Some real estate agents offer a commission ‘rebate’ whether it’s cash, peripherals like legal fees or home inspections perhaps even some other enticing perk like vacations or other ‘gifts’.
A rebate at the start and included in your Buyer Representation Agreement is one thing but when your real estate professional suggests you meet higher offers to close deals, this is what Joseph Richer, Registrar of the Real Estate Council of Ontario (RECO) had to say:
“It sounds like a can’t-miss offer, but there are some important details to consider before accepting the helping hand. If you take the rebate and agree to pay a higher price for the home, keep in mind that your mortgage eligibility, mortgage amount and down payment requirement will be based on the higher sale price, not the net amount of the sale price minus the rebate. Likewise, your land transfer taxes will be based on the higher sale price. In addition, the higher sale price may affect your municipal tax assessment in the future, meaning you may pay more in municipal taxes. These additional costs don’t seem like much on their own, but combined and considered over time, they could impact your budget and what you feel comfortable paying for the property. The bottom line is that a rebate might look good on the surface, but it’s ultimately your money coming back to you.”
So, instead of a rebate why not something more basic, more obvious? Today more than X% of homebuyers are finding their own homes to purchase online and progressing much further through the purchasing process without the need of a realtor. Traditionally the Real Estate industry has maintained and perpetuated a belief system that there some hard and fast rules on what you should pay in commissions as if carved in stone. What if we just approach the process from the standpoint of equitable effort/ reward? In other words, if the homebuyer is doing the work, should they not share and or get the commissions back?
Yes – commission reduction, slashing, splitting, and discounting etc. all the worst words in the vocabulary of any salesman or woman much less a Real Estate agent who is a traditionalist. The truth is, there are thousands of agents out there barely surviving, many times at the hands of their own brokerage (that’s another newsletter) and if there is a system out there that is more equitable for the homebuyer and the agent then why not?
To learn more about this exciting new approach please visit; http://www.5050split.ca/home.html