At first I didn't think anything of it...but all of a sudden I notice a dramatic increase in phone calls from buyers to our office asking to have the listing agent ONLY show them a listing. It became more and more frequent. The buyers were stating one more things "We do not have an agent and we will not sign buyer agency." OK...but why?
The buyers tell me they are calling all the listing agents to see several different properties. Hmmmmm.....this just doesn't make sense. Until...I realized a particular online company was actually telling buyers to do that...and then call them when they want to write a contract so the buyer can get 2% commission rebated back to them. Interesting.
Why the heck wouldn't a buyer want a great agent, who was THEIR buyer agent, showing up, showing comparables and then taking them out? Good buyer agents can even show you neighborhoods you don't even know about. I mean, honestly...how do you even KNOW you are seeing what there is to see? Rarely do my buyers who started online even buy the house they called about. Usually, it a concentrated effort that takes much dedication and energy to find that perfect house. It's just not that easy, folks.
Why do buyers all of a sudden think buyer agency is a bad word. HELLO...the buyer agent is representing YOU. This is a GOOD THING. We worked really hard in the 90's to make buyers agency happen FOR you! Prior to that time ALL agents were representing the SELLER and the buyers didn't understand that. Why would you GIVE that away? Does that make ANY sense?
Listen, I have absolutely NO problem with commission rebates. What I do have a problem with is misrepresentation. Why should listing agents drop everything they are doing (remember they are NOT sitting around twiddling their thumbs). If one of these buyers wants to come through an open house, no problem. If their agent happens to be out of town and calls us to ask us as a favor to show a property to their client...we are more than happy to accomodate.
The issue I have here, and I think it may actually violate ethics, is to coach buyers to be dishonest. These buyers are NOT telling us they are working with another company as they are instructed to do from the sites I have visited. A 2% rebate? Actually it's not a big deal. Most of our buyers who are experiencing buyers representation are getting 3% or more back in sellers subsidies. If you get a 2% rebate and it fails to show up on the settlement sheet or your agent is violating HUD/RESPA laws. All rebates and subsidies MUST show up on the settlement sheet. Why???
Lenders have a right to know just how much a buyer is actually putting down on a house. They have lending guidelines that must be complied with. Any money going back to a consumer not noted on the settlement sheet is considered a kickback...and kickbacks are illegal.
Let's skip the rebate issue for a minute. If I was a buyer, there is NO way I would want to not have buyers representation. The listing agent is representing the seller. Anything I say to the listing agent can and will most likely end up going back to the seller. How is that good for me? Can I get a better deal by working with the listing agent? I shouldn't be able to. After all, the listing agent is representing the seller and should be trying to get the very best possible deal for their seller. So who's taking care of me, the buyer if I don't have any representation?
You see, sometimes these "Rebate Companies" want to make you THINK no one else will take care of you, that you are getting a deal from them. Really? Hmmmm...I don't know any TOP agents working for such companies. Good agents know they deserve to be compensated. A top negotiator who is going to go to work for you, is going to get MORE than 2% back for you in this market. Good agents are well educated, experienced and know how to troubleshoot any and all of the issues that come up in a real estate transaction. That kind of knowledge does not come cheap. But YOU, the buyer, don't pay it anyway. The seller pays the commission AND pays the subsidy, usually at least 3%, for YOU. OK..you could argue that some buyer agency contracts say the buyer will make up any commission descrepancies. So? Have your agent strike that part and initial it. State that the agent will only be compensated by the seller. This isn't hard to do people.
Think about it, would you go to a doctor that told you to go to other doctors and ask questions, then come back to them when you knew what you had? The old saying "Pennywise and pound foolish" more than applies here. make sure you have a good buyer agent who is working FOR YOU. You deserve to have the very best representation possible. Any agent who hides under a rebate as an excuse NOT to properly represent you isn't going to take care of you. I mean really..what's in it for them?