Canadian brokerages TheRedPin and CommissionMadeFair.com say technology that lets homebuyers do much of the legwork involved in finding the home of their dreams themselves lets them offer commission rebates to buyers.
Homebuyers “can filter through all the facts until they’re ready to take the next steps, which is usually going to see the home. They’re obviously taking some of the burden off us,” TheRedPin’s co-founder, Rokham Fard, tells CBC News business reporter Sophia Harris.
TheRedPin.com rebates of up to 15 percent of the commission split it gets from the listing broker to its buyers. If the seller of a $500,000 condo has agreed to pay a 5 percent commission to the listing broker, and the listing broker splits that that 50-50 with the buyer’s agent, the buyer could receive a $1,875 rebate.
CommissionMadeFair.com, recently launched by Toronto agent Doug Chan, offers to rebate up to 80 percent of his commission, with the size of the rebate tied to how many homes the buyer sees in person.
Each visit reduces the rebate — see 20 houses, and you won’t be getting a rebate. Buy the $500,000 condo with the 50-50 split of a 5 percent commission after your first showing, and Chan will write you a check for $10,000.
“While you’re thinking about your real estate goals and figuring out where you want to live, I’m focusing on protecting legal interests, negotiating offers, and making deals happen,” Chan promises on his website. “I believe that 80 percent of my value as a buyer agent is delivered to the purchaser in the last 20 percent of the process. No rush, and no contracts. You are not a lead to be converted.”
When the Toronto Real Estate Board began providing virtual office website (VOW) feeds to members, TheRedPin claimed to be the first brokerage to take advantage of the opportunity.
VOWs typically offer consumers a richer set of listings data than what’s available on many search portals, similar to what agents themselves see when they log in to their multiple listing service. VOW data may include sold data, days on market, price changes and pending sales data.
In the U.S., tech-based brokerages ZipRealty and Redfin capitalized on the popularity of their VOW sites, coupled with buyer rebates, to expand their operations into markets nationwide. ZipRealty was acquired last year by real estate brokerage and franchise giant Realogy, while Redfin continues to expand and lay the groundwork for an IPO.
Joseph Richer, registrar of the Real Estate Council of Ontario warns that agents who offer incentives at the beginning of the home buying process don’t always follow through.
“If your real estate professional makes a promise, get it in writing,” Richer said in a Toronto Star column. “Do remember: unwritten commitments – whether they involve a rebate, a purchase agreement or any other detail of a real estate transaction – can be difficult to enforce.”
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