States shown in white indicate that rebates are allowed and states in yellow indicate states where they are not allowed. Now that we all know this, there are three quick questions that need to be asked before we go any further. (see large map blow)
Question 1. is for Real Estate Agents: Do you offer rebates?Question 2. is for Sellers: Do You know rebates have been proven to entice Buyers and that rebates are absolutely legal in all but 12 states?Question 3. is for Buyers: Are you aware that there is a way for you to save money on a home AND get cash back at closing?
In this dismal real estate market, it seems that all kinds of promotions and “out of the box” marketing needs to and should be happening to move property. Then why are we not seeing more of the rebates put in action to move the inventory that is just sitting there stagnating?The rebate marketing is available on any property that offers a commission to a real estate agent. So any property, REO, property in foreclosure, or anything listed can avail itself of this marketing vehicle. So why is it not being utilized on a mass basis?
Lee Iaccoca took over a failing automaker and turned Chrysler around with great marketing. Most of his marketing was built around consumer rebates. Iacocca helped establish the cash rebate as a major marketing tool in the U.S. auto industry when he appeared in over 60 commercials during the 1980s.
In September 2003 American Express in marketing the launch of its “Blue Card” offered rebates up to 5%.
While there may indeed be negative implications resulting from rebates utilized on an extended, long term basis, there is no doubt that when an industry is struggling in both sales and in public perception, that rebate offers excite consumers.
So Realtors..what gives? Why are so many adverse to implementing a rebate program to provide an incentive to Buyers? Why, if in all but a few states, this kind of campaign can be implemented are more houses not being sold with rebates to the Buyer?
Now don’t tow the party line and tell me or the American consumer that it ends up being more expensive, it’s simply not true. How many Sellers are even told that this is an option? I shudder to think how few Sellers even know this is available.
Let’s say I am selling my house. I put it on the market for $300,000.00. I, through my listing agreement am offering 6% commission. That means $18,000 is coming off of my net. Out of my bottom line. Now I find out my house is taking a long time to sell. I ask my agent if there is anything I can do. I am told it’s just a tough market and I need to lower my price.
No…what I need to do is lower the commission and offer the buyer an incentive to but my property. So here’s what we’re going to do.
1. We’re going to keep the price at $300,000.00
2. We are going to offer a qualified Buyer a cash rebate of $7,500.00
3. My Agent and the Buyer’s Agent (if any) are going to split the remainder of the commission
( as the Seller, I really don’t care how it gets split up)
4. If My listing Agent won’t do this, then I will terminate my listing Agreement
More than likely most homeowners are locked into a horrible listing agreement and they are at the mercy of the agent to bow out gracefully ..like that’s ever going to happen.
Then I can remarket my property with a cooperative agent and offer a real incentive to a Buyer.
Sound like a plan? Why Not? It’s better than sitting around waiting for something to happen and being told to keep lowering my price.
Fort Lauderdale Real Estate Blog is offering cash back on all its deal for new homebuers!
I have been giving cash rebates on any home in the MLS for years. I also list homes at 3.99% (full service) giving 2.5% to the selling office and taking 1.49%. Anytime a seller asks me about giving a bonus to the selling office, I tell them to offer it to the buyer. The buyer is the one that makes the decision on which home they want and no matter how big the bonus is to the selling agent, they can’t force a buyer into a purchase. We have been in business for 33 years and I plan on being in business for at least another 33 years, the only way I can see that happening, is by adapting to the market. The old days of 7%, and closely guarded listing info, are over.
I believe that full service with incentives is always the best way to do business.
Since I started in real estate I have given cash back rebates to my buyers. In my listing presentation it is included and I tell the sellers to use it. In todays slow market I have found out that offering 4% to the selling office and 1% to the buyer attracks more offers. I still make my 3% because Iexplian to the seller how the system works and why I charge 7%commission. I also explain to the Seller that if I find the buyer I give 1% to the buyer and reduce my commission to 4% to him.
This way I always make my 3% the seller and buyer are happy. I have no problem getting 7% on my listings. Also I always give the buyer a home warranty.
Home buyer rebates are very beneficial to buyers, inasmuch as they lower the cost of a real estate transaction.
You’re kidding, right? Hey Brad, if taking 1.49% is such a good idea, why don’t you offer that on the selling side? Because there aren’t enough agents willing to stoop so low? Apparently you are. Geez, if 1,49% is a good deal, why not just take 1%? Because, Brad, because you are convinced that you are worth 1.49%. I don’t doubt that. This is about VALUE. There will always be someone willing to charge less – that’s, uh, really easy. The important value equation we face, is how to deliver more value to our clients, not less. Brad, if your dentist advertised cavity fillings for $30, would you go? No, you want quality. We need more dialogue about quality, which is difiicult to deliver, and less diatribe about discounts, which anyone can deliver. Be good, all of you, and charge a fair price for it!
Who is it that is supposed to determine “fair”?
Houses are not selling! The market is slow, there are no buyers, and so goes the mantra. The month of May was a good month for me with 4 closings. How I got the buyers to call me? Simple very simple, I offer cash back rebates to anyone buying from me. I have a flyer printed in yellow paper which I distribute in different neighborhoods. Any agent is wellcome to use this flyer.
It says:
I Pay You To Buy A Home
Finally! A realtor who actually pays you to do business. Literally!
Buy any home on this magazine or any home listed with any real estate company
using my exclusive program and get paid up to 1%* of the sale price commission.
It’s that simple.
You’re buying a home anyway, So! Why not get paid to buy it?
Example: Buy a home for $300,000 and get paid up to $3,000 at closing.
Call now for details Phone #**** *****
This ad has been brought to you by (Realtors Name) at (Company name)
* Some restrictions apply.
Use this ad it works wonders to your bottom line. 2% of 300,000 is $6,000
times 4 houses in one month $24K. Better than 3% of nothing any day.
Try it, You’ll be glad you did.
Call now for details
Looks like Rafael above has designed an ad for everyone… Pretty straight forward to me.
Only the person offering the service can decide can decide how much they want to charge for it.
Real estate brokers representing buyers are allowed to offer cash back or commission rebates from their commissions. Broker rebates are the principal method by which a buyer broker can negotiate or discount their fees otherwise commissions are essentially fixed. Cash back or rebates from buyer brokers promote price competition amongst real estate brokers. See DOJ websites regarding broker rebates to buyers.
Flexibility is the name of the game. Value is determined by a happy buyer, agent and seller. The rest is just rethoric and talk. You can’t fix commissions. You can’t fix pricing. Traditional real estate companies want to keep their modules because their livelyhoods (overhead, etc) depend on higher fees, which they call value. They don’t want to be a Wal-mart, yet wal-mart is richer than all of them combined. The name of the game is what WORKS for the consumer and is LEGAL. Opionions…well, everyone has one. In about 1 week I will be opening a cash rebate brokerage in Utah and later a flat-fee service even. My guess is that if I become successful, the mafia here will try to make the state pass a law against cash rebates as they have in 12 other states. The bad guys, are not necessarily the little guys. It’s the big ones. So, when you hear that Utah has passed a law against cash rebates to buyers, you heard it from me first. But I will try it until they try to stop it. By then, the consumer will be made aware that the mafia wants to control everything, including their choices and options. It’s a good thing that the people at the DOJ side with flexibility and seem to be on the side of discount brokers and cash rebaters. Otherwise, the mafia would continue to run things their way, taking consumers to the cleaners and preventing anyone from the bottom to ascend to the top.
I would not fool a lender about information, however, one of the strategies talked about are cash back at closing. Is there a place to get information about legal cash back at closing so someone like me who is just starting can read about the correct way to do the cash back closing?
can you just see a house by the listing agent and neg. to get back 3% of the comm. if the agent says no do they still have to show it to the seller?
I found your article on cash back at closing informative and intriguing. I have been doing real estate myself for 15+ years and mortgages 12+ years. My partner and I actually do three radio shows in Southern California a week, discussing the market in the Carolinas and Florida. We move a lot of properties in these areas and will actually be in Sarasota setting up a new office this Thursday.
We anticipate that rebates will be allowed in all 50 states in the very near future. LIttle by little each state is taking a new look at its reasoning for not allowing cash back rebates. The DOJ vs. NAR lawsuit has made a positive impact for consumers by allowing the real estate landscape to become more competitive. NJ is next on the block and we should see their rebate ban lifted by early 2010 if not later this year.
I would like to buy lots of properties and rent them in my area. I can get positive cashflow of $300 per month and negotiate with the banks to lower the loan amount. Where do I find a hard money investor who will give me about $37,000 for a $250 per month payment at 10-12%? I want the money to buy more properties and use no more than 20% for personal expenses.
Dan where are you located?
I live in Bakersfield, CA. 253-230-6617
Disclosure is the key-stone to buyer incentives and creative financing plans. One should check your state law and even then it may not be controlling as to federal lending institutions.
There were many errors on the part of the Floriday investors. One of the biggest was misrepresenting the terms of the deal and submitting fraudulent bank statements.
My best advice is to get advice from a competent attorney who understands real estate law in your neck of the woods.
The wisdom of taking the motivation away from the guy who works on a success-fee is a matter that each must decide for himself.
Tim Paynter, Attorney at Law
Well said Tim!