As the real-estate market continues to cool, a growing number of brokers are doing what was until recently unthinkable. They are giving most of their commissions to buyers.this novel pitch is catching on in some of the priciest real-estate markets in the country. In February, Seattle-based Redfin launched a service that offers to rebate two-thirds of the commission it receives for representing a home buyer. Redfin currently operates only in the Seattle area but plans to expand to San Francisco in May and to Los Angeles, San Diego, Boston and Washington later this year.
People selling homes typically pay commissions of 5% to 6% of the price, which is split between brokers representing the buyer and seller. On a $300,000 home with a 3% cut for the broker representing the buyer, BuySide would earn $9,000 and pay 75% of that, or $6,750, as a rebate to the buyer
Consumers often grumble about real-estate commissions, particularly because the surge in home prices over the past decade has pumped up the amount pocketed by agents. Many small firms have begun offering to help owners sell homes for a flat fee, usually a few hundred dollars, rather than taking a percentage of the sale price.But the traditional model has proved resilient. That's partly because buyers pay nothing directly to agents (the seller pays agents on both sides of the deal), while sellers tend to assume that a smart agent will fetch them a fancy price for their home.
The premise of BuySide and other rebaters is that many consumers nowadays find the homes they want to buy online and should be able to share in the commission paid to the agent that helps them complete the transaction. BuySide customers will view homes on their own rather than being driven around by agents. The BuySide agents, to be paid salaries rather than commissions, will be available to answer questions and help guide the paperwork by telephone and email. The firm has 45 employees and offices in Chicago, Miami and San Diego.
People selling homes typically pay commissions of 5% to 6% of the price, which is split between brokers representing the buyer and seller. On a $300,000 home with a 3% cut for the broker representing the buyer, BuySide would earn $9,000 and pay 75% of that, or $6,750, as a rebate to the buyer
Consumers often grumble about real-estate commissions, particularly because the surge in home prices over the past decade has pumped up the amount pocketed by agents. Many small firms have begun offering to help owners sell homes for a flat fee, usually a few hundred dollars, rather than taking a percentage of the sale price.But the traditional model has proved resilient. That's partly because buyers pay nothing directly to agents (the seller pays agents on both sides of the deal), while sellers tend to assume that a smart agent will fetch them a fancy price for their home.
