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Consumers Always Looking for A Deal

I was over at a real estate forum yesterday, browsing around like I do a couple of times a week to see what kinds of questions people have and to see if there is anything worth commenting on.

Yesterday, a lady posted a question that is summed up like this:

"I'm looking to buy a house. I've bought two others before so I know what I'm doing and don't need any help, so I'm looking for a Realtor to rebate me back most of the commission. I have already sold my house out of state so there is no negotiating multiple deals for the rebate."

What do you think the responses were?

There were a handful of common-folk, meaning non-licensed people, chiming in saying that what she was asking for was fair since she had the buying experience. Huh? Has she bought a house in her new market and especially in a market like we're in today?

There were a handful of common-folk giving examples of the deals they received, however, every single one of them had a house to sell in addition to the one they were buying, so their Realtors received compensation off two deals, not just one. And I believe all of their Realtors received the full buying commission, they just did a reduced commission on the listing side of their previous house.

Then, you have all the responses from the Realtors. I've got to tell you, many Realtors don't agree on anything. Many rather argue a point to death just to prove they're right and another is wrong. What did they say in this case?

Every Realtor responded with statements that this lady was not going to get what she was asking for. They responded saying that she didn't have any negotiating power on the purchase side because she didn't have a house to sell in order for the agent to make up some of the time and energy spent holding this buyer's hand.

The bottom-line response was that NO, a good Realtor was not going to rebate their hard-earned money back to a buyer just because they had bought a house before, several years ago, and mainly because the buyer was new to this market and would need a lot of guidance on what areas to look at, what are taxes like, what are schools like, and the normal first time home buyer questions since this market is very different than the market they were coming from.

How could this lady get what she is asking for? One suggestion would be to find someone else she knows who is buying and/or selling and give them as a referral to the same Realtor. Then that Realtor would be working in volume and it might be well worth giving a little rebate. Another suggestion would be for her to ask the Realtor who sold her last home to give her a referral of an agent in the new market she's moving to. That way, the Realtor would already expect to pay out a referral fee, but instead of paying a referral fee to the other Realtor, the Realtor in the new city could rebate that amount to the buyer.

Any other suggestions on when a Realtor should rebate back commission? My suggestion is for Realtors to stand their ground and explain why they earn what they earn. In this specific scenario, this buyer was brand new to this city. She doesn't know the areas, and she doesn't know this particular market. The Realtor is going to be holding her hand through way too much of this buying process, I don't see how a Realtor could fathom giving back most of the commission to someone she doesn't even know. She's not a past client, she's not buying multiple properties, she's not a friend or family member...

Now, if this lady were to find a house and called a Realtor and explained her situation and said I want to put an offer on this house, I know I want it, and I want a rebate since I did the leg work, and you just need to negotiate, that might be a different story... but with the facts that were given, would you give back a large chunk to this lady? My short answer is NO, what's yours?

Posted by Donna Harris, REALTOR® & ASP - Hill Country Austin Lakeway Homes on 11/20/2008 10:38 AM

Comments (67)

Rebate in the Sales Strategies / Tactics Channel

commissions, rebate, buyers, realtor, austin real estate, austin realtor, austin tx homes

Originally posted at: Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: Consumers Always Looking for A Deal

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67 Comments on Consumers Always Looking for A Deal

NOV

2008

Coupons are the way to go now a days!

Raylene, So you're saying you offer your buyers and sellers coupons for you to give them your commissions? Is there an expiration date on these coupons? They must buy by the second time you show houses or the coupon expires?

Wow. Good article. Very nice blog post, I also checked out and like your best site.

I would say that the commission payed on buying a house is payed for by the seller and has nothing to do with the buyer. It is offered as compensation for bringing a buyer to the table.

Also reducing commissions in this market is like shooting yourself in the foot. Especially on the selling side. Its the last thing you should do.

No. Sorry. I got distracted with a phone call and I guess I wan't very clear. I don't negotiate on my comission or offer coupons for that. What I do, is provide coupons for other things from my service providers. If I can get a coupon for a Survey fee or discount an inspection...have an attorney draw up closing docs for less instead of the Title Co....Clients really appreciate things ike that. I can't afford to give one dime away, but trying to offer coupons for other things helps. I also send out coupons from local businesses once a year to clients around Christmas. The local business gives me the coupons for free because I am doing a mail out for them and the clients look forward to the coupon. The service providers give me the coupons because it helps them get more needed business since transactions are getting fewer and fewer.

Reducing your comission is not necessary, and eating is very improtant.

We all work to hard to cut our money, though I have done it on many occasions. However, I don't do it until the last minute when it is the only way to make the deal work. I do however, discount for the repeat client which I tell them up front. I stay in touch with my clients between transactions and they can't wait to come back to me for the discount!

Good Point! Stand your ground - People don't realize that you get what you pay for - You want a Good Agent you will have to pay for it - In the long run the buyers and sellers will probably, when all is said and done have more money in their pocket -

Robert, thanks!

Eua, Very good response. I go further and tell buyers that the contract between the seller and their listing agent is not anything I can change since it's a contract between them.

Raylene, Thank you for your further explanation. Coupons from different vendors is a nice idea.

Valerie, Discounting for repeat clients is understandable, especially when you're getting two more deals from them, the sell and buy, not just one side. It's volume based.

I say stand your ground this is our job would they expect to cut their pay on their job?-NO.

I don't do rebates and never will, but there are companies out there who do.

I have never heard of that down here. Who is doing rebates? That just seems desperate to advertise that you would give a rebate.

If we earned a salary instead of a commission, I think people would rarely ask us to give up a chunk. It always seems like a large amount of $$ to them and they want a piece, but whoa, string those commissions together and sometimes it's not all that much.

I might occasionally throw in a small amount to get the deal done or pay for something small, but that's where I draw the line.

I will not help them buy their house unless they want to put my name on the deed!

I was just thinking what Pat said above. Ask her to work for free next week since whatever store she works at we have all shopped at before, or if she is a doctor we have all been to doctors or attorneys etc. Who doesnt have some experience doing almost anything? It doesnt make you an expert or mean you can do the job on your own. If she can? Then go do it on your own! Why are you asking us for help then?

Wow, what a great idea for that lady. I wonder if she had any takers? I think the consumers need to be more involved and not just lay down for the real-a-tors! LOL

This is an idea that should be considered....from this point forward, real-a-tors must pay their clients to represent them! LOL, maybe the lawyers and doctors will get on board too? LOL

Hi Donna, good to see you, hows that young-un?

The only type of discount I offer is through my vendors. Because of the volume I do with my inspectors and title company, I pass those saving on to my client. I do not offer a discount on my commissions as this is my compensation for the work I preform. I look at lower home prices as incentive enough for my buyers.

Donna, if this buyer is so 'buyer' savvy, then why are they wanting to work with a Realtor? This is just like telling a lawyer that you have already done half of the legwork therefore they deserve a discount. It's like telling a pharmacist that they already have vitamins and minerals in the pantry, would they please discount the meds because I am halfway naturally healed?

I think that this buyer is such an insult to Realtor's who have earned their title with on-going education, certifications, designations, etc.

Here is a link on a recent article by realtor.org - Do You Really Think You Are Worth It? Negotiating Skills vs Discounting Skills. You might also be interested in reading Commissions (or where does all the money go?) by Caroline (Realty) Corp.

A note to buyers: You have experience in buying and selling real estate? Good, then do it yourself, but if you want my professional opinion, don't waste my time in giving you a discount from MY earned commission. But I will tell you this; I will however serve as real estate consultant and it won't be cheap!

Steve, The sellers usually have thousands more in their pocket than I do!

Pat, Thanks!

Michael, I know. The most I do is give a small 0.5% discount on the listing commission WHEN they buy from me. If they don't close simultaneous, I take a full commission, and then "rebate" back the .5% on the purchase, but of the previous home's price. No discount without multiple, volume closings.

Angelia, Many companies across the country are doing rebates, especially redfin, ziprealty, and others.

Margaret, You make a great point!

Donna - While I agree whole heartedly with the idea of not cutting commissions, rebating, etc.; I wanted to make a comment about something else. I've done it too, so please don't get me wrong, but don't you think that our (agent's) attitude of "hand holding" is a bit demoralizing to the consumer? I've used the phrase before, and I know what is meant by it in RE circles, but the fact is, things like that are what gets consumers frustrated. Babies get their hands held through things. By exposing the consumer to some of the phrases we hear in training, coaching, etc., I think we truly run the risk of sinking our own ship someday. Now I know, some people do want their hands held and others know what is really meant by it, but those words, to someone who isn't thinking about the underlying meaning, could seem a bit condescending (if you ask me). I make this comment only to open up the discussion about it, I want to be very clear, I am not calling you out or anything, because like I said, I've said it too, but its something I've been thinking about lately and when I read your post, it just popped into my head to see what your thoughts are on it (I like to hear others thoughts as much as possible - no matter which side of the opinion they fall on). Thanks for writing great material though, I do enjoy it.

PS I know you have a BA in Pyschology, so that has a lot to do with my interest in your answer.

I've never entered into an income-sharing agreement. But certainly if I were to agree to share my income then I'd expect the other party to do the same with me!

Identical!

I would say that the commission payed on buying a house is payed for by the seller and has nothing to do with the buyer.

Nope.

Look, I have no problem with somebody asking for a commission rebate as long as they are up front and honest about it.

I won't work with them.

I am sure some others agents will be tripping over themselves to work with them.

That's fine.

There is always going to be a small percentage of the opoulation that wants the "best deal."

They won't change and I am not going to try to make them change.

Next...

It's interesting to hear discussions on commission rebates. If this lady were moving to my area, it would be a moot point because rebating commission is illegal in my state. I do agree with Diana's comment about why does she need an agent if she is so experienced. Perhaps she is not as confident in her abilities as she led the forum readers to believe.

Good post, Donna! Isn't it funny what people expect, something for nothing... This is always true but especially now in these economic times.

I totally agree with Mark...I use my imaginary button, NEXT!

I am glad that my commission is set and I can't rebate whatsoever in the insurance industry. My friend who was a mortgage consultant always stated how he hated the client seeing what he made on each deal! They always wanted to negotiate the terms with him, I would hate that.

punt it! That is how I usually handle these in the mortgage world! Otherwise they end up being the clients who need the most attention and most work involved. Not to mention-No Respect!

Eau, I self-diagnose all the time, and then still end up at the doctor's office...

Ed, Last I read the thread, she had no takers. She's in Austin, so you would think I would jump on that needing to start up my new business down there, but even with that, I'm not desperate! And Alyssa is doing great! She turned 1 on Sunday!

Steve, Vendor discounts sounds like a good idea.

Diana, I'm wanting all the Fund managers to share the wealth. I took a hit on the market, but they made millions. Do you think they'll share so I can invest more money?

Matt, I understand what you're saying, however, my own clients use the phrase all the time. I received this two days ago when I asked for a testimonial: "Writing what has happened to us so far and how you baby sit us one step of a time is not a problem. I can't see myself doing anything without consulting with you. You REALLY know a lot more than we do." Makes ya feel good, huh?

Richard and Li, Makes sense.

Remo, Exactly. Buyers' agents are not part of that contract.

Mark, There's a client for every business model... and many of those business models disappear after short times in business.

Pam, I think it's because she's new to the area and DOES need help in figuring out the different cities.

Kris, Yeah, I know!

Diana, you snuck in there again ;)

Jason, I don't really care when my clients see the number since our average sales prices are much lower than the national average, I don't make very much on each deal. Another reason why it's a volume thing.

Jennifer, No Respect is right! They'll take and take and they think nothing of it.

** Just a reminder to all, this is a Public post as I'm hoping the public does see it and when they do, they'll think twice about this topic.

First of all, rebates are illegal in our state, But buyers here will ask to lower the selling price 'and take it out of your 3%.' I just ignore people who blatently tell me up front that, in effect, they don't want me to get paid. Who do they think they are? The audacity! Having said that, they might find some agent who will do it. But that agent won't be around the next time they buy a house.

Sarah Rummage
Nashville TN
Sarah@Nashville-Homebuyer.com

Donna, it just makes me very angry that buyers think that we make too much money when all in all we actually do work very hard by having to be an all-in-one office/business. It might not mean anything to the world but it does to Realtors, at least for me it does. Also, I don't see why this buyer is asking for a discount when it's the seller that pays the commission but then here we go with another topic :)

Too Many Chiefs - Not Enough Indians!

luckily my State doesn't allow rebates. I wouldn't be surprised to see a day when you have to negotiate your commission amount with the contract.

Didn't we see a large discount Brokerage firm in the Northwest go out of business a few weeks ago? Discounting commissions is following that same failed business model. At the end of the day, you will hate working for this person...they de-valued you before the work began and you will always resent that. Tell them to call a discounter...they will get the help they are willing to pay for.

Sarah, You are correct. Most of those agents realize real estate is hard work and they're part of the stats when people leave within the first 18 months.

Diana, I understand completely. I have a closing on Monday, and I actually get a bonus. I was a little worried about the buyers seeing it because they almost used a rebate company, but asked my opinion before junping ship a few months ago. I explained to them what happens. When the bonus was put in front of them to sign off on, they actually asked the builder if I could get more. They told the builder how hard I worked for them to make things happen. I didn't get more, but it made me feel good to know that some people really do appeciate us!

Nope. Each transaction is different. Buying two homes hardly makes one an expert. I wouldn't even entertain it. I had one guy buy one of my listings this past spring and he HATED Realtors. He always ended a call with "go make a phone call so you earn your commission." He represented himself and I was always clear on deadlines for inspections and loan approval. He ignored everything I told him and then CRIED at the end when some tree roots were eating the sewer system.

I hate to be mean but you do seem to get what you pay for.

Hi Donna,

I don't even waste my time arguing anymore...I just let them find it out for themselves. And then they end up blaming us anyway.

"My suggestion is for Realtors to stand their ground and explain why they earn what they earn."

I would have to say that this would be my option. I know it's been said for years, but we are professionals, so we need to act like professionals. We do a lot of work and juggle many things to help our clients buy and sell, so I honestly believe that we earn every cent of our commission. No other profession gives you a chunk of what they make back, so we shouldn't either.

If you give up anything it's your choice...Use good judgement..Rich Charlotte NC

Michael, But then what are the seller and listing agent negotiating for their contract? Only the listing commission?

Carolyn, I'm not sure which company you're referring to. I know Redfin has changed their business model several times over the past couple of years. Discounters can't sustain in the long run.

Renee, Sounds like how Roy would end calls, but he did value my hard work... though I hope he rots in jail for what he did!

Neal, People point the finger, and have 4 more pointing back at themselves when it doesn't work.

Jimaria, I agree completely. However, even some lasik doctors are discounting huge amounts like get one eye done and get the other for free.

Did anyone suggest she go to REDFIN? That company is tailor made for her!

I saw an ad on Craigslist once - A buyer was advertising for an agent who would rebate him half the selling side of the commision - the ad stated that he was pre approved and knew the area he wanted to buy in. I would love to see what responses he got and I always wonder if anyone took him up on it.

Excellent post.

I will stand firm. I am experienced at buying purses and shoes, but the stores and salespeople still have to get paid! My number one pet peeve is people asking for a reduced commission. NO, do you argue with Wal-Mart about the price of any item? Not usually. Do you argue with the Dentist about the price for tooth extraction? No! So, please, quit asking for reduced commissions!

Rich, Yes, it's a choice, but it's not a choice most realtors would make.

Debbie, Redfin is not in Texas.

Keahi, THanks.

Lacey, I agree, however, hospitals will haggle price with you if you don't have insurance.

with the current economic crisis and changes taking place, this is likely a sign of the times. Who knows how things will change, but this sort of behavior is going to be more prevalent and those who come up with some sort of plan on how to handle this sort of thing in the future will be at an advantage. The free market is undergoing a permanent change and we must adapt to survive.

Can we legally 'rebate' part of our commission? That sounds a lot like paying a commission to a non-licensed agent.

This does not sound like a client that would I would choose to serve. If they are trying to cut my fee before we even start working together on the buy side, I don't like where that is leading.

Let me ask this question... If you had some dental work done a few months back.. and now needed route canal.. would use ask the dentist to give you a refund because you were there before? It is a separate diagnosis right? Do people call attorneys and say "I did some legal work for the closing of my house, would you reduce your hourly rate?" What do you think they would say? NO. Why do realtors who work their butt of have to do give backs? If this job was so easy everyone would be doing it... they aren't. This market is hard, and we WORK for a living like everyone else.

Can you tell what my answer is.. NO.

valerie osterhoudt

I've never rebated part of my commission to a buyer. If they want to "go it alone" then they certainly have that right to do their best to negotiate a price they find acceptable. But it is not the agent's responsibility to finance the buyer's purchase.

No doublt people like to believe strange things.

Robert, That was the same arguement I heard when the market was hot... now discounters are disappearing, so I don't buy what you're saying.

Lovejoy, Some states do rebates, others do a straight reduction. Each state is different. In Texas, you cannot give referral fees or actual cash to your buyers, which is what "rebate" sounds like to me, but you can give a credit to closing costs as long as the lender and underwriter have approved it. No check is actually made out to the buyer.

Carroll, Me neither!

Valerie, But in CA, just about everyone *is* a Realtor as they all think it's so easy! I think they say 1 in 3 people are licensed. But I completely agree with your comment.

Kelly, Makes sense.

Dawn, No doubt!

Good article, we have to be very creative nowdays, and I think this is a good example.

Good luck!!

No way would I rebate my commission, and if a buyer can't understand the reasons why, I don't think I want that buyer. I don't care if a buyer has done it before, each transaction is different. Each transaction requires just as much work drawing up contracts, looking out for the buyer's interests, working the deal through until the closing is done. If that buyer cannot understand that just helping them through houses is not what I get paid for, they are not going to value what I bring to them as a Realtor. They will have no loyalty.

This buyer is asking for substandard service. The only realtors that will go for something like this are the ones I do not want representing me in a buying situation.

I agree with you, stand you ground. I work very hard to provide my clients with the most professional, complete service from the first contact through and after the closing. My services are worth every penny I earn.

Donna,

This reminds me of the old Budweiser commercial ~ Put down the skunky beer and slowly back away. Good luck to her!

Lynn

I would definitely say NO, not interested, but wish her luck at the same time. And if she runs into trouble working with inexperienced agents who agree to that, feel free to call us. Further, I would explain that a good buyers agent will probably negotiate a much better deal for her that would more than pay for the real estate commission itself, not to mention home inspection repairs, and everything else... The choice is hers : )

JM, THanks.

Brenda, You make some good points.

Erika, I bet!

Lynn, Funny!

C & S, If an agent can't negotiate their own income, how will they be able to negotiate a great deal for their client?

Discounts or perceived discounts, fee for services, retainers with hourly rates. It all can work, but in the end what we have to offer is our time and experience. It is what we are worth. We have to get paid.

I sold real estate in Seattle, WA where you could use different real estate companies that would rebate back to the buyer. There is nothing that I am aware of in New York City where I now work that offers that same type of agreement.

Fred, Completely understand.

Morgan, And many of those business models have disappeared.

I always felt that we earned our commission getting the deal from contract to closing. Dealing with inspection issues, banks, etc... Yes we earn some of it find the client a house, but the money I beleive is earned getting from contract to close.

It is amzing how they want us to reducerour fees... but do not want us to reduce our services.

Incentives are highly lucrative right now and consumers know it. Give them a deal they can't resist.

NOV

2008

I've never rebated money to a buyer---only when there was a last minute problem with inspections and the deal had to be saved.

I think my response would be, "I'll tell you what, you get me anothe referral that closes before yours and I will pay X amount of your closing costs!". How's that!

Jim, I agree, thank you.

Roland, Of course not. I want FULL services and then some.

Castellum, and that deal from you would be what?

Diane B, So it's "never", but when exceptions?

Tami, Sounds reasonable.

"The bottom-line response was that NO, a good Realtor was not going to rebate their hard-earned money back.......My suggestion is for Realtors to stand their ground and explain why they earn what they earn"

It is amazing to me that so many Realtors still don't get it. The goog old days are gone forever and yet still this tired argument about not reducing commissions continues.

News Alert: There are tens of thousands of starving , hungry agents out there that need ready, willing and able buyers that will negotiate their commission in order to facilitate a sale. There are also some successful agents out there who will do the same. And guess what...the consumer knows this!

It's really simple. If you are doing so many deals that you feel facilitating a deal for a lesser commission is something that you would never do, then don't do it and keep getting what you're getting.

If on the other hand, you are not satisfied with your income and want to market yourself in a way that differentitates you from all other agents in your market, then by reading these types of blog posts with this type of ideology, you casn see that you won't have much competition in your market.

We ONLY work with agents who give us rebates. We had to look pretty hard to find agents who would do what we wanted...NOT.

One email stating what we were looking for, nearly 450 responses within 3 hours, thousands over the course of a week and we vetted out the ones we did not want to work with until we had our current stable of agents who are HAPPY to be rebating half of their commission on every deal. And yes, we ask BOTH sides to offer the rebate.

Man I love a Buyer's market!

Some people will step over dollars to pick up dimes.

This overconfident and foolish consumer will easily find herself an underachieving and incompetent agent. Together the two will both feel like they got a deal.

She'll see how much of a "deal" she got when she moves in and needs to sell one day.

SUCKER!!!

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