Residential Real Estate FAQ

How much is a Realtor fee?

As a home seller, negotiating the listing rate is important because it directly affects your net equity. As a home buyer, you can negotiate a commission rebate in 40 US States.

Uncompetitive agents often imply or say directly that a paying a standard 6% listing commission results in a higher final home sale. There is absolutely no evidence for this. There are no standard commissions for real estate representation - all commissions are negotiable.

When working with a real estate agent, it is important to find the one agent who meets high standards for a fast service, great quality and competitive price.

What is a buyer's commission rebate?

In 40 US States, real estate law allows home buyers to negotiate a refund with their a real estate agent. A buyer's rebate is the same thing as a buyer's refund, stated differently. A buyer's rebate is typically negotiated as the percentage of the fee to be returned, and buyers refund is the dollar amount. The reason why the buyer's rebate is often quoted as a percentage is that it is difficult to predict the exact commission amount buyer's agent will collect after the transaction is closed.

Buyer's refund is the only mechanism available to buyers to negotiate commission savings. Buyers often can receive thousands, tens of thousands, and in extreme cases, hundreds of thousands in fees back from their real estate agent. If a buyer does not negotiate a refund, these potential savings are simply lost as an expense, merged into buyer's mortgage.

How to negotiate with a real estate agent?

Consumers can greatly benefit from services of a competitive agent to buy or sell a home. Having to pay standard fees has nothing to do with your best representation options.
When buying or selling a home, one of the most important questions consumers typically focus on is the price of the property itself. This question is important to both sides of the transaction for obvious reasons. Uncompetitive real estate agents have capitalized on this subject, claiming that paying a standard 6% representation fee outweighs the potential loss of buying a home for more money than it is worth (or selling a home for less money than it is worth.)

Sometimes an uncompetitive agent may quote you a standard fee with a stark warning that having to negotiate representation fees with other agents will cost you more. Nothing is further from the truth. Real estate property value is always defined by the market conditions and the genuine value of the property itself. Working with a competitive real estate agent saves net equity because closing fees are always considered an expense.

To save on buying or selling a home a consumer can take advantage of genuine savings by negotiating a competitive price for an excellent service.

What is an iBuyer?

Direct Cash Buyers (dubbed as iBuyers) are private real estate investors who do not have a legal obligation to represent consumers in real estate transactions. The primary legal responsibility of an iBuyer is to shareholders, not to consumers.

iBuyers claim that their service adds convenience, speed, liquidity and saves on costs when selling a home. However, numerous studies have confirmed that selling homes to iBuyers results in a severe loss of equity, anywhere from 15% to 30%.

As a consumer, you should only approach iBuyers with help from a qualified and impartial real estate agent: every iBuyer has this exact advice written into their Terms of Service.

iBuyers, such as Zillow Offers, operate on a massive failure rate. Only about 2% of all instant offer requests ending up with a sale. In 2018, out of reported 60,000 instant offer requests, only 600-700 homes got sold using Zillow Offers. Zillow Offers often receives referral fees and payment incentives from random brokers by feeding their rejected inquiries as sales leads.

Are real estate referral fees legal?

RESPA (12 U.S.C. 2607) Section 8 narrowly allows payments pursuant to cooperative brokerage and referral arrangements between real estate agents and real estate brokers. This limited exemption on kickbacks only applies to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity.

This provision to legally allow kickbacks between brokers was adopted into RESPA because real estate is a local practice and brokers routinely refer business to others outside of their area. However, a broker Referral Fee Network never acts in a brokerage capacity, instead, it simply uses a real estate license to collect referral fees. The business of a Referral Fee Network is reversed because it is a licensed broker that simply exist to sell consumers as leads, instead of helping you to buy or to sell your home

Today, almost the entire RESPA prohibition against kickbacks and unearned fees is bypassed by Referral Fee Networks with use of blanket real estate referral arrangements as a loophole. All blanket referral arrangements between real estate brokers in the United States constitute a violation of the Sherman Act.

How to find a real estate agent?

Consumers have a choice to find your real estate agent any way they like, but in order to avoid paying hidden referral fees, kickbacks, and unearned fees, consumers must avoid using online Referral Fee Networks.

There are many Referral Fee Networks out there and many specifically hide their brokerage status, claiming to be impartial matching platforms. Most Referral Fee Networks add a hidden blanket 25%-40% referral fee into your agreement with any broker that they recommend. Referral Fee Networks often claim to find and rank real estate agents independently, but they will never match real estate consumers with agents who have not signed their Referral Fee Agreement.

Brokers who participate with Referral Fee Networks do not pay any upfront costs. However, due to the added referral fees, a recommended broker has an incentive to quote you her worst rates because it yields the highest revenue without a downside. Economists refer to this process as reverse completion. Reverse competition is competition not for you as the consumer, but for the middle-man who steers consumers toward its network of brokers and away from competitors. According to economists, reverse competition results in low quality of service and higher commissions.

Is HomeLight legitimate?

HomeLight is not an impartial platform and it is not free. HomeLight, is a California licensed real estate broker, potentially engages in an antitrust violation known as market and consumer allocation via blanket referral agreements with other licensed real estate brokers across the United States.

Matched results provided by HomeLight are always biased due to a requirement to pay referral fees. HomeLight only matches consumers with real estate agents who have agreed to pay the referral fee back to HomeLight after the transaction is complete. HomeLight does not match real estate consumers with agents who have not signed their referral fee agreement. All agents agree to pay HomeLight a referral fee, on all closed transactions, through their employing broker.

All real estate brokers must compete with one another to provide consumers with real estate services, but HomeLight withdraws itself from the competition with real estate brokers and does not offer any representation services itself. Instead, HomeLight only sells consumers information to other brokers for a blanket 25% referral fee.

The HomeLight algorithm is self-proclaimed and easily amounts to unfounded results. HomeLight has a financial incentive to recommend the most expensive brokers to consumers because the referral fees are calculated from the total price of the commission a referred broker earns from the real estate transaction.