I'm not really a big fan of rebates. Are you a fan of making less money?
Now, before you dismiss me as a broker who only wants to maximize his commission, I am pretty qualified to write about buyer rebates in a real estate transaction, because I am a Redfin Partner Agent, and rebates are one of the linchpins of their business model. I have done dozens of transactions with Redfin buyers, and all have gotten a 15% rebate. So I know what I speak of. I do it. I get it. I have also rebated sellers under certain circumstances. I guess you could say that I am a "master rebater!"
Do I love it? No! Is it the cost of doing business I would not otherwise get? Yes!
Two events have prompted me to offer my thoughts on rebates to buyers in a real estate transaction.
- Two weeks ago, we received an offer on one of my listings. Before we could make a deal, a 2nd broker submitted an offer for the exact same amount from the same buyer. The buyer switched firms for a $500 rebate. $500.
- Diana Lisinksi just wrote a featured blog about a client who asked for 50% of her commission after working with her for over a year.
In both examples, I would characterize the conduct of the buyers as ranging from dishonorable to downright sleazy. That's right. Do I feel that way because they asked for a rebate? No. I feel that way because they tried to extort a rebate after putting the broker through a home search and offer process. That is bad faith, and it is lame. Having broker A do all the work and then either chiseling them or having broker B write the offer and get the commission is unconscionable.
Those of us in the business for any period of time know the stress of a last minute expense to our buyers
- a home not delivered in the same condition as when it was first seen, an unexpected closing cost or tax shortfall, or anything else that hits the already stressed buyer in the pocketbook after a drawn out transaction. It sucks
. We'd never intentionally cause a financial hit to a client or customer. And we decry those among us who add fees to their commission at closing which were not approved when first hired.
And yet, there are buyers out there demanding rebates, not at the beginning of working with an agent (like Redfin), but after they work that agent over for weeks and months. If that happened to them at their job, they'd scream for a lawyer. If it happened at a closing, they'd walk out. It's a scam. Many of these characters are the same people who complain that agents are dishonest or sleazy. Look in the mirror!
If you want a rebate when buying a house, you need to negotiate it upfront, the same way a seller negotiates their commission when they list a house. That way, I know if we have an acceptable business arrangement or if I suggest you find other representation. No hard feelings, just business. But to commit your agent to work under one pretense and then to extort money later because "something is better than nothing," you are doing something sleazy and dishonorable. I'd use stronger language, the same language you'd use if I extorted you, but I won't.
Up front: Good faith arrangement.
Later on: Bad faith and extortion.
Another thought: The best professionals are the best paid. I'll bet you'd never have your vasectomy performed by a doctor who agreed to a rebate. Think about that one.