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SD Realtor.
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February 12, 2007 at 3:49 PM #8376February 12, 2007 at 4:24 PM #45202
(former)FormerSanDiegan
ParticipantWhen your gardener becomes a realtor and starts flipping it’s a sign that you shouldn’t buy … whether you use an agent or not.
I can just see it. The little Toyota pick-up with ladders, rakes, and a pile of leaves on it driving down the 52 to the dump, with a little sign on the side : “Evergreen Lawn Care and Real Estate”
Do they also leave little baggies stuffed with a rock and a 4×6-inch flyer that lists recent market activity in your area ?
February 12, 2007 at 4:29 PM #45203farbet
ParticipantWhat about Zip Realty? How many people used Zip Realty?Pros and Cons.Do they really give a rebate on the comission?
They do give a limited version of the MLSFebruary 21, 2007 at 12:34 PM #45923BobbyD
ParticipantTake a look at the following blog:
http://sandiegohomeblog.com/2007/02/08/redfin-revisited/The Bergs, realtor husband & wife team in Scripps Ranch interviewed the CEO of Redfin.
February 21, 2007 at 3:40 PM #45952SD Realtor
ParticipantI read the article. Quite interesting.
With absolutely no doubt I can say that you can get the same rebate as the Redfin model and receive much better buyers agent services.
SD Realtor
February 21, 2007 at 3:46 PM #45953JJGittes
ParticipantIs the rebate taxable income? Seems like it probably would be. I doubt redfin or zip or buyside would want to pay taxes on the whole nut.
Perhaps it might be better to reduce the purchase price by that amount instead, if the deal can be crafted that way?
February 21, 2007 at 4:40 PM #45964justme
ParticipantRebates are not taxable. A rebate is not income, it is a price break on a good or service that you purchased.
Do you pay income tax because the store sold you something at a sale price? Of course you don’t.
There are realtors that will claim that they cannot give you a rebate because either
a. you don’t have a real estate sales license and therefore it would be illegal to “pay” you for representing yourself.
b. you would have to pay tax on the commission “income”, and “their office just isn’t set up to do that”.
Both a. and b. are total lies.
Repeat after me:
I’m getting a REBATE!
I’m getting a REBATE!
I’m getting a REBATE!There, does everyone feel better now :-).
February 21, 2007 at 5:02 PM #45966Sandi Egan
ParticipantWith absolutely no doubt I can say that you can get the same rebate as the Redfin model and receive much better buyers agent services.
Could you please elaborate? I like dealing with my agent, but 15K on a 500K home seems to be a REALLY expensive way to say thanks. I imagine I could tell my agent that she is getting a fixed 3K from any deal I sign, and the rest she will have to pay me back. And I believe she would agree, since it’s still more than nothing. Somehow, though, I suspect that will make me the least favored of her clients, and that’s bound to have negative impact on the service provided. Don’t you agree?
February 21, 2007 at 6:10 PM #45968ParticipantJJG –
I will try to answer your question but I am doing it in a gingerly manner because I don’t want to be accussed of shilling or promoting fraud.
A “possible” and what I would term “very much recommended way” to get a rebate would be as follows:
– Lets just say for instance you struck a deal to say split the commission 50/50 with your agent. Lets say the seller was paying 3% commission to the buyers agent.
– When you submit the offer, in the purchase agreement you include a request of 1.5% credit towards non-recurring closing costs. Your Realtor will also submit a coop commission agreement agreeing to only take 1.5% commission rather then the 3% of the commission.
– Now, all parties involved, including the lender, appraisers etc will see that a credit is involved here so there is nothing being hidden.
Now as Bugs can correctly chime in and say that lenders scrutinize credits. So the bottom line is that these credit should be used AS STATED, for non-recurring closing costs. Don’t expect that the credit will come back to you as cash. However, you can effectively use it for your loan origination fees, buying down the loan, etc…
From the perspective of the IRS it is no different then any other credit in a real estate transaction.
Now there may be brokerages that issue credits or rebates in the form of writing a check directly to the client after the transaction is closed and then sending them a 1099 at the end of the year. I cannot comment on that because it is not something I am familiar with.
JJG – Also yeah simply reducing the purchase price and asking your Realtor to simply accept a lower commission is just as easy and effective.
SE – You can ask your agent for a commission rebate or to reduce the commission he/she will take and lower the purchase price. All she can say is no. She most likely will not have any say in the matter because it is up to her broker not her.
These sort of statements don’t exactly make me a darling among my peers.
I think that each case merits insight. If you are a buyer and have only had your Realtor show you a few places, then yeah perhaps a commission rebate is warranted. However, if your Realtor has shown you 30 different homes, spent weekends driving around for you, sent comps all over the place, and put in alot of time and effort for you then most likely they are earning thier money. Remember most/all realtors who work for the big boys share a slice of that pie.
SD Realtor
February 21, 2007 at 6:24 PM #45970exeunt
ParticipantCAVEAT EMPTOR . . . . . . . . . . . . . . . . .
1. Your agent will be the best friend you’ve ever had until your transaction is complete. After this, you he/she will not give you the light of day, unless you put them on retainer.
2. I would rather pay for a boat in MY driveway rather than the boat in HER (the agents) driveway, wouldn’t you?
3. Believe me, realtor folk don’t have too many clients right now who can deliver the goods – there are fewer listings, closing volume is way down, and many of these folks are the ones living highest on the hog these past few years. They need the money. If they don’t serve you, fire them and get someone else, like a Redfin or some other fixed-fee agent.
4. The fixed-fee agent wont give you much time until you get serious about an offer, after which I think he/she will be better at negotiating a close than a freelancer. Also, use other tools to gauge the state of the neighborhood: the best of these is walking around the neighborhood, knocking on doors, and meeting and talking to the neighbors. Indeed, one such conversation alerted me to a drainage problem with the property that I used to advantage in negotiations.
5. You can also hire a lawyer to go over the paperwork for you. The local title/escrow companies can refer you to such folk, or you can find them by yourself. I used my own lawyer on one recent high-$ transaction to ensure that the paperwork was kosher. You pay them by the hour, and use them at the end. I had done this abroad, where escrow companies dont exist, and its just as doable here.
6. It’s all kinda up to you – just like when you hire a painter to paint your home for $8K, but then next time you try it yourself with a few friends and it only costs $300 for materials. Your own state of readiness to take on the responsibility defines the solution to the problem.February 21, 2007 at 7:12 PM #45974Raybyrnes
ParticipantWHoever put this post together is wrong on the tax issue. You do pay income tax> I consolidated my student loans and got a rebate for doing so. Ity was accompanied by a year end 1099 as I expected. This would be not different. It is miscellaneous income. Just as ther is mortgage fraud ther is tax fraud aswell. If you get a rebate expect to pay tax. Be happy you are paying it becasue many people are not getting that wame rebate so you are way ahead of the game.
February 21, 2007 at 8:41 PM #45979PerryChase
ParticipantI would negotiate a lower purchase price (in a down market you can, especially if you're a willing and able buyer). I don't really care how the agents work it out. That will immediately lower my property taxes and pay me back a little bit every year for as long as I own the house. If there was a way to work it out, I'd be willing "rebate" money to the seller and pay all closing costs just to get a lower property tax basis.
You can easy calculate the "rebate" that you want and lower the purchase price accordingly. Be ready to walk if the parties can't come to an agreement.
I think that each buyer is different. Some buyers like to be presented lists of houses to visit and have someone walk them through the purchase process. Other buyers know that they want and are capable of finding their own house. I fall in the latter category. When shopping at the mall, I'm very irritated when the salesperson wants to help me or makes suggestions. I just need someone to find my size when it's not on the rack.
Sad to say but most people would rather have the extra service because that makes them feel good, although they have to give up something else for that service.
The main problem with negotiating with agents is that most buyers rely on the agents who work in conjunction with loan, title and escrow officers to "get them into" a house. They are ignorant of the process and can't afford to push for a better deal, lest they "loose" the house they want.
I like the way exeunt put it: I would rather pay for a boat in MY driveway rather than the boat in HER (the agents) driveway, wouldn't you?
Since I'm very familiar with RE transactions, I would have no problem going with a discount brokerage such as Zip Realty for a purchase I have already identified. If I needed hand-holding or suggestions on where and what to buy, I would use a full service broker (who charges discount commissions) such as SD Realtor. I think that SD Realtor has a good business model for the future — kinda like the Southwest Airlines of Real estate; you get everything for a lower price. Well, you get peanuts for lunch on Southwest, but you wouldn't eat the food on American anyway.
February 21, 2007 at 9:43 PM #45983Daniel
ParticipantSD Realtor,
Could you (again) post your e-mail address in this forum, please? I would like to contact you regarding possible representation. I’m not planning on buying anything real soon, but perhaps in a year or so.
Thanks,
DanielFebruary 21, 2007 at 10:32 PM #45988ParticipantRaybyrnes,
I can’t possible know what you mean by “consolidating a student loan”, but it doesn’t sound anything like getting a rebate on the services of your real-estate broker.
But then, why would someone give you a “rebate” (cash back) for consolidating a loan?
If you are talking about “cancellation of debt”, sure that is taxable a income. Many of the people that foreclose on a house and get their debt canceled by the bank will experience that this year.
Any forgiven loan must be taxed as income. Otherwise your employer would be giving you payday loans each month, and then forgiving them the next (wink-wink). Good for everyone, except the IRS is too smart to let such a loophole exist.
February 22, 2007 at 8:58 AM #45998Anonymous
GuestBe careful using one agent to show you a property while thinking you are going to write with someone else. It doesn’t work that way, at least not with the Southland Regional Assoc of Realtors. If an agent shows you the property, they are entitled to the commission. The agents agree to this by participating in the association. The listing agent (or whoever showed the home) would be within their rights to insist that they would be the one entitled to the buyers agent commission. Yes, you can threaten to walk if they don’t agree to allow the discount agent to write and all, but the whole thing just gets real ugly. You’d probably be ahead to ask the listing agent to take 3.5 or 4% to do the whole deal (instead of the 5 or 6% full commission).
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