How much and how to ask my buying agent to rebate?

Buying & Selling Real Estate
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How much and how to ask my buying agent to rebate?

Rudky Martin
Member since 2018 · 20 posts · 2 votes

I am new in real estate and about to buy my first house. The house’s listing price is 800k. I found this house in Redfin and saw it by myself in it’s open house alone. My buying agent was involved only after I decided to buy the house. He gave some suggestions mostly to encourage me to buy the house with higher price than the Listing price. He told me he spent 4 hours running a comparable tool to generate a report. 

Now when I ask him a rebate in case I can get the house. He said that there is no rebate because he would suffer heavy taxes and his net earning from the deal is very little compared to his effort.

Can I ask him to send me a copy of his agent contract so that I know how much percent of commission he will get?

On average how much a buying agent will rebate to the buyer?

Thank you.

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Zana Blue
Investor · Saint Augustine, FL · Member since 2015 · 227 posts · 61 votes
6y

Are you asking that he lower his commission ? Good luck with that...he will never do it even though you found the house yourself...

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  • Zana Blue
    Investor · Saint Augustine, FL · Member since 2015 · 227 posts · 61 votes
    6y

    Are you asking that he lower his commission ? Good luck with that...he will never do it even though you found the house yourself...

    3Reply
  • Rudky Martin
    OP
    Member since 2018 · 20 posts · 2 votes
    6y

    Hi Zana,

    thanks for the response. But I heard everywhere even here in BiggerPocket's guide books for buyers that buyers often get rebates from buying agents. 

    here is the quote:

    11. Get a 50% refund on real estate agent commission fees

    By far the largest single fee you’ll pay when buying a home is to your agent. For each property sold, the agents representing the buyer and the seller split a commission equal to 5–6% of the purchase price, so each agent gets 2.5–3% of the purchase price in cash at close. (It’s a misconception that the seller pays this fee; it comes out of the money paid by the buyer and is built into the price of the home!)

    Traditional agents don’t want you to know that this amount is completely negotiable.

    thanks

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    That conversation happens before you hire an agent, not after.

    When pay day comes at your job do you expect to get the full amount you have been contracted to work for, or would you be ok with your boss saying, well I think we need to renegotiate this to about half.  Do you think that conversation should happen closer to pay day, or before you agreed to take the job?

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    3Reply
  • Rudky Martin
    OP
    Member since 2018 · 20 posts · 2 votes
    6y

    Hi Russell,

    Thanks for the response. Because this is my first house purchase, i may not understand the convention.

    He hasn't created an offer yet except he sent a comp report to me which I hadn't asked him to do. Does it already mean I already hire him to be my buying agent?

    Is it Ok to look for another buying agent at this point it he doesn't give me a rebate?


    Anyway I still want to learn how to negotiate the fees with a buying agent. Is it common to ask him to show me his contract? And on average how much an agent gives back to his client?

    this is useful knowledge for me for my future purchase.

    Thanks

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Rudky Martin:

    Hi Russell,

    Thanks for the response. Because this is my first house purchase, i may not understand the convention.

    He hasn't created an offer yet except he sent a comp report to me which I hadn't asked him to do. Does it already mean I already hire him to be my buying agent?

    Is it Ok to look for another buying agent at this point it he doesn't give me a rebate?


    Anyway I still want to learn how to negotiate the fees with a buying agent. Is it common to ask him to show me his contract? And on average how much an agent gives back to his client?

    this is useful knowledge for me for my future purchase.

    Thanks

     Id say on average they give zero back.  There are discount brokers out there who likely do in your market, but they will likely be a minority of people.

    You are always free to hire whomever you wish and pay them whatever you wish.  If a buyers agent is going to get paid from the listing agent, that fee goes to whoever the procuring cause of the sale is. That may be who you hire, or it may not be who you hire depending on the circumstances of whats transpired in a particular circumstance.

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  • Rudky Martin
    OP
    Member since 2018 · 20 posts · 2 votes
    6y

    Hi Russell,

    Thanks for the quick response. However regarding the excerpt I quoted from BiggerPocket’s guide book:

    =======
    11. Get a 50% refund on real estate agent commission fees

    By far the largest single fee you’ll pay when buying a home is to your agent. For each property sold, the agents representing the buyer and the seller split a commission equal to 5–6% of the purchase price, so each agent gets 2.5–3% of the purchase price in cash at close. (It’s a misconception that the seller pays this fee; it comes out of the money paid by the buyer and is built into the price of the home!)

    Traditional agents don’t want you to know that this amount is completely negotiable.

    =========

    Do you think if the advice above is rarely applicable?   in what situation, a buyer agent will agree to rebate?

    Sorry if these are dump questions, I am totally new in real estate and your answers will mean a lot for me to learn and get ready for my first house purchase.

    Best,

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Rudky Martin:

    Hi Russell,

    Thanks for the quick response. However regarding the excerpt I quoted from BiggerPocket’s guide book:

    =======
    11. Get a 50% refund on real estate agent commission fees

    By far the largest single fee you’ll pay when buying a home is to your agent. For each property sold, the agents representing the buyer and the seller split a commission equal to 5–6% of the purchase price, so each agent gets 2.5–3% of the purchase price in cash at close. (It’s a misconception that the seller pays this fee; it comes out of the money paid by the buyer and is built into the price of the home!)

    Traditional agents don’t want you to know that this amount is completely negotiable.

    =========

    Do you think if the advice above is rarely applicable?   in what situation, a buyer agent will agree to rebate?

    Sorry if these are dump questions, I am totally new in real estate and your answers will mean a lot for me to learn and get ready for my first house purchase.

    Best,

     Refer to my previous answers which answer that. Are there business models that do that? Yes, but they are not common. 

    No one even requires you hire an agent if you so choose to not. 

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    1Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    If you want the buyer's agent to give you part of his/her commission at closing, then look at the webpages of the buying agents in that area and find one that advertises that.  It is more common, I think, on the west coast than on the east coast.  With a $800k property, there is a likelihood that you could get 1/2 of a percent back.  

    Or when you first talk with them say that you are interested in buying a specific house you have already looked at that is listed for $800k.  Would the agent consider providing 1/2 of a percent of the selling price out of his commission through escrow to cover part or your down payment or whatever.

    You likely will not get a copy of their contracts.  The person who is selling the house will negotiate what commission they are paying to both the listing and buying agent, generally a total of 5 to 6 percent of the selling price.  That can be split differently, but it is common for both agents to each get half.  Sometimes if the same agent lists as sells the total commission may be reduced to maybe 4%.

    But the agent does not really get to pocket half, it really goes to the broker who takes a cut.  This would be under a separate agreement and it generally is not given out to buyers.  Each agent and broker may have a very different deal in how much the agent and how much the broker gets.

    2Reply
  • Rudky Martin
    OP
    Member since 2018 · 20 posts · 2 votes
    6y

    Thanks a lot Lynnette.
    it makes sense to me. I am in San Jose, CA. If so I guess it is more common to get a refund. I will shop around for another agent as this current agent refused to give me back any money.

    Even in Redfin they advertise they will give me back ~$2000 if I choose a Redfin agent.

    Best,

    0Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    Try

    https://americarealtyonline.co...

    https://www.baronchestney.com/

    They both advertise big rebates.

    1Reply
  • Rudky Martin
    OP
    Member since 2018 · 20 posts · 2 votes
    6y

    Wow thanks for links, Lynnette, I really appreciate.

    0Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    6y

    Cutting agent fees is castrating yourself, particularly when the seller pays them. When the good agents have opportunities, they don't present them to their clients who request discounted commissions.  This is a relationship business.

    2Reply
  • Frank Geiger
    Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
    6y

    This strategy isn't good for repeat business... if you have to scrape some money out of the agent's commission, it's not a good deal anyways. Sometimes it works but you want them to bring you deals and this isn't a good way to have that happen.

    1Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    This is openly advertised and a trademark of some major brokerages on the west coast in $500k+ market areas.

    Look at the links I posted, and I have nothing to do with either  link.  Never did, though I used to live in CA.

    @Mike Dymski

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    @Rudky Martin  First thing to do is find out who pays the commission.  Typically it is the seller who pays, so it won't matter.  As for the offer price, unless there is lots of competition, why would you go above list price?  If there are no other offers, make an offer just below list and let the seller counter your offer if they aren't happy with it.  The difference in commission for the realtor when you are talking about $20K (no idea how much over list they told you to offer) split between two realtors is trivial.

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    6y

    @Rudky Martin Yes, you can find an agent to rebate part of the commission....but they won’t work a shard for you.  If you get 1% back, it’s easy to over pay for the property by more than that with an unmotivated agent.  I negotiated a $20k price reduction for a buyer who was perfectly happy with the price we already had the property under contract for.

    2Reply
  • John Barrows
    Real Estate Broker · Auburn, WA · Member since 2015 · 151 posts · 106 votes
    6y

    Most every state has LAWS GOVERNING this sort of contribution. Most state are like $100 or less. I think you're being unreasonable to ask for a piece of anyone's commission! 

    What kind of job do you have? Maybe I should ask for 1/2 a year of your salary because you were such a poor buyer? That would be fair.. right? Plus what do you care what the agent get's, the seller pays the commission. GREED.......

    1Reply
  • DJ M.
    Realtor · Southeast Michigan · Member since 2017 · 232 posts · 180 votes
    6y

    Something to consider as well. If your agent is a redfin agent hes likely already only making 1% commission.

    I think @Russell Brazil has covered everything else. 

    Just remember, you get what you pay for.

    Good luck!

    2Reply
  • Account Closed
    Specialist · San Antonio, TX · Member since 2012 · 865 posts · 351 votes
    6y

    @Rudky Martin if this is an issue you could want till you got your own realtor license. If your buying only one house and not a repeat customer them offending the realtor is not going to hurt repeat business. 

    What was the reason the agent suggested you paying more than list price? I suppose they are going to get the seller to pay most of the closing on your behalf as a trade off for the increased sales price. That could be a good thing and smart on the realtor’s part.

    I also suggest you link back to the article you are referring to and let the critics see that you didn’t make this claim on your own:) BP has some bloggers that pose as experts that are noobs. One Bigger pockets moderator promoted that Bigger Pockets is for beginners. If that is official standard of BP then BP bloggers could easily get some Vertical Assistant to write the article on thier behalf and the beginners would not be the wiser.

    Merry Christmas 🎄🎁

    1Reply
  • John Barrows
    Real Estate Broker · Auburn, WA · Member since 2015 · 151 posts · 106 votes
    6y

    One last thought on this Redfin advertising $2000 back at closing statement! 

    I believe they (Redfin) tried the same scheme here in Washington and got sued and LOST because in our license laws, one can not offer paying a FEE or CASH to any unlicensed or broker to entice buyers in any type of advertising. I think if you saw some ad like that, you stated ("Even in Redfin they advertise they will give me back ~$2000 if I choose a Redfin agent"). Please understand, In Washington state, Agents can't pay a commission to any unlicensed person. But, they can rebate a portion of their commission to a buyer (if written in the contract and disclosed to both buyer and seller), sometimes as a closing cost credit, or to pay part of the down payment if the buyer's lender will allow it but, can not pay cash to any buyer or seller.

    Please note: Brokers can offer a percentage fee like 1%-2% or can offer a FLAT FEE for services with an UP FRONT agreement. If agents or brokers are caught giving money outside of closing, then that would become (dealings outside of closing) and can be illegal in most states.

    1Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    6y

    If you want half of the commission you will get half *** service. If that's what you want they won't even bother negotiating for you and just make you pay asking and make you pay whatever the seller wants. 

    You get what you pay for and attract agents who are out their for the commission and not representing you as a buyer for your needs

    0Reply
  • Rudky Martin
    OP
    Member since 2018 · 20 posts · 2 votes
    6y

    Thanks guys. Like I said at the beginning, it will be my first house purchase. I thought it is common to negotiate with the buying agent. I just followed the guide book in the BiggerPocket that says so.

    based on your answers, looks like it is not common and most of good agents will refuse to refund in any forms.  It seems like the biggest value I will get from the agent is that he will negotiate with the seller for me.  However the question is how would I know he would do it. He knows I don't have experience and he may just push me to offer as high as possible for that house. By doing it he will have more chance to get the commission and the commission is also higher. So now instead of negotiating with the seller I have to play a game with my agent. I should not trust all he told me. I need to research by myself what will be the reasonable price for the house to offer. 

    0Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    6y
    Originally posted by @Rudky Martin:

    Thanks guys. Like I said at the beginning, it will be my first house purchase. I thought it is common to negotiate with the buying agent. I just followed the guide book in the BiggerPocket.

    based on your answers, looks like it is not common and most of good agents will refuse to refund in any forms.  It seems like the biggest value I will get from the agent is that he will negotiate with the seller for me.  However the question is how would I know he would do it. He knows I don't have experience and he may just push me to offer as high as possible for that house. By doing it he will have more chance to get the commission and the commission is also higher. So now instead of negotiating with the seller I have to play a game with my agent. I should not trust all he told me. I need to research by myself what will be the reasonable price for the house to offer. 

    Keep on asking questions. If they have nothing to back what they are saying then there should be a problem. 

    If you think you need to research yourself on the price then you should also research on the agent you will hire.

    Comps will answer a lot of questions on market conditions with sold price, % of asking, days on market, competition on why the buyers agents strategy and offer is designed that way. If the agent cannot justify it then something is not right.. 

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y
    Originally posted by @Rudky Martin:

    Thanks guys. Like I said at the beginning, it will be my first house purchase. I thought it is common to negotiate with the buying agent. I just followed the guide book in the BiggerPocket that says so.

    based on your answers, looks like it is not common and most of good agents will refuse to refund in any forms.  It seems like the biggest value I will get from the agent is that he will negotiate with the seller for me.  However the question is how would I know he would do it. He knows I don't have experience and he may just push me to offer as high as possible for that house. By doing it he will have more chance to get the commission and the commission is also higher. So now instead of negotiating with the seller I have to play a game with my agent. I should not trust all he told me. I need to research by myself what will be the reasonable price for the house to offer. 

     You learn by doing research and asking questions.  Ask him to show you the comps from recent sales which will give you an idea of the sales prices in your area.  He should be helping you and explaining where the numbers are coming from, not just telling you to offer $X.

    1Reply
  • Rudky Martin
    OP
    Member since 2018 · 20 posts · 2 votes
    6y

    Thanks @Hai Loc and @Theresa Harris

    0Reply
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