After all of these years, there is still a war rumbling in neighborhoods across America as traditional brokers are still obsessing over the merits of the rebate brokerage model despite most remaining full service and despite rebaters being embraced by consumers.
Rebate brokerages are still challenged by real estate insiders as highlighted by a recent event in Boston wherein rebate brokers Redfin and CondoDomain (both in the top 10 brokerages in volume and unit sales) were allegedly blackballed by a traditional broker and preemptively offered a lower commission because the broker allegedly has a “personal problem” with the rebate model.
According to CondoDomain, a Boston broker contacted Redfin and CondoDomain to notify them that on his listing, if either company desires to show the property, only 1% commission would be offered rather than the 2.5% offered via the MLS “because that listing broker doesn’t believe in our business model and he “personally has a problem” with the fact that we [CondoDomain] give some of our commission back to our client.”
In an email to CondoDomain, the Boston broker allegedly said, “Now, I haven’t actually done any deals with Condo Domain. So I cannot speak to the issue of whether your agents provide a level of service to your buyer clients which (sic) should entitle you to the full buyer broker commission. But you do give portions of the commission received back to your buyers, and I personally have a problem with that.”
Further, the broker allegedly wrote, “I have recently notified Redfin by written correspondence that any future compensation to their company or their brokers & agents on transactions with properties listed by my company will be at the sole discretion of Metropolitan Boston Real Estate and its seller clients, notwithstanding the MLS published cooperating broker compensation to buyer agents. Likewise, any company operating with a similar model to that of Redfin should not necessarily expect to be paid the commission being offered in MLS to cooperating buyer agents on any Metropolitan Boston Real Estate listings… Our company will advise our clients not to offer Buyer Broker level compensation to any brokerage offering to refund portions of real estate commissions received back to buyers – which is to say, we will seek our seller clients’ permission to make compensation to such brokers at our discretion.”
At the time of publication, we have not been able to independently verify, but CondoDomain claims the person who contacted them is a licensed Massachusetts real estate licensing course instructor (name withheld).
The rules under which this would be okay
CondoDomain asked their local board and MLS for a ruling on the behavior to which they advised CondoDomain seek counsel, noting the rules (as with most boards) is that the listing broker must honor the amount of commission offered through the MLS unless the brokers mutually agree otherwise or the listing broker is “excused through an arbitration hearing or other legal process.”
CondoDomain opines that this action is also a breach of the National Association of Realtors’ Code of Ethics, namely Article 15 which states “Realtors shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices.” CondoDomain’s assertion is that they are a full service brokerage and Metropolitan Boston Real Estate’s actions and alleged statements to their clientele imply otherwise.