Buyer loyalty rewards program

i don't know how she can do it if it is illegal for a broker to pay someone commission % if they are not licensed.... i've heard of this before, but would wonder how they are implementing it.

Hi, Mimi. I give Klara a big "thumbs-up". She runs a low-overhead operation, complete with below-ground offices on 80th Street. That positions her to compete very effectively with the big firms on price.

As you probably know, Keith B. and I are taking a similar approach:
http://www.theburkhardtgroup.com/services-and-fees-c14358.html
(See under "Services for Homeseekers / Commission-based")

ab_11218: The lagal boundary between rebates and kickbacks is starting to gain some clarity. The Department of Justice has taken a strong stand in favor of commission rebates.
http://www.usdoj.gov/atr/public/real_estate/rebates.htm

Just check her website, she posted the info. http://www.klaramadlin.com/loyalty.html

The "legal" boundary, that is.

Hi West81st! I like this approach. Is good to see you and Keith are doing this too. It is a way to start changing things in a relatively easy way. Opinions, anyone?

I can see the statisticians and lenders being bothered by it, as it skews the numbers. But then again sellers funnel cash back to buyers all the time, and that's not reflected anywhere.

NWT: Interesting point about skewed comps; but by that reasoning, don't FSBOs skew the comps even more? I've never heard of an appraiser adjusting a FSBO comp upward by 5-6% for the absence of a commission. It might make sense, but I don't think anyone does it.

Aren't comps based on what the buyer paid, not on the seller's net after transaction costs? Agree that my rigid rule-bound thinking about these things doesn't reflect reality.

Then again, it's probably a wash, as "what the buyer paid" doesn't include, e.g., NYSRE tax.

Edge Residential has been offering 1% rebates as a regular part of their business.
http://www.edgeresidential.com/edge/

HDLC: 1% of the selling price?

"NWT: Interesting point about skewed comps; but by that reasoning, don't FSBOs skew the comps even more? I've never heard of an appraiser adjusting a FSBO comp upward by 5-6% for the absence of a commission. It might make sense, but I don't think anyone does it."

No, it's not the same thing: in the case of a buyer purchasing directly from a seller, what is being recorded is the actual sales price, period. Homes are not worth any more or less because a broker is involved (and frankly, I can't believe a broker is making this kind of statement, since it's next to calling the broker's fee a ripoff of the buyer). If a seller sells w/o a broker, they simply get all of the proceeds since they did the broker's work.

But in the case of the buyer getting a rebate WHICH THEY KNEW THEY WERE GETTING WHEN THEY MADE THEIR OFFER, the sales price does not truly reflect the actual sales price when a rebate is involved because odds are that the buyer factors in the rebate when making their offer (some won't, some will, but I think most will. And when they don't, I'm sure the Buyer's Broker will remind them of the "extra cushion" they have to make a higher offer and "end up in the same place).

I remember once at 69 West 9th I had a seller call me up and ask about selling his place and why we weren't pushing it harder (this was in the time of almost all "open listings". I told him his price was slightly too high. He countered that it wasn't because the apartment 1 floor above him just sold for $200,000 and that's what he wanted. I told him, "no, you want $212,000". He said "Well, he got $200,000 and the commission is $12,000 so I'm really asking for the same thing". The problem with his reasoning is that WE SOLD THE ONE UPSTAIRS FOR $200,000 and that's why he was calling me asking why we handn't sold his. The sales price was $200,000 and we got our $12,000 off of that.

NB none of this should be taken as me saying I do not fully believe in the system of rebating commissions to buyers, just that it DOES skew the recorded sales price upwards in a lot of cases.

30yrs: Point taken, and I stand corrected.

I think there are a number of embedded inflators and deflators that distort comps more than a rebate of 1 or 2%. The division of closing costs (especially transfer taxes on new development) is probably the biggest.

It depends on the attorneys: some report the sales price as including the transfer tax on those sponsor sales where the buyer has to pay them (but I agree for the majority who don't, it skews the data).

30years, I wold be interested in knowing why you don't fully believe in the system of rebating commissions to buyers.

as a seller, I do not favor rebating commisisons to buyers because then that means the commission I'm chrged is jacked up. So I am glad that it is not allowed here.

from the link that West81 posted, it seems like cash rebate is not permitted. the broker can pay for some services or part of the closing, but not just give a check..... or so it seems.

ab_11218: I don't see that distinction at all on the DoJ site. Consider the following excerpt:

"Some real estate brokers offer consumers cash refunds or non-cash incentives to encourage them to use that broker’s services. Rebates are typically cash payments from the real estate broker to his or her client after closing. Incentives may include gift certificates, closing-cost payments, or free ancillary services such as home inspections or moving services."

Here and throughout the material, DoJ seems to treat cash refunds and non-cash incentives as equally valid options. Where did you get the impression that DoJ supports only non-cash incentives?

prez, what about when you sell your pad? Would you think the same? Seems to me that you are a broker that doesn't want to have changes in the status quo...
Klara Madlin has been a broker forever. I doubt she will be promoting an illegal rebate. It seems to me it's a semantics issue. Commissions might be illegal, rebates could be legal.

"NB none of this should be taken as me saying I do not fully believe in the system of rebating commissions to buyers"

"30years, I wold be interested in knowing why you don't fully believe in the system of rebating commissions to buyers."

I'm not sure I understand your query?

How can Edge sell for a 1% commission?

Going through their few listings and matching them up to SE, they are pricing things now at 3-5 years ago prices, hmmm

Are they just going for buy side biz?

It's a relief that the legal lines between "kickbacks" and rebates are getting clearer. For those of us who have had to give "gifts" to our loyal customers - sometimes in the form of Amex or Visa gift cards - as a reward program, this will make things a lot easier. As I've said on other threads, I think the current commission model does offer ways to tweak the system to make it more fair & transparent for both buyers and sellers. I prefer greasing the wheel to reinventing it.
Tina
(Brooklyn broker)

brokers can be "buyer brokers" representing the buy side or "seller brokers" representing the sales side or sub agents of the sellers agent or they can represent both sides under dual agency rules as long as both sides are told. If a broker is representing the buyer on an exclusive basis and wants to give a rebate to buyer it is a legal business practice. Acting as a certified buyer representative is very common outside of New York City