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REALTOR® RE/MAX 100 Springfield, VA Licensed in VA www.traister.com

Friday, March 9, 2018

How that $3,000 discount broker "rebate" can cost you more than $5,000

I had coffee with a new client the other day. He's looking for a house in Fairfax and told me he had pretty much decided to go with a discount broker, but one of his friends told him he should talk to me before he made up his mind.

When we sat down the first thing he said was "How much of a rebate will you give me if I go with you?" When I told him I don't give rebates he said that was all he needed to know, and that he was going to use the discount broker.

I asked him how much of a rebate the discount broker offered him and he said it would be around $3,000, which is what they advertise on their site.

"That's a lot of money," I said. "And do you know how much that rebate is going to cost you?"

He looked at me like I was speaking another language. "It's not going to cost me anything -- they're giving money to me!"

That's when I "dropped some truth" on him about buyer rebates -- they cost the buyer money.

Here's how the buyer rebate from this particular broker works: The company gives the buyer a percentage of the commission they receive from the seller, and according their site they typically pay buyers as much as $3,000.

Whoo hoo! Free money, right?

Not even close.

The commission, while paid by the seller, comes out of the purchase price of the house. So when you buy a house, the seller gets that amount minus the commissions and other closing costs. If the buyer is financing the purchase, that "rebate" is money the buyer already borrowed, and he has to pay that money back to the lender with interest.

At today's mortgage rates, a $3,000 "rebate" could cost the buyer more than $5,000 over the life of a 30-year loan.

Then I explained my approach. Using all the tools at my disposal, I negotiate the best deal for my clients to get them the lowest price.

Using those skills, I work to save my clients as much or more than they will end up paying for a discount broker "rebate." 

Let's talk about how much money you can save by working with me. Call or email today.