Rebates to Buyers Not the Answer

Hi Eric, I guess the house wasn't your listing?  In that case tough luck to the buyers.  Their realtor offering the rebate should tell them to view properties via open house or make a bid first and see the house during the home inspection. If it were my listing and a customer said that, I'd let it go and be happy with the seller's-side commission. I like to offer rebates to my customers, it makes them very happy and loyal.  We just closed on a house today and I am paying for ground-termite treatment with a five year warranty (a little over $500 bucks).  The buyers are very grateful. Aloha, Mike

Part of me agrees with you Mike - the part that always felt that rebates were a great thing for the buying public. I have always given a closing gift and my clients are always greatful. However, this situation made me really re-think things. My major thought that made me change my mind: as buyer agents, we're not there to give gifts and kickbacks to our clients. We're there to facilitate the purchase of their home. Any deviation from this ideal by either the Realtor or (in this case) the buyers themselves puts the buyers at risk. If we set the idea of commission aside, we're still left with the fact that going it alone whether buying or selling is inherently a bad idea and could lead to trouble.

Thankfully New Jersey does not allow Real Estate agents to give the buyer rebates such as what you have described.  In fact I believe the limit is still $25.00.  If it were possible I would follow up and when said buyers closed hit the Rebate Realtor with procuring cause and demand 50% of the buyers agent side of the commission.  I bet they would love coming up with 25% of the buyers agent side for the commission out of their own pockets! States that allow this sort of business practice are just asking for corruption.

sucks doesn't it? Happens to us all the time because we usually don't ask buyers to sign a buyer-broker agreement. We should, and we had when we had an inkling that the buyer was just using us to see the houses but have another Realtor on to side to write an offer with. We're having our lawyer design a specific buyer-broker agreement, specific only to the properties we show. Such that if and when they make an offer on any of the houses we show they are obligated to use us. As far as rebate, I did a 1% rebate when I was starting to get clients. I thought that would entice a lot of buyers to use me over others because there was something in it for them. After a year I stopped doing it because, of the 38 closings I did in my first year, only 3 used my services specifically to get that 1% rebate. I was giving rebate to everyone even though they were not asking for it and most of them were surprised I gave them a rebate. I gave a way free money! More common problem we see are buyers asking part of our commission. Our response to that: we'll give you part of our commission if you give us part of your salary.