Should I ask for a buyer rebate? Or, am I being too cheap?

35 Replies

I called the listing agent on a foreclosure listed at $35k. 

I told her I'd make an offer (not at $35k). Mine was significantly lower.

She told me she'd e-mail me the documents to e-sign. 

She had everything filled out (convenient). 

They already have an offer that I know is more than mine (it's cash as well). 

Am I being too cheap asking for a buyer's rebate on such a low dollar transaction? She's representing both of us. I looked at the house once. 

Although it was convenient having everything filled out, there was nowhere to change anything on the Authentisign document. 

What would you guys do?

What is a buyer's rebate? It sounds like you were out-bid, so you are not under contract. If you were the winning offer, the buyer does not typically pay any part of the commission to the seller's agent. I'm confused where you lost any money? Are you going to lose the deal over a few bucks? The ROI on the deal you don't close is zero.

@Anthony Dooley  I think Fred wants this agent to credit HIM money from her commission at closing..  

This kind've stuff drives me absolutely insane..  Stop calling the listing agent and trying to save a few dollars thinking youre going to get a better deal..  

#1 - Get an agent to represent you properly.. If you think this listing agent cares 1 iota about you when her fiduciary is with the seller, you're out of your mind..  

#2 - This is a sub 30k property..  Even at a full 6%, after broker fees, taxes and misc fee's, she'll be lucky to make $800..  For a months worth of work..  And you want to take part of that?  Really?  Do people come and try to take part of your check for work or services you provide?  You should be smacked for even considering that..  

#3 - karma is a beach

End of rant...

@Brandon Carriere I've never heard of such a thing. I would laugh if someone asked me that. The buyer/broker relationship with the seller and the agreed compensation does not involve the buyer, who is by definition a customer. The buyer should get their own agent, who would then get a % of the commission. None of which is owed to the buyer.

Hi Fred,

Its a $35k house and you are asking the agent to kick you back some money.   I would never ask or even think of doing this.  Ask yourself, do you think that lowballing the offer and asking the listing agent for a kickback will increase your chances of getting an accepted offer?  Wonder why all these buyers are not getting deals accepted?   Everyone there is a lesson to be learned here. 

Originally posted by @Anthony Dooley :

@Brandon Carriere I've never heard of such a thing. I would laugh if someone asked me that. The buyer/broker relationship with the seller and the agreed compensation does not involve the buyer, who is by definition a customer. The buyer should get their own agent, who would then get a % of the commission. None of which is owed to the buyer.

 Exactly..  Couldn't have said it better myself..  

I've cut my commission many times in the past for various reasons..  Many more times than I should have, as Im a human being with a big heart..  But to have someone ask directly or insinuate that I need to cut my commission for them?  On a 30k property?   Unreal..  

Coming from CA, I know that many realtors who are buyer's agents advertise that they will rebate part of their commission to the buyer for their closing costs.  HOWEVER that is in areas where a low priced house is over half a million and most houses are over a million.  

I never heard of that for lower priced houses, and would not think it would be fair to even consider asking for a house under $100k.

Also, when you are an investor the realtors you work with can make or break you.  You want to be their best, easiest customer, not the one who nickels and dimes them to death, cuts into their income, wastes their time, and always has questions or special requests.  Investors can be a pain to start with just because they buy the lower cost houses, so at least let them know you value them by not asking for their salary.

Lastly, do you really want to ruin a chance at getting the house?  Go ahead and offer lower commission.  Do you realize how much influence a realtor can have on sellers in helping them analyze the offers and choosing to accept one?  I want the realtor to tell the buyer that my offer is good, I was easy to work with, etc.  If I knew my offer was low, I'd at least want to not offend the realtor by asking her to reduce her commission.    

BTW, when I really needed to sell a house that was not moving, I did not reduce the price, I offered the selling agent an extra 1% commission if I received an offer within the month that was accepted.  It worked, house sold, first week of December, and closed a few days before Christmas.

Realtors are your friend, don't take their pay!

Two different issues @Anthony Dooley . One is the buyer's rebate. The other is, at this point, it would be a moot point as this offer won't likely be accepted. 

Wasting her time? I made an offer after a 20 - 30 minute inspection of the house. 

As she has a fiduciary duty to represent the seller (a credit union), she doesn't have my best interests in mind. 

She has not done any work for me from the buyer's side. Her role was minimal.

I expected to get slam from realtors because they have a self-interest (no offense).  I'm trying to make money in a C/D neighborhood. There are no half million dollar homes here.

Not presenting my offer? I'm not worried about that. I offered all cash and no contingencies other than a clear title. She would probably make more money on someone else's offer, but I have no doubt my offer will be presented.

Look at it from my perspective: making $10k on the flip (all new kitchen, floors, bathroom rehab, replace missing vinyl siding, ridgecap on metal roof, paint trim, pain inside, minor electrical, minor plumbing, etc.) is my goal and it's a fair amount of work.  Asking for a $500 credit when my expected profit is $10k is not as outlandish as you guys are making it out to be. 

She drives a nicer car than my beat up pickup truck.

Not being mean here but I wouldn't get out of my beat up pickup truck to only make a potential 10k. Try to find deals with a larger profit margin so $500 isn't a consideration. Love em or hate em, realtors are part of this business and it doesn't pay to get on their bad side if you plan on staying in this business for the long run.

@Lynnette E.

Amen!  You should be our spokesperson..  Across the board, spot on..  

@Fred Engh

Ugh..  So many flaws in this theory..

Her role is minimal?  She's processing the entire transaction, for both sides..   Her role is the ONLY role..   If you need an extra $500 for the flip to be worth it, your margins may be a bit thin..  Asking her for anything in this situation (30k property) is insane..  She's literally gonna make $8-900 on this whole transaction..  And she's gonna give over half of it to you?  Really?  

Do you ask your doctor for 1/2 of his pay?  Your lawyer, CPA, or financial advisor?  Thought so..  and they combined might give you 5 mins of their time..  

Typically REO agents do not get a buyer side commission even if there is no buyers agent.

Originally posted by @Russell Brazil :

Typically REO agents do not get a buyer side commission even if there is no buyers agent.

I missed the part where this was an REO.. Just saw the credit union part..

So she's going to give nearly her entire paycheck to Fred, for the opportunity to facilitate this whole deal for him..  Wonderful, lol

Full service listing is 6%. She will receive all of that. As I do not have an agent, she is representing both buyers.
Ok, update: I finished the e-signing and made no requirement of a buyer's concession.
Also, the point was the buyer's commission issue, not is the deal worth it.

@Fred Engh sometimes a realtor does not get the full 6% if the realtor is the listing agent and selling agent for a REO. The banks really do not want the listing agent to represent the buyers, so they kind of punish them by NOT giving them the buyer agent's 3%. So they only get the listing agent's 3%. Not always, but often.

Also remember that the agent does not even get that whole 3% the selling agent earns as they generally are working under a broker who skims off some, and they have some varying methods/formulas, that are negotiated between the realtor and broker, of paying their share for the office support/phones/etc. that skims off more of that 3%.

@Fred Engh Sir, you are not entitled to any funds from the agent's commission. She, by law, must present your offer to the seller. You stated that your offer was not the highest, therefore were not put under contract as the buyer. Even if you were the accepted offer, what makes you think that you should receive any of the agent's commission? Caveat Emptor, Sir. As the buyer of a listed property, it costs you nothing to have a licensed agent look out for your best interest. The seller has already agreed to pay the commission. You, as the buyer, get the services of a professional agent at no cost. The agents will split the commission, which is paid for by the seller. Hopefully, next time you will make a full price offer on a $35K house and you can make a bundle on the backside.

Originally posted by @Fred Engh :

Full service listing is 6%. She will receive all of that. As I do not have an agent, she is representing both buyers.
Ok, update: I finished the e-signing and made no requirement of a buyer's concession.
Also, the point was the buyer's commission issue, not is the deal worth it.

REO agents can not typically collect the buy side commission as per their contract with the bank.

Also, its highly unlikely at this price point that they are getting a flat percentage. They are likely getting a foat dollar amount, as 3% would actually lose them money to service the listing.

As many others have mentioned the agent will make maybe $800-$1,000 on a deal like this if the full 6% commission was given.  With all of the brokers fees there is very little that the agent will get for the amount of work done.

You can definitely ask, however, the agent will most likely not want to represent you on any future deals.

I'm happy offer sellers a 1% commission or less (depending on the deal) when they are my friends, family and colleagues.  And when I have a buyer that is a friend, family or colleague I'm willing to work on reducing my commission in order to get my buyer a better price.

Maybe the selling agent should send out a check to all of the bidders who did not get the contract to purchase. This way, the agent can be a non-profit for the benefit of low bidders everywhere. If you did not get the contract, you are no longer in the game. Please submit your highest and best offer next time.

It's a 1/1 that needs work. It is not livable. ARV is around $50k. That is the market here.

@Lynnette E. I agree the listing agent doesn't always receive the 6%. I believe she is the broker/agent so there would be no fees in this particular transaction.

@Brandon Carriere had I asked for the refund, it would be a reduction in pay because there was a reduction in services on this particular transaction, not exactly her whole paycheck.

@Anthony Dooley everything is negotiable. I can present any offer that I'd like. I did not elect to use a buyer's agent; therefore, I posed the question of asking for that portion of the commission refunded should my offer be accepted. I hope I can make a bundle, that is the goal.

@Russell Brazil that is a good point that they may have done a flat fee listing. Given that theory, the flat fee listing would have been higher (I've had REA want 10% for raw land). This would give more credence to my argument (say there was a $2,500 listing fee) that I should ask for a buyer's rebate.

@Michael Tripp Thank you for the input. That was the conclusion I came to: it would have amounted to a couple of hundred bucks. 

I posed a question and asked for feedback (boy, did I get some feedback. No, tell me how you really feel). Again, I made the offer without a buyer's rebate request. 

For homeowners (not so much investors), they suggest you never let a REA represent the seller and the buyer because of conflicting interests. 

As many have pointed out, it's not uncommon for the buyer's agent to refund part of their commission. If it were a larger dollar transaction with the same set of facts, I would probably ask for the rebate. 

@Fred Engh

There seems to be a disconnect..  It is VERY UNcommon for a buyers agent to refund part of their commission..  99% of buyers wouldn't even know they could do that, and 3/4 of the 1% that did know they could do that, wouldn't have the cajones to ask someone to donate part of their earnings to someone they just spent a month (or way longer) working for..    I may have done it twice in 150+ transactions as the buyers were broke and the appraisal was a touch short and it was either the deal dies, or I jump in and contribute $1500 to save the day..   Who on earth would think its even realistic to try and take a portion of someones pay thats performing a service for them, when you're getting that service for free?  I frequently get gifts from my clients, not a request for me to give them $$, LOL!

Wowsers

Originally posted by @Brandon Carriere :

@Fred Engh

There seems to be a disconnect..  It is VERY UNcommon for a buyers agent to refund part of their commission..  99% of buyers wouldn't even know they could do that, and 3/4 of the 1% that did know they could do that, wouldn't have the cajones to ask someone to donate part of their earnings to someone they just spent a month (or way longer) working for..    I may have done it twice in 150+ transactions as the buyers were broke and the appraisal was a touch short and it was either the deal dies, or I jump in and contribute $1500 to save the day..   Who on earth would think its even realistic to try and take a portion of someones pay thats performing a service for them, when you're getting that service for free?  I frequently get gifts from my clients, not a request for me to give them $$, LOL!

Wowsers

 The listing agent also can not represent the buyer on an reo. So a commission rebate is a respa violation.  You can not receive a credit from the agent on the opposite side of a deal. But he isnt really paying attention to the information being provided.

He also fails to understand contract law. He can make an offer to the seller, the agent is not a party to the contract. Even if the seller accepted the offer, the terms on the commission rebate coming from a 3rd party are unenforceable.  Ive seen buyers show up to closings thinking they are getting that, then dont and its always a big surprise for them.

Buyer rebates are allowed in some states and not the others. There may be additional layers of regulations for certain types of transactions as well.

I think we need to take the emotional aspect out of it discussing a topic. 

If the goal is to be a long term investor then buyer rebates are likely not to get you where you want to go. If a buyer develops a reputation for squeezing a broker/agent every time they try do a transaction most brokers/agents will avoid that buyer like the plague.

On the commercial real estate side if a buyer mentions a rebate to me as a potential client I will not even work with them. In over 15 years in business had it maybe happen a few times. Most clients offer me more to help them find the best deal. 10k on a rehab deal is too slim. You have higher rehab costs then thought or resale market dips a little after taxes there is basically no profit or a loss. I do commercial real estate and not houses but my friends that rehab and flip lots of houses won't touch anything under 20k potential profit. Anything less than that they look to assign the contract for a 5k to 10k fee and let that rehabber take the risk. Lot's of newbies are overpaying in the space with all these flipping shows coming out again that showed up last time over a decade ago. Sellers love to sell to the newbies as they overpay again and gain due to more limited type knowledge of repair estimates and resale projections with timelines to exit.

Often buyers think of brokers/agents as they just have time into the one transaction and are making XX. That is not really the case. Just like an investor looks at lot's of properties to eventually find THE ONE and puts tons of time in so does a broker/agent cultivating business. That listed property there likely was a lot of time and relationship building that went in to getting that business.

On the commercial side as an example I might make 100,000 in commission on a retail center. That developer however I might be in contact with them on a regular basis for over 6 months while they get to the last stage of construction and lease up. I have to get the timing right when they want to sell and get my buyer in before everyone else has a look at it. Still might be one more buyer but not tons as not many know about it.

We have a saying in the business (do not step over dollars to try and save pennies). I do not try and convince investors against their business model I simply do not want to do business with them. That is why I have MY BUSINESS model and if they do not fit into that I do not work with them. Brokers/agents often have buyers with all different methods of business trying to pull them in all different directions. Brokers/agents need to make their own business model and ideal customer criteria to get focused. Ramp up the success and cut down the noise. 

  

I never ask agents for discounts.  I want them to like working with me so I treat them like I would like to be treated.  If an agent came across a good deal, why would they call you if you were going to ask for a discount?  They would call me.  

@Fred Engh , yes, you are being too cheap. The property is priced too low to ask for part of the commission. If you are buying a property 250k+, asking for 1% of the commission from a broker doing both sides of the deal is perfectly acceptable because it’s still more than what the listing agent would have made if you for your own agent and you can get sever thousand dollars back.

Keep in mind though, that listing agent is all for the seller so you might not get the best service. If you are a seasoned investor, this isn’t a problem but if you’re just starting out, get your own agent so you can learn the process.

Until you have a rectified purchase contract agreed by the lenders,  this is just a wishful.....


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