Selecting an agent
Now that you have a short list of homes that
interest you, it's time to select a discount broker who will
let you look inside the houses and represent you
if you decide to buy.
remember--you'll only need a
broker if you're interested in homes that are
listed with traditional real estate brokerages.
If any homes on your list are "for sale by
owner" (FSBO) properties, visit them on your own
by calling the owners and scheduling
appointments. Another of my websites,
FSBOPrimer.com, has a section for buyers
that explains how you can capture even more of
the commission by visiting FSBO homes on your
Here are links to
several online discounters, along with examples
of the buyer rebates (or credits) you could get
from them, assuming the seller offers a 3%
commission to the buyer's agent:
SixHomes.com (Northern California
only): All but 1% of the buyer's agent's
commission, or $10,000 on a $500,000
house. SixHomes will unlock up to six
homes. (Disclaimer: I own this
(Bay Area, Boston, L.A., Orange County, San
Diego, Seattle, Washington, D.C.):
Two-thirds of the commission, or $10,000
on a $500,000 house. Redfin will
unlock the first two homes for free, and
subsequent homes for $250 each.
BuySideRealty.com: 75% of the buyer's
agent's commission, or $11,250 on a
house. BuySide doesn't unlock doors,
but it can arrange for local listing agents
to let you inside.
(Florida): A rebate of 1.5% of the
sales price assuming a 3% commission, or
$7,500 on a $500,000 house.
Rebatereps.com: 1% of the sales price
or $5,000 on a $500,000 house.
you're searching in an area that isn't served by
discount brokers, try asking a traditional
broker for a commission rebate. Partial
rebates on the buyers' agent's commission are
quite common, except in a few states* where the
National Association of Realtors has bullied
legislatures into prohibiting the practice.
Here's how it's
done: Before you begin working with an agent,
call several real estate offices and ask if any
would be willing to rebate a share of the
commission back to you at close of escrow. An
agent will be more willing to do so if:
- You are
likely to buy a house soon.
already done some research and have a short
list of homes you like.
- Your price
range is high.
- You can
persuade the agent that you won't be a "high
haven't begun working with another agent.
(If you've attended open houses or if another agent has already shown you some
homes, your new agent might have to fight
over the commission.)
- You can
persuade the agent that you won't be
"unfaithful" by working simultaneously with
Once you strike
a deal with an agent, be sure to get the
agreement in writing before you allow that agent
to show you any homes.
Agents will sometimes express surprise
and indignation when you ask for a buyer
rebate. But it's a common practice.
Some personal experiences
It's sometimes hard to find an agent who's
willing to go along with the rebate idea.
Many years ago, I found
a lot that was listed by a real estate
brokerage. I wanted to make an immediate
full-price cash offer on it with no
But first I tried to find a buyers' agent who
would agree to rebate part of the commission
back to me. The lot cost about $200,000, so the
buyers' agent's commission would come to $6,000,
a steep fee for spending just a few hours
filling out forms. I called several different
offices to ask if anyone would be willing to
accept a 2% ($4,000) commission and rebate the
rest ($2,000) back to me.
one in town would accept the deal. Many agents
acted as if they'd never heard of the practice
before. Some were a bit curt with me, as if I
were asking them to do something unethical. If
I didn't know better, I'd almost suspect that
these agents were party to a secret (and
illegal) price-fixing agreement! I finally
found an agent in a remote part of the county
who was willing to fill out the forms for me.
He ended up making $4,000 for about 5 hours
worth of work.
wanted to make a full-price cash
offer with no contingencies on a lot
I'd found myself. I couldn't find
an agent in town who was willing to
spend a few hours writing up my
offer in exchange for a discounted
commission of $4,000.
you do find an agent willing to work for a
discounted commission, get it in writing before
you begin working with him or her. I once got a
real estate agent to agree on the phone to
rebate back to me any buyer's agent commission
in excess of 2%. She later spent three hours
showing us properties. When we got home, we
asked her to make an offer on a house and
incorporate language about the commission rebate
into the contract. She phoned back and said she
wouldn't give us a rebate and that she thought
we'd just talked about a rebate without actually
reaching an agreement.
She had us trapped. We couldn't go to another
agent since she had shown us the house first,
and therefore may have had a right to a
commission from the sale of that house. She
reasoned that if we wanted the house enough,
we'd forfeit the commission to her.
Though we loved the house, we ended up not
making an offer on it or on any of the other
properties she'd shown us. We simply refused to
deal with her.
Some agents prefer
to give secret rebates, since they fear
retaliation if their brokers or other agents
learn of their willingness to offer discounts.
I suspect their fears are well grounded.
Unfortunately, making the rebates secret makes
it seem as there's something shameful or
unethical about them. Why would that be? What
ethical principle is violated by an agent who
wants to lower prices for buyers? Isn't
competition the American way?
Though I would prefer dealing with agents who
are upfront about offering buyer rebates, in
some areas you may need to resort to secrecy. I
believe this speaks ill not of the agents who
offer rebates to consumers, but of the agents
who punish mavericks who break rank.
Next step: More
*These states ban buyer
rebates: Alaska, Iowa, Kansas, Louisiana,
Mississippi, Missouri, New Jersey, New York,
Oklahoma, Rhode Island, South Carolina, and West
Virginia. These states have "minimum
service requirements" designed to discourage
discount real estate services: Alabama,
Florida, Illinois, Iowa, Missouri, Oklahoma,
Texas, and Utah.
ŠLori Alden, 2008. All rights reserved.