I don't think it's a shot, Ron, it's good thinking on your part.  I love to see people let their brains loose and see what happens.  You have a very good point.  Something for me to ponder for a while.

Well, we ARE from the same great state, aren't we? ;)

I think agents who rebate the money they earn are telling buyers and sellers they are not worth the price they charge...or are being paid. I assume if that is what they think it is probably true. Limit your services, give less advice and help...and charge less. I think it is reasonable to assume that some people buy Lexus and some buy Hyundai...it may be because they can not affort the Lexus...or they just do not see the value in the quality. Either way I think you will always have people who do not see the value in quality! Let those who do not see the value in what they do continue...my guess is most of them will be selling cars in a few years.

Ron, good point, that is how sellers would see it. I recently had sellers to deal with that could not understand why they were asked to pay some of buyers costs, even though they recd a full price offer, I did everything but draw a picture and they felt they were taken advantage of and they weren't.

You are right on point, good bird dawg, Ron. (And I didn't mean anything mean by that).

Yes, I have changed my game plan when I present offers now where buyers are asking for seller contributions. Because once they hear that full price offer, they shut down. So now it is "here is the offer, but we will write the contract for ___ and ask you to pay____.

They are just concerned with their bottom line. It is all in presentation. Even liver could look good with a little parsley garnish. ...well maybe.

I have never had my sellers wonder where their commission would go (other than knowing it's split between me and a coop broker) ... once they agree to a certain commission rate, that's it ... they want their home sold, they know the "price" of getting it sold from the very beginning and don't question it in any way.

That is why a good buyer’s agent won’t reveal the rebate until all negotiations have passed -- contract and inspection. Of course, Zip doesn’t have that luxury.

With all due respect, why do you give Prudential a large hunk of your commission? Don’t you value your services and thus deserve the entire commission?

Opps, wrong blog! Disregard the last post.

Makes perfect sense to the point where if I'm writing an offer to Zip I would certainly ask for more concessions.  If my sellers are under pressure then I advertise closing costs paid by seller.  If it is a regular deal and nobody is relocating I wait for the offer and negotiate the closing costs which I usually build into the selling price.  By advertising CC paid, I'm hoping to appeal to other agents who are working with folks that are short on cash.  I also believe in making the sale as easy as possible for the buyers, mine or others.  I generally feel that folks find it a lot easier to pay an extra 35 bucks a month than give up 5k upfront.

Mary, fried liver looks good without the parsley.

Ron, I'm glad you pointed that out. One of the agencies waiting for me to handshake is Zip in Orlando Florida. P2A says they have zero listings,or, may I say zip. But, click on the web site and WOW! Look at all of those listings. Please, Ron. Tell me why agents approve a company like that and then complain about the lack of buyers at their web site? You don't give a nut a gun and bullets and wonder why you got shot!

Since rebates should be paid by the rebating company.  I would suggest that you pay the rebating company you co-op broker compensation after closing instead of having the escrow company.  Could the rebating company provide those rebates if the company had to pay up front at closing and 1099 the buyers for IRS purposes.  The buyers haven't figured out they are getting their own money back from the sales price they just paid for the property.

oops - hit the return button by mistake.  What I was trying to add is that I never do both sides of a deal.  When I list a home, I make a commitment to protect the best interests of my clients (again) and I don't feel that dual agency is doing that.  Some agents think they can walk the line, but I don't agree and I think they are just seeing the $$.  That's why I don't particularly care if I have a handshake agreement with someone who is limited services or provides rebates or whatever.  It doesn't take a thing out of my pocket because they may be able to bring a buyer for my listing.

Looks like I lost the first part of my post after all - here's a summary -

If you are going to receive the commission you negotiated in the listing agreement no matter the selling agent is, what do you care if they're giving a rebate to the buyer or if your handshake is with someone who has no listings of their own?  

With my RE/MAX broker, 5% commission is the norm rather than a discount + there's the minimum $250/mo. desk fee along with the 80/20 split.  Again, don't forget the franchise fees, et al.  And do you think that for that 5% commission we limited our services?  I don't think so.

I feel this is two different subjects. Rebates to clients and sellers paying closing costs. I work with buyers from all over the country because we are a vacation, 2nd home, retirement market. They all come here saying I think the seller should pay my closing costs. Markets that are accustomed to that have built the closing costs in to the price and the listing agent has prepared the seller for it. I have also worked with this market of paying the buyers closing costs. I tell them full price or adding to if it appraises may work.

The rebates. I may be wrong, but I think in Texas you have to ask the seller if you are allowed to pay rebates. It is like a kickback. It is the same thing as discounting commissions. Why? You did your job. A housewarming gift is in order.

I think where all this started was the new home builders were giving agents a bonus on some homes and they passed that on to their buyers, in the form of buying them a fridge or a gift certificate to Home Depot for their grass. The on line brokers who do nothing for their commission but send a client to a new home subdivision, register them, then say they get a nice fee back is nasty. And if it is not stopped, we all are going to lose that client base.

Who the heck is zip?  And in another thread I read that you aren't an independent contractor, you are an employee?  How is that legal in Florida...and if it's not, how are they operating in Florida?  I went to my approved and I have one zip guy in there...he has no listings, his website is a beginner website, it says nothing about rebates for buyer or seller, says nothing at all.  So, he has no listings, doesn't say squat on his website, hasn't approved me so he's not carrying my listings...just how much competition can he possibly be?

Dennis,

Realty rebates aren't taxable income and thus a 1099 isn't required.

Karen,

Per RESPA, a rebate is not a "kickback". In Texas & most other states, a rebate is to be disclosed to all parties, but does NOT require their approval. Of course, if a rebate is used against the buyer's settlement charges, then that would require lender approval and must be recorded on the HUD-1.

Cheers!

Cyd, I know zip about zip. Rebates are not allowed here in the great state of New Jersey. The company was identified in an earilier thread as a "rebate" buyers agency. If you pull up the one pending approval and click on "our listings" you will find a lot of listing that belong to other hard working agents. My position is that: those agents who approved the handshake for that web site can't complain about the company's "rebate" competition once they allow them to display their listings.

I believe Ron is absolutely right. I foresee sellers taking that stance in regards to rebates, and I also see listing agents advising sellers not to contribute to closing costs because the buyer is getting a rebate.

Good luck selling your listings. Buyers have options -- many options.

We're lucky to be in a state (Utah) that does not allow "rebates" to buyers in the form of cash.  This means the discount brokers pretty much leave the buyers alone and focus on the seller side.  (The also customer service requirements make it hard for Redfin-type internet brokers to come into the state.)

And, fortunately for sellers, Utah has also not suffered the rest of the country's RE market downturn ... yet.   So, there aren't to many times that they have to pay part of the sellers closing costs.

My local market (Park City Utah) is vacation & 2nd home based, so we do occasionally get asked the "closing cost" question by buyers.  But, while not as hot as the rest of the state, our market is still OK ... probably buyer/seller neutral at the moment ... which means no concessions to the buyers.

Not a big fan of the rebate companies but as far as the Seller, Don't Sellers typically go with the highest and best offer?  If there is only one offer, that makes the decision making process easy.  Can always actively solicit backup offers just in case.  I had a few zip offers come through, they never closed anyway.  

In CA we can rebate the buyer but not the seller.  You do have to disclose a rebate to the lender.  This can mess up a deal, as for what ever reason lenders don't want to see that.  But there are many companies that have popped up that are advertising as much as 25% rebates to the buyer.  I have yet to do a deal with them but do see their ads everywhere.

It is also legal in our state to be an employee of a Broker.  It means more tax consequences to the Broker so most prefer for their sales persons to be independent contractors and pay their own taxes.  I am surprised that this is not legal in FL.

However we do our business or what company we choose to work for or what reason we choose to work for that company, we just need to follow the rules, regulations and laws of the State.  Conduct our business with honesty and stop bashing the other companies because they choose to do business differently.  

Georgia not everyone wants to work from home or pay for office space, desk space, office equipment, or paperwork.  Others want that "big name" as it may be the most popular company in their area.  So those agents are willing to pay their Brokers for the items they don't want to pay for.  I happen to work for a independent and I am willingly giving them some of my commission to have a beautiful office to work in, as well as having them take care of my office expenses, long distance, printing, copying, documents, E&O insurance, coffee, cleaning crew and did I say coffee?  Ok you get the point.

Have a great selling week everyone!  Pray for us we are going to play short pay this week!  EEEEE

Jana  

PS.  Ron I think it was you who told me about Google Tool Bar - Thank you I love the spell check!  My grammer may still stink but my spelling is better :)

I certainly understand. However, many agents & brokers will knock other agents for giving rebates to the buyers, yet these same agents & brokers are either giving away substantial commissions to their brokers or the brokers are taking it from the agents. In any case, the same argument can be made: Don’t you value your service enough to not just give it away? I always get a chuckle when I hear that argument about agents who give rebates.

Huh!!!

Keller Williams is a rebate franchise also also.

One of the top Keller Williams producers are here in Florida.

http://gitta.com/custompages_reports.php?key=g61446

Check out this rebate page, above .

I can tell you she has blown away the competition in Lake Mary/ Heathrow area and beyond, KH agents should take notice of her achievements.

Vance

Same goes for relocation companies ... what difference does it make if you giving money to a relo company or your client?

Vance, I am always amazed at the information you bring forward. Keep it coming!

Exactly! Relo's take 35% in many cases. And yes Vance, that KW agent is giving rebates too.

Well if you like that Keller Williams agent, then you should like this RE/Max agents rebates.

Is it full service or limited service cash rebate? or is it just good old competition in the marketplace catching on in the real estate industry today.

$10,000 cash home buyer rebate below

http://www.dallas-real-estate.net/index.html  

giddy up partner!!! what do ya think of that Pilgrim?

Yee haw

Thanks Gregory I will keep em coming ha ha

Vance

Ok one last one.

The American Dream so it says.

http://www.adrealty.us/index.html

Vance

I think it is good old competition.

Some people may not like it but it is what it is!

For the record, I had my first day of training @ Zip today.  Zip is a FULL SERVICE brokerage that runs a bare bones main office in order to be able to provide sellers with a 5% listing fee and a rebate to buyers.  The agents work from home offices only - there is no elegant furniture or flat screen televisions in the office.  The staff consists of a staffing manager, the manager, a trainer and two customer service/transaction coordination/payroll people.  That's it.

They have a proprietary agent computer platform that maintains the agent's data base and keeps track of where prospects are in the process of selling or buying a home.  This is similar to RE/MAX Main Street, but about 5 years advanced.

I saw the numbers today - if you could find a house that sold for $200,000 in the Seattle area, the agent would net $2100 and change with no unreimbursed cash outlay - no marketing, no gas, no cell phone, no signs, no flyers, no no no.  There are 3 agents that I met today that have been there for 6 months or less that have 5 open transactions for this month - isn't that about $10K or more?  Also, the Seattle office has about 25 agents who have been there for 3-5 years.

So, I'll say again, I'd rather attract and keep clients than pay RE/MAX $310/mo. (includes desk & franchise fees) for a gorgeous designer office that I used maybe 3 times in the past 2 years to meet clients, for which the main purpose is to recruit more agents to make the broker more money.

I think this is the future, my friends.

Well Vance, I see that the one guy says it is 30 to 50% of the agents commission. I guess I would rather give my hard earned dollars back to the owner or buyer than give it to some bogus referral company. Heck, I would rather give it to them than another RE Agent who just picked up the telephone and re-directed some poor soul who got lost on the internet. But, I'm glad I live in New Jersey!

Wow, Vance - that American Dream Website sure is bright and cluttered!  Hurst my eyes.

Belinda, does it pay to have its name on the back of the town little legaue uniforms, does it pay local real estate taxes, or, give to other charities in your community? Take a good look around your home town and see how much money the local real estate company gives back to the community. The discount on fees comes from more than just the lost of the franschise name.

Exactly Rick, it is good old competition!

Weather you are a independent agency or a franchise agency what difference does it make if you want to reduce your commissions.

The point is franchise Vs independent is what it really comes down to rebates

When in fact we all all in this together, full service or limited service or whatever you want to call it.

How does one agency know what type of service I give my clients? you don't, only my clients know.

All they know is I give a rebate as in those examples above, franchise or independent.

So bashing someones business model is really uncalled for, you do not have to give a rebates and stay the course, I prefer to give a rebate so what itis the problem?

Answer. there is none

Please be sure to stop by my Buyers/Sellers Rebate page

Vance

Viva Las Vegas

http://www.cashrebatesrealty.com/

http://www.GeorgiaPeachRealEstate.com

http://www.MyOrlandoFloridaRealEstate.com

http://www.ConnecticutHomeFinders.com

"Wow, Vance - that American Dream Website sure is bright and cluttered! "

Yea but he got his point accross ha ha

Vance

As a matter of fact, Gregory, they do not as far as I know.  However, neither did my specific RE/MAX broker.  RE/MAX International does co-op with the Children's Miracle Network and the Susan G. Komen *** Cancer Foundation on a national level.  On the local level, each agent is asked to contribute a portion of each commission to the Children's Miracle Network that goes to support Seattle Children's Hospital.  

I plan to continue to give to the hospital and I'm a volunteer for Susan G. Komen *** Cancer Foundation and an at risk teen girl mentoring program.

Best I can tell, there's NO loss to my community.

Belinda, those are "national" causes. Worthy, but not local. I know about the RE/MAX and Miracle. An agent can claim and put up a neat looking sign if they give just $1 at closing. Local!

Zippy-Do-Dah,, to you Belinda

I plan to continue to give to the hospital and I'm a volunteer for Susan G. Komen *** Cancer Foundation and an at risk teen girl mentoring program.

Vance:)

Calm down, Vance. This isn't a fight. It should have been a fight by Broker Owners years ago, but today it is just a discussion. So, how much does your company give to "all" those different communities you serve? I'll show my 1040 if you show yours. I can't get my brokers, but I will bet he gave more to the town and at least the same to national causes as Zip.

Didn't you love watching Arsenio Hall when he did his "things that make you go hmmmmm.... So where does that discount come from?

Gregory

I don't have a clue what they give back, all I know is what I give back to the communities every year, March of dimes is a biggie for me.

How did we go from cash rebates to giving back to your communities anyhow?

I know today it is just a discussion but when you look at some of the responses in other threads pertaining to this very same topic it will raise some hair, and must be defended to those who who think discounting/Rebating is a four letter word that's all, Iam not in a fight with anyone.

All I wanted to do was show everyone that even some of the franchise agents offer cash rebates now.

Does that make you any less of a Caveman! ha ha NO

You know what I mean Gregory

Vance

http://www.marchofdimes.com/

So where does that discount come from?

The Indians who sold Manhattan for $24 bucks, now that was some discount on real estate.

I can see it now, "Kemosobby" Discount Realty

Vance

Vance, I got the idea. I said before I would rather give the money back to the buyer or seller than pay out a referral fee. However, Belinda has started work at a company called Zip. I really know nothing about their business model. But, I do know how much it costs to do business in real estate. So, if you cut a cost to save the consumer what cost is it? More importantly, how will it effect the people it is going to save?

I know you would like everyone to think I have switched topics. But, even a caveman like me gets it.

Here, I'll use a reach that will make everyone nuts. By freeing Iraq, have we saved it?

Yes, Gregory, RE/MAX gives nationally, not locally.  That was my point.  RE/MAX is my old broker.  So for my local community, it makes no difference that I have left RE/MAX and gone to Zip.  I'm doing the same things I always have.

"Here, I'll use a reach that will make everyone nuts. By freeing Iraq, have we saved it? "

Well my only answer to that is an easy one,

It depends if you are from a Red state or a Blue state now there is a reach for ya.

Vance

Back in the 70's when RE/MAX entered real estate, they too were criticized & boycotted for their innovative business model of only charging rent to their agents.

Now in 2007, RE/MAX and others are bashing rebate companies for their innovative business models. Go figure....

That's to funny back in the 70s

Now in 2007, RE/MAX and others are bashing rebate companies for their innovative business models. Go figure....

___________________________________________________________

My how times have changed Huh, if you can't beat them join them.

http://www.dallas-real-estate.net/index.html    <------:) Bash this

Vance

Belinda, if I may. You are mistaken about RE/MAX only giving on a national level. There are many physical offices, each paying the community, in some form or another either in taxes or rent. Furthermore, when a local group is looking for sponsors - there is a door for them to knock on. I see many times the company name on the back of a jersey. That company does give to the local community. The problem with their business model is the "flat tax" that many agents can't afford to pay. By "flat tax", I am referring to the monthly business costs that are divided equally among the agents at that office. If you are a top producer then it is great. Using that model the top producer earns more commission with less costs going out to support the office. However, if you are not a "top producer" that "equal" division of costs will quickly put you out of business. This is something you already know about that franchise and most likely one of the reasons you packed your bags. But, the truth be told, there is a dollar amount in costs that in takes to conduct business. If Zip is saving some costs - it will have an effect on community it is suppose to serve. There is no free lunch! I am sure there are many, more qualified agents, who can explain macro and micro economics than I, but that is as simple as I can do it. Having said that, I want to wish you Good Luck in your new venture (and I mean it).

Thanks, Gregory.  I get your point, too.

rebates or not, as long as we can make a living and are happy doing what we are doing, that's what matters!