Big Bucks to Buyers: Part I

In the last few years, coincident with the growth of the Internet as a real estate search tool, a number of real estate firms have begun to offer rebates their buyer clients. The firms offering rebates range from venture capital-backed national startups like zip realty, to small local firms like ours, Realty Advocates.

In the pre-Internet days, the information about homes for sale was very tightly controlled by local boards of Realtors with their wholly owned Multiple Listing Service. With the exception of newspaper advertising, buyers needed to work closely with an agent to learn about the inventory and closed sales. Agents are where buyers would also find out about local schools, crime statistics, neighborhood demographics, and where the best coffee shops were. Agents used this monopoly of information to justify their value in the real estate transaction. That value was reflected in the the buyer’s agents share of the total sales commission, usually between 2.5-3% of the sales price.

The Internet has changed all this. Nowadays, all the formerly proprietary or hard-to-find data is freely and easily available on the net. Homebuyers can search virtually all the available listings of all the real estate companies on a nationwide basis. This means that agents spend much, much less time with buyers prior to making a purchase offer and ultimately closing a sale. But has this reduction in the workload translated into any transactional savings for either buyer or seller? For the most part, no.

Traditional buyers agents now earn the same commissions while doing about half the work! Luckily, for buyers at least, companies like Realty Advocates accept the new realities of the Internet and offer buyers commission rebates of up to 1.5% of the sales price, depending on the price of the home and what commission is offered by the seller’s agent. For our Piedmont buyers, for instance, where the median price home is $1,500,000, they would receive a check from us at closing of somewhere between $15,000 to $22,500. Now other local real estate company, with the same level of experience and expertise, offers such generous rebates as Realty Advocates.