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 FREE
GIFT CARDS! It's a
no-brainer; pick the "free gift card" if you have no brain!
Sometimes,
smart people do stupid things. Buyers who think they are getting something for nothing
should wise up! Bold statement? Yes, but the proof and the
truth is out there.
A buyer goes to the net
to buy their first home in Seymour, Indiana. They don't visit the big real estate portal of
Realtor.Com, but instead find properties via other
sites; maybe from a television commercial showing desperate Realtors clamoring
at the door in the middle of cartier replica sale the night, clawing and scratching for their business.
The other sites offer inducements to the buyer that suggest that if the buyer uses their online
service to find a Realtor, find a home, find a lender, etc.; then the company will provide the buyer with a
"free gift card" at closing. The buyer has the impression that this card is free, but
come on - is anything really free? Let's follow the money and see
who really pays, and pays handsomely.
The buyer, fills out forms online and jumps through all the hoops to rolex replica sale participate in the
"free card" program. The company/site offering the service then
forwards and sells this information to
Realtor(s) in the Seymour market. Some companies offer Realtors a "flat-fee" arrangement for the lead, and others let the Realtor pay for the lead upon successful closing on the home.
Either way, the "Middle man" (referral website) is going to earn a fee from the Realtor for the buyer lead.
The
"find a Realtor" website sends the buyer a
"free gift card" using the money the Realtor paid for the lead in the first place. The buyer thinks they are getting a "free" card. The Realtor suffers
a steep (yet self-inflicted) cut in rolex replica watches income by paying for the lead. The referral company, however, makes out well.
At closing
the referral company receives 100% of their fee, spends less than
20% of the fee for the "free gift card" for the buyer, then pockets the difference laughing all
the way to the bank.
But where is the harm in this? Well, SHOW ME THE MONEY!
Suppose the home is $150k, the commission is 6% and the buyer broker gets half of the commission, 3% = $4500 gross for the buyer broker.
|
Referral
Model / Gift Card |
No
Referral Model |
| Buyer
Realtor Commission (3% of $150K) |
4500 |
4500 |
| Net
to Realtor |
2925
(65%) |
4500 |
| Fee
to Referral Company |
1575
(35%) |
0 |
| Referral
Company Gift Card for Buyer |
250 |
0 |
| Net
Profit to Referral Company |
1325 |
0 |
From their gross commission, the buyer broker agreed to pay the referral company
35% of the gross, or $1575 right off the top. From that $1575; the referral company creates the gift card in the amount of $250. Profit to the referral company
$1575-250=$1,325, not too bad considering the buyer input all the information into the
online form in the first place. All the referral company did was
let the website visitor input some data on their web page, find a
sucker Realtor willing to work at 65% of normal price, send the referral, collect the
commission at closing, cut the "free gift" card for the
buyer, and count their huge profit for almost zero
effort.
 Now let's look at
it from the Buyer Realtor's point of view; namely MY point of view!
If any Buyer Realtor is willing to work for a net commission of $2925
rather than a full commission of $4500; the Buyer Realtor could refuse
the referral model and actually rebate the buyer up to $1575 without
being one bit worse off financially. Who benefits from this?
The Realtor is indifferent; $2925 equals $2925 either way. The
Referral Company loses $1325 of profits by not placing the
referral. The buyer, however is the largest potential
winner. Either way, the Buyer will get either a $250 "free
gift card" or the leverage to negotiate up to a $1575 discount by
dealing with the Buyer Realtor directly.
Hmm.....
let me think............a $250 "free gift card" or $1575
negotiating power. It's a no-brainer!
Here is one real example, and
there are MANY that are very similar. See LendingTree
REALTY SERVICES (contained in the middle of the third paragraph); and I draw your attention to:
"LendingTree
receives a real estate brokerage referral fee of up to 35% of the local brokers
commission."
[RED - emphasis added]
Any
buyer would have been far better off to have contacted me directly and
negotiated our terms ourselves, rather than go through any referral
company offering "something free". I sure hope by
now this is common sense to you.
Buyers don't ask the broker directly for a discount because they are
not current in real estate or don't know the right questions to
ask or the right topics to talk about. My goal is to
help you do what's right for you.
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