I recently came across a Reddit thread where a buyer asked in the subreddit whether he should consider using a rebate Realtor in Denver, as he had heard from some of his friends that it was an option and could save him thousands of dollars. To no surprise, Realtors were very quick to chime in and tell him all the reasons why using an agent that provides a commission rebate was a bad idea. As a Realtor in Denver that provides a 50% commission rebate back to his buyers, I felt somewhat obligated to address these comments.
Any agent that would give up half their commission must be a bad negotiator.
Let’s dive into this. The first thing I found interesting in this Reddit thread is that another agent also posted in the same thread that agents have to give a portion of their commission to their brokerage, so they are not even getting the full commission to start with. This is true! Most of the big-name national brokerages you will have heard of take a substantial portion of their agent’s commission. Further, if an agent works within a ‘team’ structure they likely have to kick up a portion of their commission to their team lead as well, leaving far less than 100% of the commission actually going to your agent.
At EZ Agents we don’t have these problems. Instead of giving a portion of our commission to a brokerage, we simply give it directly to our buyers. I have never heard an agent state that working at a major brokerage or team makes them a bad negotiator, but apparently giving it to your buyer instead of your broker is a bad idea.
You wouldn’t want someone to ask you to give up half your paycheck would you?
First, Realtors work on commission and don’t receive paychecks. Anyone who has ever worked in any commission-based sales role understands that with it comes risks. For starters, you will work with clients that never end up purchasing a home. There are no paychecks and you do not get paid for those hours. That is part of the deal.
Secondly, not every client or buyer is created equal.
Let’s say for example I work with The Robinson Family helping them to buy a home. I show them homes every weekend for 6 months until they finally close on a home, and I earn a commission of $14,000.
On the other hand, I have John Smith call me over the weekend saying he saw a home on Zillow and is interested. I show him the home, and he writes an offer that weekend. When it closes, I earn a $14,000 commission.
Obviously, the time I spent working with these two buyers is vastly different yet in the end I earned the same commission. Broken down hourly, I got paid substantially less working with the Robinson family than I was with John Smith. Yet, I have never heard of agent stating that their buyers took ‘half their paycheck’ nor have I ever heard of an agent offering retrospectively to give their commission back to John Smith because they were ‘overpaid’ for the amount of work they did.
Any agent that provides a rebate is likely inexperienced and a ‘bottom feeder.’
I think we can start by stating that obvious which is that any blanket statement an agent would make like this without knowing anything about this hypothetical Realtor is obviously based on assumptions and falsehoods – but hey that’s the internet these days.
I can’t speak for all agents that provide rebates, only myself, and I am not interested in writing similar blanket statements but I will address these based solely on myself and my company EZ Agents.
Inexperienced? Last year I closed just under 40 million dollars in buy side transactions. This puts me in the top 1/10th of 1 percent of licensed agents in Denver, Colorado in terms of production – closing an average of 3 to 4 buyers a month. While I’d agree that experience is probably the most important thing your agent can have, my model specifically allows me to work with more buyers, close more deals, and pass the savings (and experience) along to you.
As a buyer, you get to work with a top producing, local agent while also receiving a huge commission rebate.
What about shopping lenders?
On this same Reddit thread, one mortgage lender decided to chime in and correctly point out that agents will often encourage you to ‘shop’ your loan so why not shop Realtors? And by shopping what he means is talking to many mortgage lenders to see who can give you the best rate and lowest fees. When you do this, each lender that spent hours pre-approving you but doesn’t end up closing the loan gets left with nothing. No commission for the hours they spent working with you. Why? Because someone else offered a better deal. Yet no agent will argue that you getting the best loan for your situation is a bad idea. Apparently, it is only with Realtors themselves that buyers should only have one option – 100% of the commission to your agent or go it completely alone.
You wouldn’t ask a brain surgeon to work for half price would you?
Yes. An agent actually wrote that. I’m not going to bother to spend much time on this one other than to state that if your agent considers themselves as important and as knowledgeable as a brain surgeon, then in my opinion, they are trying way to hard to justify themselves and their commission.
It’s true that purchasing a home is, for most people, the biggest financial decision you will make. And it’s also true that a good agent can be an invaluable resource if they are knowledgeable and experienced. But Realtors are not brain surgeons and again, providing a rebate does not mean we are working for ‘half price.’ In the case of EZ Agents, we simply built a different model that is attractive to certain buyers and allows us to work with more clients while saving them thousands of dollars.
In summary.
The truth is that working with a rebate Realtor is not the best fit for everyone. It’s important that you interview any agent you are considering working with to get a clear understanding of what to expect, what their experience is, and just generally whether you are a good fit to work together. However, the idea that a buyer should only have one option in this day and age of how to buy a home is just not true. The internet has changed the way buyers shop for homes and not all buyers are the same.
I understand why agents on Reddit get angry at the idea of buyers having a second option – one where they aren’t able to keep huge commissions no matter the buyer, nor the amount of work they’ve put in. But personally, I take a lot of pride in offering buyers another option and believe that the feedback I have received from my clients over the years speaks much louder than these comments from agents on Reddit.
- “Slowness to change usually means fear of the new” — Philip Crosby