Never thought about it. Can you tell me what it is like to have a client that doesn't want to make things as difficult as possible?

I thought about posting a question like that myself but than I decided to keep it just to myself ... but since you asked ... I would ... just as I'm open to ocassional discounting on the listing side, if it makes sense financially, why not do it on the other end? I'd rather have two motivated buyers in exchange for a small discount than having none at all. ... it's not that much different from paying for leads (that may never work out) ... or paying hefty referral fees to other agents, relocation companies and others who don't mind making your paycheck smaller.

I won't , I can't and I will pay the price if I am wrong!

I don't think that I could ever offer less service ... I am a full service kind of person ... but if the rebate or whatever would you call it would "force" the buyers NOT to waste my time taking them to 50 places over 6 months but instead motivate them to take it seriously and make their showing request choices more wisely, I am not opposed to it. For me it's very similar to not making a difference between working for clients who are in a $100K or $500K price ranges. As long as it is to the benefit to all of us, it's ok.

Howard, I would.

I do. I donate half my commission to my kids school when a school family or their referral uses my services. It works out the listing side is a reduction of the commission, the selling side is a donation. I provide the same excellent service. I couldn't do it any other way. Maybe my scenario is not quite on topic, but a reduction in commission nonetheless.

I have regular repeat clients who deserve a discount buying or selling because they not only give me business, they refer new customers to me, and they are experienced which makes transactions easier than usual.  I also give discounts to friends.  I also charge differently for residential than for commercial.  Basically it is all negotiable and all clients, properties, and transactions are different.  I like having flexibility when working with people.  

I offer my buyers a free home warranty.  It doesn't cost me that much, but it's of immeasurable value to the relationship with my buyers.  The fee also comes out at closing, so I don't have to pay taxes on it.

Belinda, that would be a no no here in NJ. It sounds like every agent in your state would be buying their clients something just to win over their businss. But, if that's the rules there then good luck.

Gregory, It's legal here.  Do you know why it's illegal in NJ?  For us here in WA, it's just a "value added" service we provide.  As I said it doesn't cost that much and it's really no different than a "rebate" if you think about it.  Instead of giving back 5% of my 3%, I'm giving a $400 warranty.  Amounts to just about the same thing.

Yes, I would and I have.  I'd rather have them happy....and I did get 2 referrals out of the deal.  It did bite me at tax time though.

Gregory,

You are saying that the State of Jersey mandates a fixed commission, no matter what the circumstances are? Isn't that an Anti-Trust violation?

I think, not for certain, that an agent cannot advertise a promise to discount his/her commission to lure buyers.  That doesn't mean that it isn't done at all, especially in clever ways by discount brokers, hence, Redfin.  However, it is perfectly legal, at least in Florida, to negotiate a commission while working an offer to make the deal go through as long as it is not a kick-back to the buyer after the closing.  The negotiated commission must reflect on the HUD.

John

I believe we have a cap of $25 on gifts. We are not allowed to do rebates. We can't even get gasoline rebates from our credit cards. Why? Well, it is my opinion, that some of our politicians have taken what is called "kickbacks". I think we invented it. That and traffic circles. Not too many of those circles around any more either.

In Illinois it's pretty simple ... see below a section from the IDFPR (Illinois Department of Financial and Professional Regulations) website's FAQs:

Q. May compensation be paid to a principal to a transaction, even if the principal does not have a real estate license?

A. Yes. Section 10-15(c) of the Act authorizes the offer or payment of compensation (“prizes, merchandise, services, rebates, discounts or other consideration”) to an unlicensed person who is a party to a contract or lease. Of course, such compensation is not required. The payment of such compensation should be pursuant to the negotiations on the transactions. The payment of such compensation is not limited to payment by a licensee to the licensee's client - in other words, a seller's agent may pay compensation to an unlicensed buyer.

Q. May a licensee offer compensation to solicit clients?

A. Yes. Section 10-15(d) of the Act authorizes the offer or payment of compensation (“cash, gifts, prizes, awards, coupons, merchandise, rebates or chances to win a game of chance”) to a consumer as an inducement to that consumer to use the services of a licensee, even if the consumer and licensee ultimately do not enter into a client relationship. Any advertisement under this Section must also comply with all requirements regarding real estate advertisements. Also, care should be taken not to offer compensation to unlicensed persons for referrals of clients - this is prohibited.

John, all commissions are negotiable. But, the rebate taken from the commission is a no no. I think several web base referral companies like move. com have a list of states that don't allow it. NJ is not alone. I must state the amount of the commission on the listing agreement and I must state how that commission will be split on the MLS or if it is going in the MLS. We have more paper for the home owner to sign - most of which is just CYA stuff. Redfin's model will not work here. The big discount house in my neck of the woods is Foxton. They were the 2%, then 3%, and now 4% guys. I go after their expires.

Gregory,

We also have pretty much the same rules.  Aftrer negotiating a commission with the Seller, we must also disclose it in the Lisgting Agreement (LA) and also disclose in the LA how much we will pay teh Buyer's Agentt.  That has to reflect on the MLS exactly the same.

As I explained above, in FLorida, we can negotiate the commission to make the deal only upon negotiating an offer to finalize one written offer.  Although, there are agents who will promise to their buyers upon meeting them for teh first time that they will cut their commission simply to ensure the buyers to stay loyal to them.

John

How about charging more to the problem buyers; the ones that lay awake at night scheming of ways to make your job tougher. Can we charge them a Stupid Fee?

I have done it when it means a deal will fall apart.  Such as helping with repairs if it goes over the limit.  If it takes a couple hundred dollars of my commission to keep a deal together I will do it.  It isn't a rule, it is an exception.  In return, I ask that buyer or seller for the names, email addresses and phone numbers of 5 of their friends who are thinking of buying or selling.  I get my $200 back in no time.  I always ask for referrals, but these are more that they have to come up with.

I have had two phone calls from people explaining to me that they have found the exact home that they want to purchase.  They want me to represent them and write up the contract but they want 2% of my commission as an incentive at closing!  I think these are investors that would be buying the homes anyway but are trying to work around having to have a license to make money on a transaction.

I told them both no.

John, I only promise my buyers a good time. I mean, for three bucks what do they expect?

I would offer buyer rebates, but only if fully disclosed on the HUD-1 in order to avoid RESPA issues.  Problem is, many lenders will not allow it, even though it is legal.  Has anyone worked with a lender in New York State who has allowed the rebate to go on the HUD?