On Friday Zip Realty, which up until now has been a discount real estate broker, announced that they will be eliminating their commission rebates effective July 15, 2011. Their Web site already has a statement to that effect on the bottom of their home page. According to Zip Realty the change is another part of recent strategic changes “aimed at addressing the realities of today’s real estate market and moving us closer to our financial goals.” In other words, they’ve never made any money so they need to abandon their business model. However, according to Inman News Zip Realty will continue to offer listing services below the typical going rate – whatever that means.
What I found most interesting though in this news story is the claim by Zip Realty that “extensive customer surveys and a series of pilot tests revealed that our current rebate program is not the primary driver for choosing to work with ZipRealty.”
On the one hand I totally believe this is true. Why? Because it’s consistent with my own experience. Countless times I’ve been surprised that our own buyers were not aware that we provide commission rebates. But at the same time I am totally incredulous that buyers don’t give more weight to these commission rebates that can amount to more than $10,000 on larger transactions. Come on people! We’re talking real money here. What do you mean it doesn’t matter?
So eventually, if consumers continue to show no interest in these very tangible economic benefits, commission rebates will go the way of the housing boom. According to another story by Inman News Redfin is already testing reduced rebates in Boston.