Yesterday I posted on real estate commission rebates, which are apparently the best kept secret in the real estate industry. Assuming you want to get a rebate on the purchase of your home you need to know that there is a right way and a wrong way to go about doing this. The absolutely wrong way is to start going to open houses and calling listing agents directly for private showings, taking up a lot of listing agents’ time, not mentioning that you are working with a realtor, and then at the last minute find a real estate agent that will give you a commission rebate to write an offer for you.
Here is why this approach is a very, very bad idea. First, it’s just not necessary. You don’t need to do all this work on your own, in a vacuum because there are plenty of full service realtors out there that will give you the rebate you are looking for but still give you all the attention you would get from a traditional realtor. Yeah…it’s kind of like gravitational waves. Weird but true.
Second, if you work directly with a listing agent they are going to start to feel like they are your agent and they start to internalize that they are going to earn an additional commission on you – right or wrong. Then, when you pull another agent out of your pocket at the last minute to submit an offer on their property they are going to be pissed. They will be angry that they did all this work (yeah, real estate agents tend towards hyperbole) and some other agent is going to get a commission from it. So they will go into your transaction with a huge chip on their shoulder and this is not good for your transaction.
The other problem with this approach is that, if the listing agent knows you are getting a rebate (they usually find out), your process just builds more resentment about the whole practice of sharing commissions. Instead of it being seen as a viable competitive alternative that more realtors should consider it’s seen as something that lazy realtors do.
Also, if you initially explore a new development on your own there is a very good chance that you will forfeit your future agent’s right to any commission on any of your transactions in that development and with that you are forfeiting your right to a rebate. The reason is that many, many developers have this crazy rule that your real estate agent must accompany you on your very first visit to the sales office for the development and you must be registered with that agent in order for the agent to qualify for the co-operating commission. Crazy, right? But I think the reason for this rule is precisely so that the developer’s sales people don’t spend a lot of time with prospective buyers who bring in a friend at the last possible moment to collect a fat commission.
So if you want a real estate commission rebate just find a realtor who will give you one and start working with them early on. Let them schedule any private showings for you and accompany you to them and let them address any follow up questions directly with the listing agent. If you go to an open house on your own (yeah, it’s perfectly fine to do that) just tell whoever is handling the open house up front that you are working with an agent and give them your agent’s name.
These simple rules will make your entire transaction go much smoother and save you a lot of work and anxiety in the long run.
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.