Is That Rebate Brokerage Hurting Your Business?

Real Estate Agent with Long and Foster REALTORS®, Gainesville, VA VA License # 0225089470

Is That Rebate Brokerage Hurting Your Business?

When I was sitting in my hairdresser's chair last week, I got this question from her.  She's been doing home improvement projects lately and I get the feeling she is considering a move.  Mind you, she openly told me that she recommends another agent in the area because she "loves his voice."  She is referring business based on a crush.  Doesn't bother me a bit.  I don't do business with people only because I think they are referral sources.  She gives me the best cuts and color I have ever had.  She's certainly not the cheapest in town either.  My last cut was $55.  Cut and color--$130.   I could probably get a haircut for $30 at a walk-in salon, or cut and color for $90.  I know, I've been.

So when she asked me if the rebate brokerage in the area is hurting my business, I first asked her why she was asking.  Turns out, a townhouse in her neighborhood had one of their signs in the yard went under contract in a couple of days.  Not surprising.  Our area has a huge shortage of townhouses, which is usually the home of preference for first time buyers.  My answer was a simple comparison.

A rebate brokerage to me is like what  a walk-in hair salon is to her.  Does she feel threatened by the opening of the latest location of the walk-in hair salon in the area?  Of course not!  Sure her clients could go there and get the same services for less, but the services are really not the same.  And the reason they aren't the same is that top notch hair dressers are not going to be attracted to a business model where they make less money than they could somewhere else.  And if you want a consistently good hairdo, you are going to have to pay for it.  

When I have been to walk-in hair salons, I remember feeling like I was in an assembly line.  My hair dresser remembered me and greeted me, but the overall experience was nothing to write home about.  And the haircuts were not always done as well.  Why?  She was going fast to get me out of there so she could move on to the next walk-in.  The consistency in results didn't exist.

When I found my higher end hair dresser, at the recommendation of a family member, the difference was night and day.  The higher end shop never made you feel that there were rushed to get you out.  You were offered a beverage upon your arrival and, my favorite part, given a head massage after the shampoo.  You even get to choose if you want a rejuvenating or relaxing massage.  Best yet, my hair always looks fantastic when I leave and right up until I go back.  The hair dresser is phenomenal.  I am getting what I pay for, which is top notch service and expertise.

The real estate reality is the same.  The best agents in any marketplace are not going to be attracted to a brokerage where they give a portion of their paycheck back to the client.  Not going to happen.  You are going to end up with less expertise, even though you both had to pass the same test to get your license.  The real expertise is learned from what you put into the job.  It's not magically delivered into your brain when the ink is dry on your license.  You have to WANT to be excellent.  You have to WANT to learn the ins and outs of complicated transactions so you can best serve your clients.  You have to WANT to have a thriving referral business.

So no, I am not worried that the rebate brokerage put a sign in a yard and got it under contract in two days.  A monkey from the zoo could do that in our current market.  Where I earn my money is making sure your home appraises for the sales price, making sure your contracts express EXACTLY what you what to happen in the transaction, in screening buyers and their offers to make sure they are qualified and there are no red flags.  I have a file of resources for items I can't help you with, so you never feel you are on your own.  And never has a client of mine felt I got paid too much.  Those clients are the ones getting paid to list with the rebate brokerage and, while they may not know it, praying for a good outcome.


Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Tony and Suzanne Marriott, Associate Brokers 04/17/2016 11:25 PM
  2. Patricia Kennedy 04/18/2016 02:29 AM
  3. Sheila Anderson 04/18/2016 09:23 AM
  4. Jeanne Dufort 04/19/2016 10:36 PM
  5. Winston Heverly 07/12/2016 01:20 PM
Home Selling
Virginia Prince William County Bristow
Addicted to Active Rain
Bartender, Make it a Double
Late Night Professionals Club
should i hire a traditional listing brokerage or rebate brokerage

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Melissa Jackson
Century 21 Alliance Properties - Azle, TX
Helping You Make The Right Move

Very good comparison, great blog post Chris Ann Cleland 

Apr 20, 2016 03:04 PM #116
Shanna Day Team Leader (UT & AZ)
Keller Williams SLC (UT) and Keller Williams Realty EV (AZ) - Park City, UT
Keller Williams Realty

Love the comparison!  So true!  Glad I read this today!  

Apr 20, 2016 03:29 PM #117
Robert & Leslie Lang
Weichert, REALTORS® - McKee Real Estate - Hawthorn Woods, IL

Great analogy! Thanks for sharing.

Apr 20, 2016 10:50 PM #118
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Very nice comparison, Chris Ann. What was your hairdresser's response/reaction?

Apr 21, 2016 01:20 AM #119
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good way to put things.  Thanks for the post. We are about service.

Apr 21, 2016 04:16 AM #120
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I LOVE THIS POST -I go to georgetown to get my hair done so i am definitely attuned to your comparison - 

Apr 21, 2016 10:31 AM #121
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Get paid what you are worth...Amen and Women.

Apr 21, 2016 06:03 PM #122
Cathy Hertler
Burns & Egan Realty Group, LLC - Billerica, MA

Great comparison! 

Apr 22, 2016 03:12 AM #123
Derrick Guevremont
Counselor Realty of Rochester - Rochester, MN
Rochester MN Homes for Sale

I thought that was a great analogy and enjoyed your post entirely.  As individual consumers we have different priorities as to what is important enough for us to justify spending more money.

I have friends that can't wait to get the newest and greatest smart phone.  I have sold millions of dollars of real estate with the old smart phone I have and I don't care about playing games or messing around with mine.  My real estate apps work fine and that's what I use.  They might believe they don't need a car that they store 5 months a year and no car needs to go that fast anyway.  I may agree that the car is not practical, but think that the car is so much fun that it's worth it.

I had my roof done by a fly-by-night roofer and saved myself a bunch of money, until I had to hire a good roofer to come back and fix parts of it.....  3 times.

Does a cut-rate real esate company do the same thing as a full-service company?  Not for my money, but maybe for someone who thinks that when they sell their home it is worth trying a gimmick. 

I know one thing...  When the going gets tough, they all go away.

Apr 22, 2016 06:05 AM #124
Nancy Robinson Ranked #6 in MI
Century 21 Town and Country - Royal Oak, MI
#11 Century21 Realtor in the US, #16 in the World

Discount anything just sounds cheap to me.  And sometimes people like cheap. I prefer quality any day any time for any thing.

Apr 23, 2016 08:09 AM #125
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Thanks to Patricia, I did not miss this great post!  Well done!

Apr 23, 2016 11:31 PM #126
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

I've always felt that if someone offers "limited services", they should explain that, what services don't they perform. Only the various state real estate commissions can enforce that, though. Now, by advertising yourself as such, it can be a marketing ploy to attract sellers. Those who offer this limited service, would seem to attract quantity. And that is something you should worry about especially in a hot market. IMHO

Apr 24, 2016 02:26 AM #127
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hey, Chris Ann!   I included this post in today's Last Week's Favorites. Hope you enjoy the rest of this beautiful weekend!


Apr 24, 2016 03:30 AM #128
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Wonderful analogy and outlook.  Too bad the gal doesn't like your voice, I think it's lovely!  

Apr 24, 2016 05:12 AM #129
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Redfin front page says  1.5% listing, then go in so much rebate buyer gets going with them.  There is no contact info on listing agent.

Apr 24, 2016 05:16 AM #130
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

In our area track home sellers can be clobbered for $100K easily on a home that is sold in 3 days.  Every home seller's question is the listing agent  gets $50K compensation or $2,500 an hour of work....

Apr 24, 2016 05:21 AM #131
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

That is what I always feel - not afraid of 'rebate' brokerage Chris Ann Cleland .

In fact, I do share what these rebate brokerages do!

Apr 24, 2016 12:50 PM #132
Teri Pacitto
Compass - Westlake Village, CA
Real Estate, Your Style...Your Home...My Specialty

Great post and so true. We have agents and brokerages in our area that claim they do full service for less. Consumers who buy that typically end up selling for less and paying more when they buy. I've been on the other end of many of these transactions and have cringed at what I see happening on the other side. All I can say is you do get what you pay for.

Apr 26, 2016 12:59 AM #133
Maria Peace

Great post and great comparison.   I will remember that one.  BTW, your hair looks nice too.

Apr 30, 2016 05:43 AM #134
MichelleCherie Carr Crowe Just Call...408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

It's interesting how people can choose their professionals-how will a "good voice" translate into a good experience?

Dec 18, 2016 12:50 PM #135
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Chris Ann Cleland

Associate Broker, Bristow, VA
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