this broker going to be in negotiation later on?
0 votes
Gerard Carney, Agent, Spring Hill, FL
Wed Feb 23, 2011
Redfin like Zip Realty is having a hard time keeping Agents when they dip into their pockets to find customers, top that with the fact that you'll get nothing back from the selling agent side since these types of companies sell other peoples listing and have very few of their own. These companies are not owned by Brokers but hire brokers of record, they never give 80% commission, they give 20% of the selling agents commission away, they also keep 40% of the agents commission and when an agent realizes he has to sell three homes for this company in order to make what he made off of one sale with a traditional company he or she is soon packing their bags and moving on! Will the trend catch on, absolutely not! If you want a professional to sell your home, playing games with their commission is not the way to get them to work hard for you!
0 votes
Mack McCoy, Agent, Seattle, WA
Wed Feb 23, 2011
We're working on a new program where we pay you to represent you. You'll like it much better.

Which, actually, is what Redfin is doing - they've invested like thirty million dollars into this project, and, well, they'd have to sell about two billion dollars worth of real estate just to take in that much revenue.
0 votes
, ,
Wed Feb 23, 2011
from a lenders point of view ...if this commission return is above board , then these funds would need to be used in the transaction as a credit towards the buyers closing costs / prepaids ....otherwise any lender would treat this as a sales concession ..which may affect the loan amt and ltv calculations
0 votes
MAX LEE, , Bellevue, WA
Fri Oct 1, 2010
Redfin wanna be trying... As you can see there are only 8 facefook friends.



http://WashingtonsBestRealEstate.com
http://ShortSaleHomeExpert.com
http://FirstHomeGain.com
0 votes
Courtney Coo…, Agent, Seattle, WA
Sun Feb 7, 2010
I agree with Dugald on this. Sounds a little SPAMMY to me. It just is not a business model that will work for very long either.
Web Reference:  http://www.cooperjacobs.com
0 votes
Rob Graham, Agent, Seattle, WA
Wed Feb 3, 2010
I agree with Dugald. This question is just a broker or agent taking the oportunity to advertize themselves. Good discussion though.
0 votes
Vickey Wacht…, Agent, Katy, TX
Wed Feb 3, 2010
I don't think this will last long, what agents they may have right now to work with these buyers and sellers aren't getting paid very much and I can tell you from experience it gets old...I worked for a discount brokerage my first year, closed 43 transaction that year and was beat to a pulp, the next year I cut way back and ended up spending $3000 more than I made that year...all though I was a great tax right off for my husband I didn't appreciate not getting paid for my time...

The saying you get what you pay for is not always the way you would think, I worked hard for my clients. What I did find was when the seller didn't pay full commission, they didn't expect as much from me or my broker.
0 votes
Tonya Brobeck, , Everett, WA
Wed Feb 3, 2010
I do believe that there are good agents at most offices regardless of the broker. i do look at the real estate industry compared with the insurance industry though as both have high liability, rules, regulations, and a lot of laws surrounding them. Unless you have a terrible driving record & you can't get insured by one of the more reputable insurance companies you are then forced to go to a po dunk company until you have a better history & the more reputable company will take you & cover you. I think real estate is very similar in the fact that as many others have stated "you get what you pay for'. The real estate business wasn't created for the purpose of rebates, it was created for the purpose of representing buyers & sellers in the sale of a home. With your home being the largest investment you make in this life time besides your family & children it should go without saying that there are certain things that one doesn't compromise when buying or selling one of their largest assets. The whole idea is to get it done right. If there is a mistake or a legal issue down the road, I ask myself, how long has that broker/office been in business? How much of the market share do they make up? Will they be around later? Or will they be gone like the wind?

Just some things to think about when choosing a realtor/agent/broker to represent you. None the less, if you are the buyer most likely the seller is paying all the commission, so in turn you aren't paying for a buyers agent.
0 votes
Jirius Isaac, Agent, Kenmore, WA
Wed Feb 3, 2010
Well, you got a lot of really good answers, and I agree with most of them. You get what you pay for. I take care of my clients and it takes a lot of work. I also saved them an average of 6% of the list price compared to the average agent in the NWMLS. Really! That is a lot of money, much more then a return of even all of the commission.
0 votes
Rob Graham, Agent, Seattle, WA
Tue Feb 2, 2010
Lets say you have a tooth ache and you go to the best dentist in town. He takes a look and says, "well your tooth is dead and you need a root canal. It'll cost you $2,000." You may want a second opinion so you go to another dentist. He says, "Yup that tooth needs to come out, but I'll only charge you $400 for the root canal.

Who would you use?

Some would use the dentist who charges $2,000. They would trust that he is the best and has earned the right to charge more by providing a superior service and superiour results. Others would feel that a root canal is just a root canal. Any dentist can do it and so what if he cuts a few corners if it cost me less.

Which dentist do you want?

Last time I asked, which was several months ago, 25% of agents have given up their license since the recession hit. Many others are just hanging on to their renewal date, have taken other jobs or have just seen their incomes cut dramatically. If someone is willing to work for 20% of their income, what aren't they doing for you that a full service agent (which would cost you nothing by the way) would do?

One last question. If you went into work tomorrow and your boss said, "Hey I love the job your doing, but I am only going to pay you 20% of what I used to pay you." , how good of a job would you do?

Your home is worth somewhere in the neighborhood of $200 - $400K most likely. Who's hands do you want to be in. The choice is up to you.
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Feb 2, 2010
It all depends on agent and their broker agreement. Frankly I don't see a problem we have same program and reason why ... "we can" . Without going into the details we love it. !

Lynn911
0 votes
Keith Zeiler, , Issaquah, WA
Tue Feb 2, 2010
All I can say is wow. There charging 1000.00 a month for bank owned listing when agents get this information for free. If you want a free list please email me I send own our every monday for free. Because it is free for us.
Also if you go under their listings they have pages and pages of listings but there other agents listings not theirs.
We do a lot of bank owned properties and work with a lot of buyers and sellers but we do not discount our commission. And as an agent who is in the top 1% of the my company at john l scott. I did not get there because I credit or discount my service. It is because me and my team our great. You will always find a discount broker and more and more are popping up and that is due to the fact that they can’t make is in this business as an agent who can do the business for what they are worth. Think about it when agent and other owners see that someone is working with Redfin or any other discount company what does that say about the buyer or seller There Cheap. I and many other agents do not like working with discount brokers because you as the agent does all the work when you work with a discount broker. Now this is not for all discount brokers but the majority of them. I got a contract today from a discount broker who did not even put the sellers name on the contract. I have had contracts from discount brokers who did not even put a purchase price on the contract. And as a great agent I have to fill out the contract the correct way when we counter an offer so that I cover my rear and my sellers rear. Again not all are bad but just be very careful sometimes that discount you think your getting will cost you more in the end.
Web Reference:  http://www.tk2homes.com
0 votes
Ryan Gerding, , Manteca, CA
Tue Feb 2, 2010
I guess you get what you pay for. I would have to guess the agent at the discount broker still has a split with his/her broker which means the agent could receive much less than an agent handling the same transaction with a traditional broker. Why would a good (experienced or productive) agent want to work for a broker which limits his/her potential income? If all the good agents are working for traditional brokers, who is left to work for the discount broker?????? Make sense??

Ryan Gerding
PMZ Real Estate
Manteca, CA
Web Reference:  http://www.ryangerding.com
0 votes
Keith Sorem, Agent, Glendale, CA
Tue Feb 2, 2010
I think that they will not stay in business very long. No, the answer is that the trend is not catching on.
0 votes
Ashley Berg, , Seattle, WA
Tue Feb 2, 2010
Just like everything in life, one size does not fit all. I think there is a place for these types of "discount brokerages" as I have heard them called. Some people have bought and sold many homes and don't need as much guidance or hand-holding as say a first time home buyer would. There are also those who don't mind doing all of the leg work by going to open houses and paying for showings. But there are also those who want to be able to look at 25 (or many many more as I've witnessed) houses if that is what it takes to find the perfect house. They don't want to pay every time they want a service. They want to feel like they can call their agent at all hours for one-on-one support. In essence, they want an agent to lean on to guide them through the sometimes difficult process of buying a home. They are willing to pay for that.

So, I think there is a place for many different business models in real estate. One size has never fit all so why not have choices. I however, am a full service agent. I am up at midnight looking for homes for you. I do expect to get paid a full commission because I work hard for it.
Web Reference:  http://www.LiveGreenNW.com
0 votes
Dan Chase, Home Buyer, Texas City, TX
Tue Feb 2, 2010
It actually sounds like you could pay more than a normal realtor if you had a cheaper house.

For up to 4 services: $1995
For up to 5 services: $2995
For up to 6 services: $3995
For unlimited services: $4995

Up here I just saw a sign saying we will sell your house for $2,995. Not more even if it is a $million house.

It still comes down to numbers. Cheaper houses might still pay more at these discount places
0 votes
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