To Rebate or Not to Rebate? That is the question…
Over the last month, I have had 3 different situations with buyers where they have said they will only use me if I give them a ”rebate” at the end of the transaction. Most common, has been the request to credit them a percentage of my commission.
I realize that a lot of this is happening because so many of our clients (even the very loyal ones,) are spending a great deal of time on the websites of our cut rate competitors, but I need to find a solution.
I try to counter their requests with the very valid logic that you get what you pay for in this world, and that my many years of experience, negotiating skills and industry knowledge are well worth paying full price, but this is less and less successful. Nor, do they care that I need to share my commission with the company.
As one client said to me: I’m looking in a very limited area, I research the properties myself, mostly go to see them myself, so why should I pay you a $1,000 an hour to write a contract? (Please keep in mind, that I would very happily do the research and show him the houses, he simply prefers to do it his way.)
When using the logic that they are not paying the commission, that the seller is, they, of course, point out that the commission is included in the price they are paying.
This has become quite a challenging problem, because I need to sell houses. Other than handling a few rentals here and there, this is my only source of income. When I said no to one of them, he went to another broker and instead of getting some money, I ended up with nothing.
What do you think fellow Realtors? Customers…let’s here your thoughts, as well.
Kathy Wall
(415) 608-4168
www.michaelandkathy.com
If you enjoyed this post, subscribe to the Author's RSS feed or the Blog's RSS Feed!
Comments
9 Responses to “To Rebate or Not to Rebate? That is the question…”
Leave a Reply
-
Join us on Facebook
-
Join us on Twitter
-
Recent Posts
- What is a reverse mortgage?
- ‘Tis the Season for Tax Breaks
- Top 5 Reasons to Buy a House in the Bay Area in 2012
- After Christmas Sale, – Bay Area Homes up to 60% off
- San Bruno Eye Sore is about to Go
- What If My Offer Is Rejected?
- It’s a Buyers’ Market for Real Estate Investors, too
- How to choose the “Best” real estate home loan.
-
Categories
-
Archives
Some prospective buyers, sellers, clients, friends, even relatives do not have a clue what the scope of our job, responsibilities & liabilities are…not to mention they don’t know that it’s illegal to give a commission to a non real estate licensee. They want a piece of the cake but not what comes with the cake..i.e., responsibilities & liabilities, taxes to name a few. They have no clue that it may take 60 days or 365 days to complete our transaction with them and sometimes not get paid..if escrow don’t close or a short sale don’t get approved. They have no idea that once they enter the real estate market, it’s like entering a jungle…everyone does not know what they will encounter along the way; that they better be with a knowledgeable, professional, experience realtor than a discounted realtor who will add to their ‘stress’ while figuring out what they should do while in the jungle!
I believe we, the real estate community, should do a better job educating the people who wants a “piece of cake”…what and how it works rather than saying ‘ok’. I find that once I explain to the clients what’s involved they are ok for me to make a few dollars to pay my bills and buy some food, which I am happy to share with them too…
And for the ones who don’t understand…I just wish them well in their real estate journey.
Finding a home is a very small part of what we do. You wonder if these same folks would ask their doctor for a rebate since they diagnosed themselves.
Larry
Kathy,
I relate everything to food. I will use a hamburger and an example. We could get a hamburger at MacDonalds or Mortons. They are differnt tasting different quality and a different price. We are the Morton’s Burger. We are worth the difference. Sure some transactions are easy. present the offer and it gets accepted, all disclosures are in order, and loan is a breeze. (been a while since I had one of those) I have tried to give examples of people whom I have helped purchase a home that truly without me they would not have gotten the home or the price. I also mention that I ahve advise people not to purchase a specific home due to HOA finances or property structures. Would a cheap agent do that. With your relationships with other agents, knowledge of business, experience of negotiating, understanding of the market you can certainly save them the few thousand they are speaking about. What about if there is a problem wouldn’t they like to have a Piece Of The Rock’s deep pockets to go after rather than an agent whom discounts his/her value. That agent probably does not have much to go after or better yet may not even be in business several years from now.
Good Luck Kathy. You are worth the full commission plus a good tip. If they do not realize it it is their loss.
Lee
Kathy, I understand your frustration…people have been trying to pick our pockets for years. The reason? Because some of us are too quick to give in. Do you know of any other profession that gives up their hard earned money? I don’t. Until we ALL respect our profession and what we do….clients will always think that our earnings are funny money and they can have a piece of it. We’re all in the same boat….needing a paycheck every month….be strong and don’t give in. Self respect is worth it. Let’s be so strong in our conviction of what and why we bring value to each client that they won’t even dare ask us for anything but our experience, knowledge and help! And if they still ask……say NO!
Good luck….,Pat
Thanks for the blog Kathy. I’ve had similar experiences along the way. I totally agree with the comments thus far, that it’s important for clients to be educated about the process and understand that what we do involves so much more than simply filling out a purchase contract. What gets frustrating at times is when fellow agents turn our service into a commodity and end up discounting the value for all of us.
Jean
If it make business sense then do it. I always ask what is it that they are looking for sometimes it just to negotiate, but i would always do the calculations and subtract all my expenses including taxes and try to make them understand that there are expense involved; everyone deserves to make a fair living and if that doesn’t work then tell them good luck and be done with them
Don Clouse
Prudential Ca Realty
Kathy, this is a tuff issue. Realtor’s have become a commodity like most other products/services. The customer is looking for the best bargain and yet expects the same top service from any or all agents (which they should get).
As much as I would rather get the higher commission I’ve come to grips with the fact that competition makes the buyer the master.
The reality is that we either dance their tune or they go somewhere else and they still end up with what they really want. I find no consolation in telling myself they would have gotten better service from me.
Often enough, I find the reduced commission more palatable than the loss of a potential client (win some, loose some?).
Hang tough, we’re all looking for bargains.
Tom
Kathy,
Thanks for bringing up a relevant topic.
It all depends on the situation. A client who is selling and then buys may deserve your consideration of an adjustment. Or one who has referred other buisness to you.
Carte Blanche, I will say no, but if it makes sense and it will create other business, then that is a different situation.
Keep in mind if you are confronted with that decision to rebate or not, feel free to ask John, Larry or I as we have experience in that and can help you make a proper decision.
Remember, you only have eight (or ten or twelve)business hours a day and those hours must be productive and profitable.
Brian Boisson
I want to thank everyone who has commented so far, both in person and here on the blog. I have to say that I am still, somewhat, torn. I really want to stand tough, but I am a single woman with a big mortgage. The way it stand now, I am going to take every situation on a case to case basis. By the same token, I fully intend to continue to fight for my very hard earned, full commission.