Real Estate

Buying agent with most cash back?

  • Last Updated:
  • Oct 25th, 2020 5:19 pm
Member
Mar 2, 2017
314 posts
347 upvotes
Markham
Sanyo wrote: Another question -- do you think its smart if you see a property you like to call up the seller agent and negotiate for them to be your buyer agent for that transaction only and try to get 50% cash back if the deal closes since they will also be getting a commission from the seller?

So basically i assume 1-2% seller commission + 1.25% buyer commission would still be a sweet deal for the seller agent.

Does this happen often?

In theory what you are proposing makes perfect sense and would work well if all agents were created equal (have the required knowledge/objectivity/etc to carry this out as a win/win for all). Because this is hardly ever the case and because they don't have a client obligation to you as a buyer you take on quite a bit of risk engaging the seller agent.

In short It's doable and it works, but buyer beware.
Realtor, Investor, CPA
Deal Addict
Mar 27, 2004
4509 posts
2139 upvotes
Toronto
Sanyo wrote: Another question -- do you think its smart if you see a property you like to call up the seller agent and negotiate for them to be your buyer agent for that transaction only and try to get 50% cash back if the deal closes since they will also be getting a commission from the seller?

So basically i assume 1-2% seller commission + 1.25% buyer commission would still be a sweet deal for the seller agent.

Does this happen often?
so you want the listing agent to represent your interests in negotiating. while the agent is also suppose to get the highest price possible. do you not see the conflict there?just get your own buyer agent and get a rebate
Full-time Realtor
Deal Fanatic
Feb 9, 2009
9338 posts
6952 upvotes
Any agent doing 50% cash back on this site? pm...potential quick close. no need to take me to the property. we can docu-sign everything you dont even need to see me in person lol. ill give you details in pm but property is over seven figures so even with 50% cash back the agent will still get a pretty good payday here.

Also, only if you can do at least 50% cash back (or better) please pm me... also please state your name and the agency you work for in the pm for verification. Ill get back to you and we can discuss further. Thanks!
Deal Addict
May 9, 2017
1059 posts
1087 upvotes
Sanyo wrote: Any agent doing 50% cash back on this site? pm...potential quick close. no need to take me to the property. we can docu-sign everything you dont even need to see me in person lol. ill give you details in pm but property is over seven figures so even with 50% cash back the agent will still get a pretty good payday here.

Also, only if you can do at least 50% cash back (or better) please pm me... also please state your name and the agency you work for in the pm for verification. Ill get back to you and we can discuss further. Thanks!
Beware. This is just a test for agents that said they wouldn't do cash back :)
Deal Fanatic
Feb 9, 2009
9338 posts
6952 upvotes
NotRobot wrote: Beware. This is just a test for agents that said they wouldn't do cash back :)
my convo will be in full confidentially (as i expect the agent to do the same)... will not disclose or reveal identity on this board (and i think its illegal anyways).
Deal Fanatic
Feb 9, 2009
9338 posts
6952 upvotes
property i wanted to bid on already sold yesterday 50k over asking lol... this market is super red hot right now!
Deal Addict
Mar 27, 2004
4509 posts
2139 upvotes
Toronto
all agents know this already
Full-time Realtor
Newbie
Jul 30, 2020
3 posts
Looking for a cash back realtor in the Windsor/Chatham area. Please PM offers. I pretty much know which homes I want.
Deal Addict
Nov 22, 2004
1459 posts
497 upvotes
We seem to keep coming back to the same debate as to what the agents are worth and how to get the maximum cash-back rebate.

I remember being triggered by this thread when it was first created by the OP who ended up being a good friend of mine, and now the thread has evolved into a silent bidding portal in itself, which is pretty cool. I avoid getting into rebate debates but I figure now that I’ve spent a lot of time in the industry with a variety of clients, I can reflect on this:

With respect to sales & commission:
A lot of people who take issue with the commission rates without acknowledging a few things:
  • It is a 100% commission-based sales job and can be a demanding one, notwithstanding the fact that sales gigs in general are high-risk-high-reward in nature compared to other fields.
  • We only get paid once the transaction has closed, have no way of knowing how long it would take, how much it would be for and how long it will be before the next closing.
  • Clients can be fickle, their situation can change where at one point they are viewing properties regularly for weeks then suddenly go radio silent indefinitely, which becomes sunk cost for the agent who has spent all that time with them. It is really easy when there are 65K+ agents in GTA alone to compete with. I’ve had people I worked with for months just to have them change their minds or ghost me. C’est la vie.

With respect to commission model:
People also take issue with the %-based compensation model where agents benefit from the increase in property values in the last decades. I feel this is offset by a hyper-competitive industry we now have. When the OP created this thread 4 years ago, there were 40K+ agents in GTA, now there are 65K+. Veteran agents can attest but I believe earlier on agents could more easily make up in volume for the lower prices, with more sincere and committed clients, in a lower cost-of-living environment, and rebates probably weren't commonplace either.

I don’t see the %-based compensation model disappearing until they find a way to minimize the risk of an agent not getting paid if the transaction doesn’t close. For ex: a buyer client should pay the agent for the agent’s time and work until the deal is firm where the seller can pay a lower % or fixed amount. That way, all that work is not sunk cost for the agent if they don’t get the property for any reason. But I don’t see this happening, nor do I see the % structure changing.

Side note:
Being an agent isn’t rocket science and it isn’t hard to become an agent either, but it is much harder to establish yourself after being licensed and have success. How often does one choose to work with a newly licensed agent to make a transaction worth hundreds of thousands if not millions? Everyday, newer agents have to try harder to justify their value because we all want someone who’s experienced, knowledgeable, and competent at their craft.

With respect to technology:
For people who believe that technology is going to get rid of agents - It’s not. If anything, it will only help agents save time when clients will be able to do more homework on their own but this is a service-based industry where there will be a continued dependency. This is doubly true when things go south in a transaction, clients want “insurance”, assurance, or even someone to blame if things don’t go their way. I’ve observed that people have a very hard time dealing with consequences for things that don’t go their way.

Cash-back Rebates - Expectation vs Reality:
I have no problem with rebates. I value my time and when I have a sincere client who offers to save my time, I’m happy to share my commission as well. Websites like bungol make my life much easier as well. The issue arises when people demand 70~90% rebate promising to “most of the work” but still requiring a lot from an experienced agent. They want no BRA or any commitment, but do want the agent’s time, advise, red flags, showings, time to decide to buy (or not), have all their questions answered about the process, the property, and so on…then still require the agent to give up most of their commission because “agents are glorified assistants and door-openers that get paid to do nothing”. This isn’t just “signing your name and getting paid”.

Sometimes unforeseen issues arise during the transaction which substantially increases the agent’s work, keeps them on the hook legally, and they still have to rebate the promised amount. That headache isn’t worth 10~30% of gross commission, and also potentially sets up the agent for tax issues as @deal_with_singh explained. But as long as both parties are okay with their rebate structure, kudos to them.

A couple of suggested alternatives were private sales (great if you're comfortable with it), or to approach the seller’s agent directly; works great in theory but comes with its own set of risks for the buyer (see other replies above). Another alternative is to get the license yourself. It’s a great idea, people really should. Then at the very least they’ll be able to empathize. Not everybody can be a good artist, IT or healthcare-professional, etc., similarly, not everyone has the temperament for sales.

Personally speaking…
Since my triggered post, I’ve reached a point in this career where I can choose my clients and I don’t race to the bottom with rebates. Majority of my clients preferred getting less or no rebate to work with me than go elsewhere. I ended up working with high-quality clients that were sincere, transparent, appreciative of my time and effort, and allowed the client and me to collectively use our strengths to find something they liked. Most are now good friends of mine. But that's just my personal experience.

Like other folks, I like what I do, I work hard at it and everyone I’ve worked with tells me I’m good at it. I’ve had bad clients and amazing clients. I’ve had clients that took a couple of weeks to close and others that took years while I worked with them regularly, which was fine, as long as they were happy in the end. What mattered was that the sincerity was mutual in terms of attitude and compensation was fair.

Finally:
I’ve learnt a lot from this community, been rightly schooled from time to time, and I try to help when I have the capacity for it. I do feel for people that have been wronged by their agents. I strongly believe that the industry also requires more regulation. But the notion that all agents only act in their self-interest is glib and facile. You’ll always have a few good agents who’ll work to foster a long-term relationship, many average agents who will do what’s required transactionally, and few bad agents who will screw over their client either out of negligence or willingly.

For any half-decent agent, be it on buyer’s or seller’s side, the monetary incentive from inflating the sale price is not worth risking their reputation in the market. A happy client may tell 2~3 people about their experience but an unhappy one tells 20~30. I’ve seen this first-hand.

Lastly, folks need to remember that if an agent is agreeing to give up most of their commission, they will have certain expectations as well - quicker closing, bigger deal amount, etc. otherwise the agent’s opportunity cost increases with time. At the end of the day, you do get what you pay for.

Stay safe, everyone.
Last edited by Clueless Fox on Aug 1st, 2020 12:16 pm, edited 3 times in total.
Heatware: 9-0-0
Realtor @ Royal LePage Ignite Realty
Deal Expert
User avatar
Feb 11, 2009
17428 posts
4272 upvotes
Toronto
Clueless Fox wrote: We seem to keep coming back to the same debate as to what the agents are worth and how to get the maximum cash-back rebate.

I remember being triggered (link) by this thread when it was first created by the OP who ended up being a good friend of mine, and now the thread has evolved into a silent bidding portal in itself, which is pretty cool. I avoid getting into rebate debates but I figure now that I’ve spent a lot of time in the industry with a variety of clients, I can reflect on this:

With respect to sales & commission:
A lot of people who take issue with the commission rates without acknowledging a few things:
  • It is a 100% commission-based sales job and can be a demanding one, notwithstanding the fact that sales gigs in general are high-risk-high-reward in nature compared to other fields.
  • We only get paid once the transaction has closed, have no way of knowing how long it would take, how much it would be for and how long it will be before the next closing.
  • Clients can be fickle, their situation can change where at one point they are viewing properties regularly for weeks then suddenly go radio silent indefinitely, which becomes sunk cost for the agent who has spent all that time with them. It is really easy when there are 65K+ agents in GTA alone to compete with. I’ve had people I worked with for months just to have them change their minds or ghost me. C’est la vie.

With respect to commission model:
People also take issue with the %-based compensation model where agents benefit from the increase in property values in the last decades. I feel this is offset by a hyper-competitive industry we now have. When the OP created this thread 4 years ago, there were 40K+ agents in GTA, now there are 65K+. Veteran agents can attest but I believe earlier on agents could more easily make up in volume for the lower prices, with more sincere clients, in a lower cost-of-living environment, and rebates probably weren't commonplace either.

I don’t see the %-based compensation model going away until they find a way to minimize the risk of an agent not getting paid if the transaction doesn’t close. For ex: a buyer client should pay the agent for the agent’s time and work until the deal is firm where the seller can pay a lower % or fixed amount. That way, all that work is not sunk cost for the agent if they don’t get the property for any reason. But I don’t see this happening, nor do I see the % structure changing.

Side note:
Being an agent isn’t rocket science and it isn’t hard to become an agent either, but it is much harder to establish yourself after being licensed and have success. How often does one choose to work with a newly licensed agent to make a transaction worth hundreds of thousands if not millions? Everyday, newer agents have to try harder to justify their value because we all want someone who’s experienced, knowledgeable, and competent at their craft. Other than offering greater rebates, there’s no easy way for new agents to stand out.

With respect to technology:
For people who believe that technology is going to get rid of agents. It’s not. If anything, it will only help agents save time when clients will be able to do more homework on their own but this is a service-based industry where there will be a continued dependency. This is doubly true when things go south in a transaction, clients want “insurance”, assurance, or even someone to blame if things don’t go their way. I’ve observed that people have a very hard time dealing with consequences for things that don’t go their way.

Cash-back Rebates - Expectation vs Reality:
I have no problem with rebates. I value my time and when I have a sincere client who offers to save my time, I’m happy to share my commission as well. Websites like bungol make my life much easier as well. The issue arises when people demand 70~90% rebate promising to “most of the work” but still requiring a lot from an experienced agent. They want no BRA or any commitment, but do want the agent’s time, advise, red flags, showings, time to decide to buy (or not), have all their questions answered about the process, the property, and so on…then still require the agent to give up most of their commission because “agents are glorified assistants and door-openers that get paid to do nothing”. This isn’t just “signing your name and getting paid”.

Sometimes unforeseen issues arise during the transaction which substantially increases the agent’s work, keeps them on the hook legally, and they still have to rebate the promised amount. That headache isn’t worth 10~30% of gross commission, and also potentially sets up the agent for tax issues as @[deal_with_singh] explained. But as long as both parties are okay with their rebate structure, kudos to them.

A couple of suggested alternatives were private sales (great if you're comfortable with it), or to approach the seller’s agent directly; works great in theory but comes with its own set of risks for the buyer (see other replies above). Another alternative is to get the license yourself. It’s a great idea, people really should. Then at the very least they’ll be able to empathize. Not everybody can be a good artist, IT or healthcare-professional, etc., not everyone has the temperament for sales.

Personally speaking…
Since my triggered post, I’ve reached a point in this career where I can choose my clients and I don’t race to the bottom with rebates. Majority of my clients preferred getting less or no rebate to work with me than go elsewhere. I ended up working with high-quality clients that were sincere, transparent, appreciative of my time and effort, and allowed us to use our strengths to find something they liked. Most are now good friends of mine. But that's just my personal experience.

Like other folks, I like what I do, I work hard at it and everyone I’ve worked with tells me I’m good at it. I’ve had bad clients and amazing clients. I’ve had clients that took a couple of weeks to close and others that took years while I worked with them regularly, which was fine, as long as they were happy in the end. What mattered was that the sincerity was mutual with respect to the attitude and compensation.

Finally:
I’ve learnt a lot from this community, been rightly schooled from time to time, and I try to help when I have the capacity for it. I do feel for people that have been wronged by their agents. I strongly believe that the industry also requires more regulation. But the notion that all agents only act in their self-interest is glib and facile. You’ll always have a few good agents who’ll work to foster a long-term relationship, many average agents who will do what’s required transactionally, and few bad agents who will screw over their client either out of negligence or willingly.

For any half-decent agent, be it on buyer’s or seller’s side, the monetary incentive from inflating the sale price is not worth risking their reputation in the market. A happy client may tell 2~3 people about their experience but a wronged one tells 20~30. I’ve seen this first-hand.

Lastly, folks need to remember that if an agent is agreeing to give up most of their commission, they will have certain expectations as well - quicker closing, bigger deal amount, etc. otherwise the agent’s opportunity cost increases with time. At the end of the day, you do get what you pay for.

Stay safe, everyone.
Amazing Post! Pretty much sums up in one post what myself and some of the other vocal agents have been trying to get across!
Real Estate Agent, MAcc, CPA, CA
Deal Addict
Jan 3, 2007
1639 posts
181 upvotes
Toronto
Is the cash offered as commission cashback taxed as income?
Newbie
Dec 24, 2010
98 posts
88 upvotes
Toronto
With so many buying agents offering 50% cashback. Why would someone not take this? There doesn't seem to be any difference between a cashback and regular buyers agent.

Its all standard paperwork and DocuSign to submit an offer... no buyers agent has ever said "no, that's too large of an offer"
Newbie
Apr 6, 2020
73 posts
42 upvotes
Toronto
crosby86 wrote: With so many buying agents offering 50% cashback. Why would someone not take this? There doesn't seem to be any difference between a cashback and regular buyers agent.

Its all standard paperwork and DocuSign to submit an offer... no buyers agent has ever said "no, that's too large of an offer"
Except when my last buyer wanted to offer over asking, I advised against it and they got their home for $35k under... but yea, you're right, that would never happen. I saved them $35k and lost out on a whooping $875, seems like a fair trade to make someone extremely happy.
GTA Real Estate Agent
Newbie
Jul 17, 2013
48 posts
25 upvotes
Kitchener
mjkrealty wrote: Except when my last buyer wanted to offer over asking, I advised against it and they got their home for $35k under... but yea, you're right, that would never happen. I saved them $35k and lost out on a whooping $875, seems like a fair trade to make someone extremely happy.
The realtor who represented me was adamant about offering $25k over asking to “have a chance”.

I got the house for $20k under asking with no counter. Probably still paid a little more than I should have. So I guess it goes both ways...

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