Jessica Swesey of Inman News just wrote an article on South Carolina lifting its ban on real estate rebates to consumers.
I found the article very interesting, and timely. With major changes coming to the industry the rebate model is one of those models that are being tested well. There are a number of companies that offer the rebates. Seattle investors are banking on it; Redfin a Seattle based discount company has recently received 8 million in venture capital. Zip realty is one that's been utilizing and adjusting the model for some time.
My question is how well does the model work? I used to run a company that as a part of its services offered rebates to consumers. At the same time a part of our business was very similar but not rebate based. We found that most consumers were not especially drawn to the rebates. Many of them had to be reminded of the rebate. I did better with the non rebate based company.
This amazed me, but I found that by far most buyers were more concerned about the house that they were going to buy and was it right for them and what they were going to do with it, investment potential, etc. The idea of a rebate wasn't often part of the equation.
So really how successful is the model?
Reference: "State Lifts Ban On Real Estate Rebates" By Jessica Swesey, Inman News, Friday, July 14, 2006
It works to a certain degree. It will, however, attract a certain kind of clientele. Some will need the rebate in order to be able to afford a new home.
However, its also been my experience that consumers are more concerned about other issues, including good service. Here in Las Vegas, there are companies that do offer discounts and rebates. I have represented several clients who did seek their services, but then decided to seek another agent after.