Discount Rebate Real Estate Companies: You Get What You Pay For

You know, I always say I love real estate because everyday it’s something different.  No two days are alike and it keeps me on my toes.  But some days those things that happen make me shake my head and I have to get it out in writing so steam doesn’t come out of the top of my head.  A little real estate related rant ahead and education, hopefully, be warned…

I have a home listed in Historic Kenwood that is next to a vacant lot, which is owned by a different owner. The buyer’s agent who showed my listing twice calls me and says “What’s the deal with this other lot?” Clearly if this agent had done his homework he could see in county public record that it’s not the same owner and county appraised value is $142K for that other lot.

Me: “It’s a different owner who plans to build on it in the future, my seller tells me her neighbor is not planning to sell it.” Him: “Oh my buyers thought maybe they could get that lot included with the house…hmm.” Me (laughing): “Well, like I said, it’s a different owner who owns the lot.  And you DO know that Kenwood vacant lots are selling for $150,000 to 200,000, sometimes more right?” Him: “Oh no, I didn’t realize.  I’ll have to inform my buyers – that’s way more than they’d pay for that lot.” Me: Silently rolling my eyes because 1) every builder in town has probably already tried to buy that lot at fair market value, and 2) this agent is doing a big disservice to his clients by not doing his homework and assuming the lot was part of the deal (even though I clearly wrote in MLS remarks that it was not) and 3) he doesn’t know the market, or he’d have known that you can’t get a lot just added on to a home purchase for a few extra thousand bucks.

MORAL OF THE RANT: I’ve said it before, and I’ll say it again.  You get what you pay for. This agent works for a discount real estate company who rebates a portion of the agent’s commission back to the buyer at closing.  Sounds super attractive if you are a buyer, right?  I mean all Realtors do is show a house and write a contract, right?  WRONG.  There are actually over 180 steps that go into a real estate transaction, many of which most people aren’t aware of that are happening behind the scenes.

This company pays their agents an hourly fee and the brokerage company keeps most of the commissions, rebating a small portion to the buyer.  This company is known for hiring inexperienced agents who may or may not know the area or the value of property. Some of those agents (like this one) are badly informing their clients that they can get something for nothing and giving them horrible real estate advice when it comes to making an offer. Paying the wrong price or getting bad advice can be the most costly mistake a person makes when it comes to their largest financial asset. Please careful who you hire – discount company or not – you may think you are saving a few bucks but it’s costing you big when it comes to what you paid (or the house you lost out because your offer was terrible or the agent made a mistake on the contract which you are now bound to.)

I highly recommend checking consumer reports and google reviews on any new to the scene real estate company you are considering or companies that offer a buyer a rebate during the home purchasing process.  Most individual Realtors have reviews on Zillow or Google as well that you can check out to see how past clients felt about them.  Here’s one complaint I read about the company in question on ConsumerAffairs.com, with the name of the company omitted so they don’t come after me for speaking the truth:

“I started to look for home in New Jersey with ****** when I came to know that they pay some of the commission back to buyer. But the home buying experience has been adequately unsatisfactory. Matt ** was my agent who was always willing to show the home, and also appeared sharp dude. But once I offered on the home, he did not put much effort in identifying the issues of home. As a novice home buyer, I relied on him too much. I went with the home inspector recommended by him (****** ). Matt never told me that if home inspector does not go on roof is a BIG red flag. I came to know on the day of inspection that inspector does not go on roof. I asked Matt what to do… he said, “No worries, we will get a roofer.” Roofer came referred by Matt (****** )… found out couple of holes which are not big issue and roof has 5 year age left, which I said is acceptable to me.

There was garage issue which Matt said he will fix. On the final day of walkthrough, I found a crack in spindle of the staircase which was meticulously pasted together, not easy to figure the crack unless someone is specifically looking for it. After closing, lots of issues were uncovered with home starting with roof leak, windows crack, bathroom leak behind dry walls. If I fix all these items today will easily cost 20 grand. I am repenting why did I go with ****** ? A big rip off, and no way to recover the cost. Please think twice before going with ****** . If you still want to go, make sure you have done your ground work and have good contacts for attorney, home inspector and roof inspector.”

Another review showed that an agent from this company had butchered the contract she wrote for her client – who was then legally bound to it.  HELLO.  Law suit ahead you think?

Yet another who listed their home with this company talks about how the company advertises to “sell your home for only 1%”, but at the end of the day, zero marketing was included, and if you wanted marketing services, it was all additional fees that added up to more than what most Realtors will charge you to sell a home.  Just like those “Guarantee We’ll Sell Your Home in 30 Days or We’ll Buy It” schemes, this is a bait & switch.  And the agent gets paid regardless of whether they sell your home or not – how do you feel about that?

Please, do your research when it comes to hiring an agent to represent you, whether on the buying side or the selling side.  Check out our list of 7 Ways to Find the Best Realtor.  After all, you want the best, not necessarily the cheapest, when it comes to representing your best interests in what is probably your largest financial purchase of your life.  Like hiring an attorney, the decision to hire a Realtor should not be taken lightly and without much research.