A Buyer’s Agent Rebate You Can Do Without

You may have heard about buyer’s agents providing his or her client with a commission rebate. It is a bit confusing since the seller pays the commission, which is split between the listing and buying brokerages according to a pre-arranged formula. The respective individual agents further spit the commission. However, under a rebate situation, the buyer’s agent agrees to forgo part of his or her commission, returning it to his or her client.

Since everyone wants to save money, this is tempting and may cause you to sign on with an agent. However, there are many downsides that you should carefully consider.

Inexperienced agents

An inexperienced agent, looking to build his or her business, might offer a prospective client a rebate. This is an astute move in a competitive business. However, you do not want your agent to learn and gain experience at your expense. After all, this is likely the most expensive purchase you are going to make in your lifetime. The city’s median purchase price was $630,000 according to the Real Estate Board of New York (REBNY). However, in Manhattan and Brooklyn, it was nearly $1.1 million and $755,000, respectively. This is for all properties. A condo costs more.

Part-timers

The real estate industry has a number of people attempting to work on a part-time basis. This agent may offer a rebate to compete with full-timers. This balancing act does a disservice to buyers. This is a profession that demands one’s full-time attention. A part-time agent may not give his entire thoughts to his or her client. Additionally, he or she may not fully understand the market.

Lack of relationships

Those just starting out and part-time agents likely lack relationships that can hurt the buyer. A more experienced agent knows many listing agents and boards, building up relationships and gaining each other’s trust through the years. These can facilitate a sale. Alternatively, a lack of industry relationships can hurt your chances to buy the property.

There are also many services a real estate agent can refer to his or her client. These range from the mundane, such as a locksmith to the other key players in the transaction, such as a home inspector, contractor, lender, and lawyer. An experienced, full-time agent has built up a list of competent people for you.

Rebates can cost you

As with other things in life, in real estate, you often get what you pay for. All else being equal, of course, buyers should want a rebate. However, these are often given by inexperienced or part-time agents, meaning you are not benefitting from a venerable agent’s experience and extensive network of experts.

Think about why a real estate agent is offering you a rebate. If the agent had a solid client base and enough business, he or she would not need to discount his/her commission.

This is an industry where 75% of agents leave after the first year on the job, according to one estimate. The high turnover indicates this is not the profession for everyone. Successful agents are driven, motivated, smart people who have excellent communication skills. These are the agents that can help you the most.

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