Commission Rebates - Good or Bad for Real Estate?

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It seems like I'm seeing more advertising for the various commission rebate programs vying for agent business.  As far as I can tell, the idea was really born back in 2005 and received plenty of attention when it first started.  I like to think I'm progressive and willing to consider new ideas - but I've never jumped aboard the rebate band wagon.  Maybe because I feel like it puts the focus on the money I'm making rather than the house my client is looking for.     

In a down market - everyone is looking for leads.  That means more and more lead generation advertising.  I really do believe different alternatives work for different agents.  Regardless of what you and I think - THE US DEPARMENT OF JUSTICE IS ALL FOR REBATES.  They even have a website Rebates Make Home Buying Less Expensive.

At first glance - the rebate issue seems like a simple for or against idea.  Either you want to offer them to clients or you don't.  But it's not just real estate agents that offer rebates.  Builders offer them too. (a subsidiary of Lending Tree) has been offering rebates to new construction home buyers for years.  The Illinois Senate recently proposed legislation that would make Rebates by Illinois Real Estate Licensees illegal (Inman News).  The Illinois Association of Realtors Came out against it saying it would put licensees at a disadvantage compared to non-licensees (builders & developers).  According to an article at RedFin - that legislation was defeated back in March of this year

That being said - here are some of the rebate programs I've found on the web.  Plenty of agents will offer Rebates to their customers on their own. The list below contains referral networks you can join and be connected to customers looking for rebates or commission bids.  I thought it would be an interesting exercise to see how many of these companies also had profiles on the various social network sites so I've included any of those links I could find.         

Some states do not allow agents to offer commission rebates.  For a complete list of states allowing agents to offer rebates, visit the Department of Justice Competition and Real Estate Rebate Page


All the resource related links in this post are available at the Directory of Resources for Real Estate Professionals. is a human edited diretory of links for real estate agents, loan officers & appraisers.  If you're looking for anything related to the business of Real Estate - you'll find it at Resource Directory for Real Estate Professionals  


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Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Bo:  A great post... very informative.  Rebates can be good for buyers and sellers, and for agent's, too.  As long as everything we do regarding them remains inside the box... if it brings positives along with it... it's up to the agent, or even the buyer or seller, to choose.  Thanks for sharing, and thanks for all the links.

May 14, 2008 05:08 PM #1
John Ford
Security National Properties - Eureka, CA

I agree with Karen. I have participated in several of these programs. they've given me the ability to get a  new client that I would not have had if I didn;t sign up. They have ebcome clients for life

May 14, 2008 05:16 PM #2
Michael S. Mackey
CENTURY 21 All Islands - Mililani, HI

Bo, I saw your post immediately after it came up, and I was impressed by how well you examined the issue. I wanted to comment right away away about my personal experience with a rebate program, but the phone rang, yadda, yadda yadda. Anyway, I couldn't say it all here, so I wrote a blog to share with you and others.

May 14, 2008 06:13 PM #3
Stephen Graham
Inactive - Atlanta, GA

A home buyer's rebate is simply a reduction in the price of buyer-agency services; it's no differnet than a listing agent lowering the percentage to list a house. Buyers should understand that while they don't directly come out of pocket for the cost of a buyer's agent, it is built into the sales price of the home. From the USDOJ:

"Although the seller pays this commission, the buyer bears part of the burden of the commission through the sales price of the home."

Given that, a buyer's agent can reduce this fee through a rebate to the home buyer. The Washington Post gives buyers the "heads up" on how a real estate transaction works in the real world.

"Some people just don't like working with agents. Other buyers go without them thinking they can negotiate a better deal on their own by working directly through the listing agent. Often they think that by working on their own, they are entitled to a discount on the sales price equal to what the buyer's agent would have received as commission. But the payment structure doesn't work that way. In that situation, the seller's agent just keeps the whole commission."

Jun 05, 2008 04:31 AM #4
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