How RebateReps is positioned in the "rebate real estate" marketplace:

There are several new real estate companies on the scene that offer to rebate up to 75% of the buyer's commission.

I'd like to delve a bit into how RebateReps.com (which offers a 33% rebate) compares to BuySide (offering a 75% rebate) and Redfin (offering a 75% rebate).

I would group BuySide and RedFin into the same category: They have "virtual" agents who work out of a call center and never physically interact with their clients.

On the other end of the spectrum are traditional agents who offer full service & high touch, but do not provide rebates (and in fact campaign vehemently against them, seeing rebates as an erosion of their business model.)

RebateReps sits in the middle. RebateReps is more of a "buyer's club" than an actual real estate firm (although it's run by a real estate company based in Virginia). You can almost think of it as an association or a "union" that regular, non rebate agents can belong to.

By participating in RebateReps, agents are making a certain commitment to us, and to the clients we refer to them, as follows:

1. The agent will give the buyer web-based tools to start their home search online (these tools will vary based on what the agent has available in their service area, but generally include MLS search tools and listing alert emails at a minimum)
2. The agent will be available via phone & email to answer buyer's questions as they start their search
3. Once the buyer has done the preliminary research involved in finding a home, the agent will step in to help
4. Once the agent steps in to help, they will provide a "full service" experience like any other agent would, including the negotiation of contracts, satisfying contingencies, arranging inspections, and generally shepherding the contract successfully through to closing.
5. In return for the buyer having done the initial part of the legwork and saving the agent time in the beginning of the process, the agent shares his commission with him. The exact amount of the rebate depends on the amount of the commission being paid, but is generally 1% of the sales price (equivalent to 1/3, or 33% of the agent's commission).

Here's why we think this is the best model for buyers seeking out rebates:

1. Rebates Require A Tradeoff: No matter which agent a client speaks to, rebates always require a trade-off. It's simple economics. Realtors have two things to offer their clients: Time, and expertise. Anytime a firm offers a rebate, they either:
* A) Won't be able to spend as much time with the buyer on the transaction, or
* B) Won't have the expertise & knowledge to guide the buyer through the transaction and avoid pitfalls.
When a buyer focuses on getting a rebate, they will always be giving one of those two things up (and sometimes the buyer gives up both if the firm isn't very good).

2. Rebates Require More Work On The Client's Part: If a buyer comes to a RebateReps requesting a rebate, our RebateReps agents will happily give it, but in return, they'll ask the buyer to do the initial home searching on their own. Many RebateReps agents will even loan out a free GPS machine so buyers don't get lost. The way RebateReps agents afford to give buyers a rebate is by having the buyer do the time-consuming home search process on their own time, using the agent's tools. Then, the agent steps in when the buyer is ready to have them negotiate on a specific home. From that point on, the RebateReps agent serves as a "full service" agent to ensure the home closes successfully. With RebateReps, the buyer gives up some of the "time" but not any of the "expertise".

3. Rebates Can Be "Penny Wise & Pound Foolish": The really dangerous thing about real estate is that one single mistake can cost a buyer many thousands of dollars. If a buyer misses one item in an inspection, say a roof problem, it can cost the buyer $5,000+ to fix. Or putting a contract together the wrong way could cost the buyer $20,000 (and possibly much more). Not negotiating the best deal could also cost the buyer much more than they'll save by getting a rebate. Having a problem with a seller and getting into litigation can prove tremendously expensive. Therefore, rebates are tricky. They're not for everybody. This is the major issue we have with BuySide and Redfin. Since they can't have local, expert agents interacting with buyers in person, the potential for an oversight, mistake or problem is much higher, which can easily cost the buyer much more than the benefit of a rebate. Redfin might be able to get away with saying that Realtors generally work very inefficiently (and rightly so), but it would be very erroneous to imply that there is not a tremendous amount of value in having a local, expert agent handling the transaction in peson once the initial searching has been done and it's time to negotiate terms, write a contract, and ensure it closes successfully. This is the value that RebateReps provides.

Our approach enables buyers to perform the "self service" piece in the initial home searching, which is the part most buyers want to do by themselves anyway. This approach allows RebateReps agents to spend time with buyers once they're ready to put a contract in, which is where the really expensive pitfalls can be.

An additional benefit of our approach is that it gives regular, non-rebate Realtors a way to compete in the rebate field without having to advertise rebates to their local market, meaning they get the best of both worlds: They can be "full service" non rebate agents around town, and then when a RebateReps lead comes to them from us, they can offer that buyer a rebate because the buyer understands they'll have to do most of the initial legwork.

If any agents would like to join RebateReps.com, simply visit http://www.RebateReps.com/join

PS - RebateReps is free for Realtors to join; there is no monthly fee. We only take a referral fee when a lead we send closes.