Let’s begin with a story about Buyer Rebates: Yesterday one of my agents came to me because her friend is getting ready to buy a house. He went online to look at properties and was solicited by a company offering to give him a partial commission rebate. He called my agent and told her that he wanted to work with her, but he didn\u2019t know how he could possibly give up that buyer rebate. She was really upset about it and didn\u2019t even know that a commission rebate was legal so she came to talk to me about it.<\/p>\n\n\n\n
I told her the commission rebate was legal although I think it\u2019s weird and I don\u2019t think it\u2019s really in anyone\u2019s best interest. <\/p>\n\n\n\n
Then I told her the story about the time I showed my listing to a buyer and her non-commissioned\/salaried agent\u2026<\/em><\/strong><\/p><\/blockquote>\n\n\n\n
I had to be there to show the property because there was a dog in the house, and the buyer\u2019s agent was being paid to show up, but not earning a commission. She leaned against the wall and did something on her phone and just had me show the house to her buyer. The buyer loved the house and was happy to tell me (the agent for the SELLER) how excited she was and that she wanted to jump on it before Amazon opened their Philadelphia headquarters (spoiler alert- Amazon never happened here) and the house prices shot up.<\/p>\n\n\n\n
I had to tell her not to divulge confidential information to me to protect her interest, but it was too late. I knew how much she loved the house and of course told my seller. The seller played hard ball in the negotiations and she ended up paying full price for it.<\/p>\n\n\n\n
This simple mistake happened while her own agent was 10 feet away not even paying attention to her. The seller would have sold for $12,000 less than asking. The buyer\u2019s rebate was $3,000, so her rebate ended up costing her $9,000. <\/p>\n\n\n\n
Calculate Buyer Rebates here<\/a><\/p>\n\n\n\n
How those Companies Make the Rebate Work<\/strong><\/h2>\n\n\n\n
Companies that offer these rebates generally hire agents that that either pay on the salary or an hourly or task based fee based schedule. What I mean by this is they might say to their agent \u201cgo show this house and I\u2019ll pay you a flat fee. Show up for this buyer\u2019s home inspection and I will pay you a flat fee\u201d. By doing this, by not having to pay their agents a full commission, they\u2019re able to save money and refund it back to the buyer. If this were the entire story it may seem like a win-win situation. But it\u2019s not quite that simple\u2026<\/p>\n\n\n\n
Agents who get paid a flat fee or salary are not incentivized.<\/p>\n\n\n\n
Incentivized agents MUST go the extra steps, or they don\u2019t eat. <\/p>\n\n\n\n
Agents on full commission partially or fully rely on referral business to keep them fed.<\/p>\n\n\n\n
Agents who rely on referrals are incentivized to do an amazing job for their clients.<\/p>\n\n\n\n
Part of doing an amazing job for buyers is to get them a great deal. This includes the best possible price as well as terms and conditions.<\/p>\n\n\n\n
A salaried or flat fee agent has no incentive. None. <\/p>\n\n\n\n
The buyer may have tax consequences on the rebate. In fact, the law states that in order for the rebate to be legal, the broker must inform the buyer that they should consult a tax advisor.<\/p>\n\n\n\n
Commissioned Agents are Incentivized, and That is a Good Thing<\/strong><\/h2>\n\n\n\n
First of all, let\u2019s admit right up front that on the surface it seems like we as real estate agents get paid a lot of money. I\u2019ve had to defend my commissions in front of people more times than I can count over my career. But there are a lot of things that I have to say about that. <\/p>\n\n\n\n
I only get paid if I close. If you count up how many hours and days and weeks and months I\u2019ve spent with people educating them, giving them advice, giving them counsel, giving them my knowledge & my experience, and never closing a deal\u2026 the numbers would be skewed closer towards minimum-wage. <\/p>\n\n\n\n
Getting through a transaction can be a detailed and complicated process with many moving parts and variables. I have the necessary experience and knowledge to deal with these issues and give amazing service to my clients. <\/p>\n\n\n\n
I also concentrate totally on real estate which means that I have a network of service providers who can help my buyers and sellers. I deal with home inspectors, lenders, title companies, insurance brokers, contractors, maintenance people, personal organizers, de-clutterers and just about every other professional that you can think of that whom you need for your transaction and maybe even for your life in general <\/p>\n\n\n\n
If I don\u2019t close deals, I don\u2019t eat. That\u2019s not meant to be dramatic. That is the straight up truth. There is no paycheck coming to me unless I close deals. Why is that important to my buyers and sellers? Well, it\u2019s important because it shows that I\u2019m motivated. No, I\u2019m not just motivated to close deals and make money. That is short sighted. If that were the case, then one could argue that my best interest is for myself and all I care about is money and therefore my being motivated by money would hurt my client. <\/p>\n\n\n\n
Real Truth!!<\/strong><\/h3>\n\n\n\n
The real truth is if I were motivated solely by money I would\u2019ve burned out along time ago because people would\u2019ve seen through me. I\u2019ve been going strong well over 20 years without a steady paycheck. The way I am able to do that is because I give amazing service and do a great job for my clients and they refer me. And my reputation speaks for itself.<\/p>\n\n\n\n
Granted I\u2019m not the right fit for everyone but that\u2019s to be expected. What I am is ethical, hardworking, honest and I possess integrity. Those traits and characteristics are what build my business. <\/p><\/blockquote>\n\n\n\n
The fact that I am motivated to do my best and keep learning and use my experience to help my clients is what keeps me going. If I were not motivated by money and if I were not compensated by commission, there would be no incentive for me to do an amazing job. If I got paid every time I show the house I would get bored and complacent. Not only would I hate that life but it wouldn\u2019t keep me sharp and on top of my game. That hurts my client.<\/p>\n\n\n\n
By being sharp and on top of my game it causes me to go above\u00a0 and beyond the call of duty as well as negotiate the absolute best deal for one of my\u00a0clients. There\u2019s a lot more to an offer than the asking price.\u00a0I use skills, experience, tips and tricks to negotiate a strong contract in the best interest\u00a0of my client and, in so many other ways, it often translates into a lower selling\u00a0price for my buyer and the higher sales price for my seller. As well as better terms.<\/a>\u00a0
<\/p>\n\n\n\nBuyer<\/strong> Rebates Actually Cost the Buyer Money<\/strong><\/h2>\n\n\n\n
So that little commission rebate that they are dangling in front of your buyer? What is that really worth? The person who works for that company is basically an hourly employee. Although they might do their job well and even be a skilled agent, the fact can\u2019t be denied that there is no incentive for them to work harder for their client. <\/p>\n\n\n\n
They are going out and doing a task oriented job for the client during what could be the most expensive and important investment of their entire life. <\/p>\n\n\n\n