With Zip Realty Eliminating Buyer Rebates, Does It End the Discount Buyers Agent ?

By
Real Estate Agent with The Somers Team at RE/MAX Access

I read this morning on Inman news that ZipRealty is Eliminating Buyer Rebates.  And for those that do not have a premium membership this article has a lot of information - ZipRealty Eliminating Buyer Rebates.

So the question now is are there any other discount realty services that are offering buyer agent rebates?  One of the Buyer Rebates - a thing of the past ?problems with the ZipRealty model is that in some markets, buyer agent rebates are simply not allowed.  And in others, the consumers catch on that the quality of the agent just is not there.  Consumers are more interested in getting quality service and representation than a buyer rebate at the end of the deal.  Especially since they do not have to pay for any of the real estate commission in the first place.

In Philadelphia, I only had a couple of deals accepted with Zip Realty agents, all where it was obvious that the agents had no clue what they were doing. None of those deals made it to settlement.  Maybe those were isolated incidents.   But I can see that they were not closing that many deals at all.   So obviously ZipRealty, as mentioned in the article, had to make a business decision to eliminate these rebates to try to stay in business.  Their website did attract a lot of traffic in the past but now that the rebate gig is over, will the website still place as high?  And will they be able to convert that traffic to clients?  

The same goes with listings.  Most sellers realize that in this market that they need a professional to properly advertise and market their property.  And one that has the experience to negotiate a deal and get it to settlement once it is accepted.  There is much more risk with a discount broker.  Is it worth it by saving 1 percent or whatever the discount might be?  Maybe for some, in a sellers market.  But for most, probably not.  At least not in this market. 

What are your thoughts on this subject - buyer rebates?  

With ZipRealty ending them, are rebates essentially dead now too?

What are your thoughts about the discount model in general in this market?

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Charles Gardner-Realtor/Investor 07/05/2011 05:57 PM
  2. Sharon Kowitz 07/06/2011 02:01 PM
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Rainer
51,787
Jen Giraud
American Home Shield - Dallas, TX

Personally, I'm glad they stopped. I actually used to work for Zip and it was a great model for new agents since leads were provided, however, the main reason I left is because the quality of leads was decreasing. And I'm sure it had a lot to do with what you mentioned in the article.

Jul 06, 2011 02:05 PM #29
Rainmaker
261,271
Kim & Kristine Halverson
www.LiveWorkSiliconBeach.com, Santa Monica Real Estate :) - Santa Monica, CA
Realtors

Getting a buyer into a home is a LOT of work.  I never did understand this model for the agents?  Also, for the buyer since the Seller pays the commission why skimp on one of the biggest purchases of your life?  Kristine :)

Jul 06, 2011 02:43 PM #30
Rainmaker
186,174
Cameron Wilson
Labrum Real Estate - Murrieta, CA
The Short Guy - Murrieta,Temecula,Menifee Californ

Since 1987 when I entered the business I have seen companies like this come and go and it's always in a down market. None of them have ever affected my business personally and they never will.

My Dentist never gave me a rebate and when I sold him a house he didn't get one from me...........

Jul 06, 2011 02:45 PM #31
Rainmaker
715,933
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

This "model" is what I would call a "fair weather model".  When buyers and sellers are easy to come by, when banks are reasonable and we don't have rampant insanity  with negotiations dragging on forever and buyers demanding to see 100 homes before they make a low-ball.  But under present conditions it takes about 250 hours to close one transaction - Rebate?  You've got to be kidding me...not under these conditions.

Jul 06, 2011 03:42 PM #32
Rainmaker
150,760
Jeremy Joslin
Coldwell Banker Residential Brokerage - South Windsor, CT
Professional Real Estate Marketing and Sales

One thing I am sure of is that there will always be people looking for anything at a discount.  But as the saying goes you get what you pay for.  I had a friend who had joined zip and she was receiving a lot of leads but she has since relocated.  I am sure this is not the last we will see of the discount brokerage.

Jul 06, 2011 04:12 PM #33
Rainer
126,916
Brian Doubleday
Brian Doubleday - IML RealEstate - Orange County, CA Broker - Ladera Ranch, CA
Ladera Ranch, Foothill Ranch, Lake Forest, Mission Viejo
It seems like every 5 or 6 years the discount groups lead a big charge, but fizzle out
Jul 06, 2011 04:50 PM #34
Rainer
211,241
Jack O'Neal
Conway Real Estate - Gilbert, AZ

Sellers want agents that get the home. In today's market, to buy a home a Buyers agent needs to know the market and what it takes to win the bid.

 

Jul 06, 2011 05:01 PM #35
Rainmaker
1,157,174
FN LN
Toronto, ON

Discount buyer agents will continue to be in the marketplace.  I don't believe that Zip Realty operates in Canada.

Jul 06, 2011 05:21 PM #36
Anonymous
vance hill

i worked for zip and i have to say that i agree that most of the agents were clueless, not to mention their lack of knowledge for the real estate industry i.e their District Manager?! what a joke that guy was. He had never sold a house in his life! How in the heck was he supposed to hold me accountable for how I do business when he doesn't know the business...they are a purely numbers based company, plain and simple. all the sales meeetings were ever about were the stock number and how much money we brought in to help the offices bottom line.  they preached "if you're successful, we're successful" model instead of the opposite. They may have HAD some of the best technology (which i have now actualy been trained how to impliment into my own websites, yes the exact same maybe better lead capture models). the rebate was never a selling point to any transaction i had. i had clients follow me after my departure because they were sold on ME, not some silly rebate. I saw the sinking ship shortly after I joined and started seeing the stress levels of the office staff rise to scary levels...they were more interested in how many agents they could hire than how the agents they had could better serve the indusrty...ZIP REALTY=FAIL

Jul 06, 2011 07:48 PM #37
Rainer
158,808
Adam Mallory
eBroker Real Estate 619-566-ADAM - San Diego, CA
Broker, ABR, e-Pro

Great post Chris and Stephanie!  It's interesting that you should blog about this now as I just noticed how few Help-U's and Assist to's we have left (here in San Diego).  Obviously that biz model no longer works as it used to.

Jul 06, 2011 08:12 PM #38
Ambassador
1,948,138
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

Taking offense at comment #9..but I choose to ignore it  and simply go on . 

I can't understand why would anyone think is a good idea to pay someone to work with them?

Should't  your service be sufficient enough? 

Jul 06, 2011 11:51 PM #39
Rainer
332,713
David O'Doherty
Raleigh Realty Inc - Clayton, NC
Clayton NC Homes, Raleigh, NC

I always tought they were just a lead generator,and as such were attracting folks who wanted their leads handed to them. I had a horrible experience with a Zip agent a couple of years back.

Jul 06, 2011 11:53 PM #40
Ambassador
769,836
The Somers Team
The Somers Team at RE/MAX Access - Philadelphia, PA
Real People. Real Dreams. Real Estate.

Am glad to see that this post was featured to get more comments and insights on this subject, especially a few from those who used to work at Zip.   Bottom line is that it the market is so difficult right now and the deals are extremely time-consuming, it would be frustrating to be a buyers agent or a listing agent working on a discount model.  It is understandable how ZipRealty was not profitable and had to make changes to their model to survive. 

Jul 07, 2011 01:14 AM #41
Rainmaker
2,817,667
Richard Weeks
Dallas, TX
REALTOR®, Broker

If commission are negotiable then how can there even be such a thing as a discount broker?

Jul 07, 2011 02:46 AM #42
Rainmaker
362,526
Mike Russell
Mike Russell & Associates - Overland Park, KS
Overland Park Kansas Real Estate

Kansas and Missouri are non-rebate states and I am very happy for that. It takes the question off the table and allows me to focus on service.

Jul 07, 2011 02:54 AM #43
Rainer
97,429
Glenn Freezman
Nucazza LLP & Home Buying Evolution, & Family Abstract, Inc - Fort Washington, PA

If a buyers agent is willing to work on a consultative, pay as they go, ala carte basis and a buyer is willing to pay for the services of their agent as they work, whether or not a successful closing is reached.  They pay for example $200.00 per hour and use 50 hours and prepay $10,000 dollars on a $600,000 dollar home.  Would the $8000 earmarked as "commission" be a rebate or a refund of an overcharge?

Jul 07, 2011 05:23 AM #44
Rainmaker
809,827
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Christopher and Stephanie:

I have never had a transaction with a Zip realty agent.  Many have shown my listings and for the most part they seemed to be professionals who knew the business.

Jul 07, 2011 09:52 AM #45
Ambassador
769,836
The Somers Team
The Somers Team at RE/MAX Access - Philadelphia, PA
Real People. Real Dreams. Real Estate.

My first experience with a Zip Realtor was as a buyer agent years ago. They had an investor's "flip" listing for a property in Fishtown and it was listed at a at a very reduced commission. I asked the agent in private, "How do you feel about the discount brokerage model?" She said, "What's a Discount Brokerage Model?"  I just smiled and was thankfully saved by my cell phone ringing!

Stephanie

Jul 07, 2011 10:30 AM #46
Rainmaker
232,679
Ken Barker Realtor® GRI, E-Pro Certified
Dilbeck Real Estate - Burbank, CA

Christopher and Stephanie - I am here from a post from Ruth Marie but this is good news. Although in my just under 10 year career I have only lost one buyer to ZIP. And that was because I would not allow myself to meet their same structure of give away.

Zip and any of the other discounters in our area are not even a BLIP on the market share but they are there.

Jul 12, 2011 05:23 AM #47
Anonymous
Ron

About 20 years ago, I bought the exact house I wanted for a great deal and got $1000 back from my buying realtor. There was no problem what so ever.

Jul 13, 2012 01:46 PM #48
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