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I get your point and it may apply to others based on their particular circumstances, but it sounds like you had a very mediocre agent for the most part. YMMV. Ours not only showed us properties not available on Zillow yet, but had a definite strategy in mind that worked to move us in front of a secondary bid that came out of nowhere when we thought ours was a done deal. That can be worth twice the commission considering once the wheels are set in motion there can be added work/expense on the selling side as well if that falls through simultaneously.
You do realize that they do this just to protect their own perceived value, right? They hold listings off of the MLS to try to sell them to their own clients or clients of friends because they make more money that way. If there weren't such a monopoly over the listing data (though thankfully Zillow/Trulia are helping with this), the value of an agent would diminish precipitously.
So your value came from the ability of your agent to make your bid look better than a second, higher bid? I'd be upset if I were the seller that the agents conspired to earn me less money on my home. So your agent pocketed a commission by working together with the other agent to "convince" the seller to accept less money, nice.
It's all a racket, and they keep the system going then whine when buyers don't do as they wish. Want commission? Then you have to risk losing it when a sale falls through or when a buyer goes with a different realtor during the transaction. Tough.
Scummy idea. Totally scummy. And if a rebate of a couple of thousand bucks is the difference between buying a housecand not buyinga house, you're in deeper financial do-do than you realize and can't afford to be a homeowner.
Not scummy or unethical. The real estate system is a game that is created and maintained by the real estate agent/broker lobby. They've created a system whereby they only get paid at the end of a successful transaction, and they get paid regardless of how much (or more often, how little) effort they have to put into a sale. They make more money on a $500k home than they do on a $400k home, even though the effort is exactly the same. Same for $900k vs $100k home. In my experience, I have to find the listings I like on the internet first then show the buyer's agent before they take me to the home- I'm the one that has to do all the work. And they are terrible negotiators because they want to get the deal done, not necessarily what is in your best interest. My last realtor tried to get me to overpay by $7,500 just to close the deal; I balked and got the home for the price I knew to be correct even though it risked her precious commission.
If they get bitten by their system enough, maybe they'll start to think about changing it. I would LOVE to pay my agent hourly to show me houses and negotiate on my behalf, but as long as they rely on the antiquated straight commission model, they have to take the bad with the good. In the age of Zillow/Trulia, ask yourself if your buyer's agent is really providing you $10k+ worth of value, especially when your lawyer only charges a tenth of that, and home inspector/appraiser a twentieth.
If you are worried about offending this agent, just dump him/her entirely and go to a redfin agent. You owe him/her NOTHING- it's their stupid system and they chose to play the game; sometimes they'll lose.
If that is your preference, then you should offer to pay agents hourly. There are lots of agents who would LOVE to have a secure, hourly payment. Of those that accept hourly payments, however, it seems that they report that most people still prefer to engage agents under the commission model--especially Buyers.
Seriously, though, you should simply not use an agent at all.
You do realize that they do this just to protect their own perceived value, right? They hold listings off of the MLS to try to sell them to their own clients or clients of friends because they make more money that way. Very few agents do this. If there weren't such a monopoly over the listing data (though thankfully Zillow/Trulia are helping with this), the value of an agent would diminish precipitously. MLS is owned by brokers to share info with other brokers. It was never intended for public usage. Zillow/Trulia rely on brokers sharing data. Brokers have shared data. If brokers wanted a monopoly they would not provide feeds to public interfaces at all.
So your value came from the ability of your agent to make your bid look better than a second, higher bid? I'd be upset if I were the seller that the agents conspired to earn me less money on my home. So your agent pocketed a commission by working together with the other agent to "convince" the seller to accept less money, nice. We were not privy to the terms of either offer we can't say we convinced the seller to take a lower offer, but the agent helped the client get the home they wanted. The agent did the job.
It's all a racket, and they keep the system going then whine when buyers don't do as they wish. Want commission? Then you have to risk losing it when a sale falls through or when a buyer goes with a different realtor during the transaction. Tough. How is it a racket? Real estate is far more transparent than most businesses. You know the margins up front, everybody gets a copy of the financials at closing. If a deal falls through it's fine. Buyer can buy another home usually, if I represent the seller I just wait on the next buyer.
Your conspiracy theories are amusing. Tell me, how did you arrive at your conclusions?
Let's explore for a second why you didn't win on one of those three offers. We can't tell what market you are in. Are you bidding below market and asking for closing costs? How many homes has this Realtor shown you? What specifically will a rebate do for you?
You do know rebates are given post-closing and not used at the closing table? Or, are you asking for a concession AT the table, which is not the model.
Think this through. If you were an experienced agent, would you go to Redfin, hoping to make it up on volume? Maybe 1 in 10 solid agents would give it a try. The rest are new agents, selling cut rate service, and you, are getting what you are paying for.
I agree, there could be an issue with the agent, but are you listening and following their advice? You know that advice is diminished with RF (as a general rule)? You could have a different showing agent for every home you see. Do you drive and preview each home before viewing? Do you need the Realtor to provide financing options? Is this your first home? Break it down, be honest with yourselves and figure out what is not working or you may get more of the same.
Pretty sure that constitutes mortgage fraud. All monies are to be shown on the closing documents AT closing.
My last realtor tried to get me to overpay by $7,500 just to close the deal; I balked and got the home for the price I knew to be correct even though it risked her precious commission.
For $225 - split with her brokerage? (Assuming a 3% commission on $7500) That is a terrible way to lose a good reference and a steady stream of referrals.
Discount brokers/buyers agents who provide a rebate to buyers is very common now. There is a whole company (Redfin) that works on that model.
My current agent who is great and has been showing us houses since May 2016 and also has helped us bid on 3 houses had not agreed to provide any rebate from the get go. We were fine with. But as we shop more we have realized that in this market our budget is not taking us far and hence we need to stretch. And in this stretching we need every dollar possible. So now we think a rebate from the agent will be helpful for us and add a bit to our stretch budget
I am going to talk to the agent tomorrow to provide a rebate or let us work with someone else. After working with her for 5 months and taking up her time, we feel very guilty about doing this and questioning ourselves.
Is this unethical or wrong?
Don't do it. She's done a lot for you and due to what is apparently your fussiness about what you want in a house, has received nothing. I suggest setting your price-range somewhat lower and having her show you houses that fit it. Even if you do take one and she gets her commission, she will have worked much harder for it, than with most other clients. Don't put her on the spot by suggesting that she should get any less.
Pretty sure that constitutes mortgage fraud. All monies are to be shown on the closing documents AT closing.
SmartMoney is an LO and touched on this, either in this thread or another. Hopefully SM can elaborate in response to your post as it's valuable information imo (I've never done a transaction with a redfin agent so I never had a chance to see how the money back worked.. or USAA with their buyers advantage program for that matter)
Pretty sure that constitutes mortgage fraud. All monies are to be shown on the closing documents AT closing.
And that is EXACTLY what Redfin and Cartus are counting on when trying to get the buyer back to their in-house lender. I thought the same to, but we will work with Cartus Rebates, so knowing this, I asked my Ops Manager what the deal was and she said if it's a rebate, the terms of the rebate are already in writing and to get a copy of it. Costco does rebates across the country, as well. It does not violate the term of the contract because the agreement is between the company and the individual, and the key, it has no bearing on the terms of the contract. The rebate has no part in the contract.
I just pulled some language off a rebate I closed last Spring. The underwriter, title company and the mortgage insurance company all signed off on it. 100% allowable, Fannie and VA both, address rebates in their guidelines. This is one of the paragraphs from a company offering the rebate:
"The cash-back bonus is offered in most states. In some states, a gift card or commission credit at closing may be provided in lieu of the cash-back bonus. The program is not available in Iowa or outside U.S. Cash-back bonus is not available in Alaska, Louisiana, Mississippi, and Oklahoma. In Kansas and Tennessee, a gift card will be issued that is accepted at specific retailers. State regulations in Kansas limit the dollar amounts and the type of incentive. In New Jersey and Oregon, a commission reduction may be available at closing. Please check with the program coordinator for details. This is not a solicitation if you are already represented by a real estate broker. Other terms and conditions may apply."
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