Not all of our group members have encountered requests for rebates in the field, but two of us have. Jane Peters gives us a personal account of an online agent. And the story provided by Norma Toering provides a perfect example of a buyer/rebate encounter which segues nicely into the comments from our other team members.
The Story of an Online Agent
A friend of mine joined an online company at my urging. He is starting out in real estate, struggling, and in need of leads. And boy does he get them at this company.
The problem is - that is all these leads are - leads. They are not people. They are farmed out to anyone and everyone in a disorderly fashion. Second problem is that my friend has never been properly trained. He has very little idea what he is doing and he is handling transactions from beginning to end with absolutely no guidance. The people who are his team leaders know less than he does. It’s not a good time to be flying with a learner’s permit. I shudder to think what goes on with the majority of transactions in this company, and I am surprised they have not ended up in litigation.
These agents ultimately get paid around 30% of the deal. (The company takes 50% of what is left after the buyers’ rebate.)
If an agent has the necessary real estate credentials, local housing market knowledge and ambition, why would they choose a business model with a lesser rate of pay? Why?
Because these agents have no other way of getting business. They are inexperienced, and they believe this is an easy way to make money. Professionalism generally doesn’t enter the equation here.
Tale of a Rebate-Seeking Buyer
A young, smart, rebate-hungry and independent buyer (not profiling here, but those are the prospective buyers that welcome the cutting edge home search ability offered by one particular site getting raves from consumers.) called me when it was time to buy. He devised a method of searching for homes that worked best for him--he searched using that method, but used me as his agent when it was time to write the offer. Was he playing both sides? Absolutely! He loved the user-friendly online search method coupled with my real estate blog.
Did the buyer ask for a rebate? Yes. Did I give him one? Sorta. Was it as much as the rebate company promised? No, not even close--just some closing costs. His reasoning went something like this: “ I'm saving you time by finding the house I want to buy (that was the plan) and only using your time” (good, more time to service listings and work with traditional buyers, whatever that is) “When I'm ready to view it, and if I like it I'll have you write the offer and do the paperwork.” I went from expert to order-taker in five minutes flat.
After a few months of daily due diligence the order taker "found" the buyer's dream home, and like most dream homes it was just beyond the buyer's grasp. Unless the experienced agent, local expert and savvy negotiator could move from order taker to oracle, this transaction was not going to happen. The buyer said he did not think I could do it and walked out the door talking about choice number two. He is now living in his dream house. He is also my raving fan, offering testimonials and absolutely sure of my worth. When it is time to sell and buy again I don't think he will be surfing on the net trying to locate a company offering a large rebate.
The Idea of Rebates
The term rebate in itself does not conjure up ideas of quality. Consider one of the meanings - “to lessen or diminish”. The largest single purchase 95%-99% us ever make is a home purchase. And if we are typical, we don’t do it more than 3-7 times in our lifetime. How comfortable would you feel putting one of the most important transactions of your life into the hands of someone to whom you are just a number – a lead? This someone could overlook an aspect of your transaction which will end up costing you much more than the rebate savings. Is the discount worth the risk? We don’t think it is.
The inclusion of rebates certainly diminishes the perception of the real estate profession. That said, buying and selling of goods and services is consumer driven, and technology has changed how many of those goods and services are exchanged. Real estate is not immune and thus the rules of engagement between consumer and agent have changed. Now it is all about giving the consumer what they want, when they want it and how they want it. Gone are the days when we controlled and owned the buyers' eyeballs. They are touring property without us online. While we're sleeping (both literally and figuratively) they are engaging and mingling with other service providers. Of course, they feel empowered and they are.
Pros and Cons
The Internet bestowed the ability to search for homes without an agent. There are positive aspects to that.
1) The Internet presence trains consumers to do all their home searches online
2) Creates awareness of the role and use of a Buyer's Agent
3) Creates the impression that online agents are order-takers
Shortfalls of the online model
1) Most people want to see more than a profile on a national order-taking site before choosing an agent. Purchasing real estate is a financial, personal and sometime emotional experience. Selecting an agent from an online profile alone doesn’t allow the consumer to develop a level of trust, determine a communication style, or evaluate personal compatibility.
2) Most consumers believe they get what they pay for
3) Not all consumers really understand that they must choose an agent directly from that online site
4) Many consumers want to "think" about things and are uncomfortable with what they perceive to be a commitment online at that very moment.....then they end up doing research and choosing someone else.
The Future
The rebate companies need not be feared, but as agents we need to raise the bar and showcase our value by educating and informing consumers at every opportunity. The complexity of the market we’re in offers our industry an opportunity to increase education requirements and professional standards. Online resources have helped buyers find properties, but consumers aren’t equipped with a handbook for the rules of real estate, including local laws, governmental requirements, financing, title and escrow issues.
Will the lure of a rebate ever trump the value of a knowledgeable local real estate expert? We've seen various discount companies fall by the wayside before. Market conditions and customer behavior suggest that the majority of buyers and sellers realize the benefit of an experienced and dedicated Realtor in this all-important purchase decision.
THE GOLD STANDARD
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