Broker: Rebates are bribes
Letters to the Editor
By Inman News, Wednesday, April 2, 2008.Bookmarking Sites
Re: 'Montana lifts real estate rebate restrictions' (April 2)
Dear Editor:
I am amazed that the DOJ thinks this will create better deals for the consumer. I think it will create more deception, graft and corruption. It serves no one but the Web site brokers and the airlines and the already corrupt, on-the-fringe brokers who are less than genuine with their clients.
We have always had the right and ability to negotiate our broker fees with our clients. That is business, but airline miles and rebates are not business -- they are bribes -- and are usually offered by those who cannot get the business through years of hard work and good reputation.
I think this is one more hit to the good Realtors who have worked for years to establish their credible reputations. Now the Web sites and the discount brokers can come in and offer cash incentives to sellers who don't always see the big picture. It sounds great at first but in the end many of the sellers will be hurt, not helped.
Kickbacks and rebates are for small appliances and cars, not services and the knowledge needed to protect consumers while selling or buying real estate. Protecting the consumer is the right thing to do. Rebates are not productive tools for protecting the consumer.
Debra Leisek
Broker
Bay Realty
Homer, Alaska
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Submitted by Terry Shortt on April 2, 2008 - 5:27pm.
In a business like real estate brokerage, where the commissions (fees) charged by brokers coast to coast is strangely the same, there is no reason why brokers should not have been allowed to compete on the basis of price all along.
When you trace the history of the MLS back to its roots with the California Association of REALTORS, it’s clear that the intent was to “fix” the price REALTOR member firms could charge; otherwise this grand scheme of “a cooperative arrangement” between competitors would not function.
The real estate industry has and will continue to resist the efforts of brokers that have developed business models that price their services differently.
This resistance is rooted in maintaining the status quo and ensuring that this convoluted “cooperative arrangement” between competing brokers lives on. Without it, the real estate brokerage business as we know if will fade away (in the US).
REALTORS that insist that competing based on price is somehow “unprofessional” for a business like real estate brokerage should consider the fact that this is a business that takes two weeks to get started in and has a turn-over rate of over fifty percent. Even car dealerships have a better retention rate than REALTORS.
Its sounds good to preach about how REALTORS are just concerned about consumers but their argument is silly, to say the least.
The Federal Trade Commission and The DOJ are not just kidding around as they continue to keep the entire real estate industry in their cross-hairs for cooperative pricing arrangements and tactics.
These tactics stand in the way of a free and open system where consumers can actually shop around for real estate service like they can for other products and services.
Terry Shortt, CRS, GRI
Broker, Instructor
TW Shortt and Associates
Fl. Real Estate SChool
And Training Company
Key West,Florida, USA
Submitted by Bill Fanning on April 4, 2008 - 8:14pm.
As a broker in New York State who has been using buyer rebates for the past 4 years of the 22 years that I have been in the real estate business I have this to say regarding buyer rebates.........Come on in the water is fine.
I once gave (I can't believe I use to do this) 25% of my commissions to a broker who sent me scant referrals. I formed my own company 4 years ago with buyer rebates and fee for services being a part of the business plan as well as the more traditional commission compensation based on a percentage of the sale price of a property.
I know give 20% (I save 5% over what I gave my broker) of my selling commissions to my buyers at closing. I have them sign a disclaimer which says that the rebate is without any strings attached regarding any obligations on their part to use me again or to send me referrals. They do both. They are under no obligation to do so and obviously receive no compensation (illegal in my state) for doing so.
I attend my closings to personally hand the refund check to my buyers and have them sign the disclaimer. I am the only person at closing with a check going in the right direction according to my buyers. While at a closing recently the attorneys (buyer, seller and bank attorney; we do things the old fashion way in New York) asked for my business card; not out of the norm.
Should any doubting party care to spend the time, I would be happy to put them in touch with any one of my buyer and seller clients so they may ask them directly the quality of the service they received.
In parting I would like to point out that NOT receiving a refund from a real estate agent is no guarantee that the consumer will be well served. I believe the current level of esteem the consuming public holds our profession in (according to the polls I read) would tend to support this argument. I know from first hand experience that my clients appreciate the level of service I bring to the table and my refunds. At the end of the day there is no substitute for the care you show and give your clients.
Submitted by Jason hamilton on April 9, 2008 - 12:19am.
Many are bribes, but you must find a good broker. You can do some research and also find high rated brokers at www.Nawlist.com
Submitted by Phillip Jones on April 25, 2008 - 7:23am.
There are a few items to point out in this "discussion" on buyer rebates (bribes)...
First, it's a free market and buyer rebates are here to stay, like it or not, regulation or not, buyer rebates are here forever.
Second, how is my time/work worth $18,000 on a $600k house while it's only worth $9,000 on a $300k house? Is the time I spend with the higher priced buyer more valuable? Is the paperwork that I complete better or different for the 600k house? Will I give the 300k buyer 1/2 the service and care 1/2 as much about their deal?
No.
So I win the lottery if I land a buyer that is fortunate enough to be able to afford a 600k and they use me as their agent. I'm not saying that this is wrong, but it does seem a little out of balance.
Finally with regard to rebates, I use them when needed to gain a competitive advantage. I look at it like insurance. If I've invested time into a buyer and then get that uneasy feeling that they may be looking with someone else because I didn't answer my phone at 8:30am on a Sunday morning I'll offer a rebate (amount varies depending on deal size) because I would rather keep the customer and earn 2% than lose them and earn 0% - I think that makes sense, but I'm biased.
At the end of the day, regardless of how much I earn (based on the purchase price of someone elses home) I still need to provide excellent service to keep my customer happy and get referrals..