Broker rebates catching on slowly

Buyers could see savings of thousands of dollars

By Katy Stech

The Post and Courier

Saturday, June 14, 2008

Randall Watts was skeptical.

When local real estate Broker Steve deGuzman promised to give him thousands of dollars as a rebate for retaining his services, Watts wondered: “What’s the catch?”When it came time for Watts, a university librarian, and his wife to buy their North Charleston home, they got the keys and a check for more than $3,000 at the closing table.

“I was sort of surprised how it worked out, because it sounded too good to be true,” said Watts, who moved from Aiken in February.

Now, deGuzman and his recently formed firm are offering the same rebate to other home buyers, which does not sit well with some in the highly competitive real estate industry.

Rehava Real Estate Store recently opened its first location on International Boulevard in North Charleston. The firm’s unconventional approach to commissions could save home buyers money, but the venture is facing some resistance.

Rehava’s business model stems from a 2006 change in state law, which previously had prohibited real estate agents from offering rebates. The U.S. Justice Department has sought similar changes across the country, saying they can save consumers money, but only a handful of states have taken action.

A rebate of 1.5 percent could result in thousands of dollars in savings in the Charleston area, where the median home price last month was $214,000. For example, on a standard 6 percent commission on a $200,000 home, the agents representing the buyer and seller would typically split the $12,000 payout. Under that scenario, Rehava said it would pay half of its hypothetical $6,000 share as a rebate.

But the concept hasn’t settled well with agents who oppose rebates, deGuzman said. Already, he said he has received several e-mail messages that he described as threatening.

DeGuzman, whose background is in the restaurant industry, said rebates make sense in the real estate business because technology now allows buyers to do a lot of the early searching themselves. The National Association of Realtors estimates that four in five buyers start their home search online, reducing an agent’s workload, he said.

It’s unclear how quickly the rebate concept is growing in the region.

Liz Loadholt, broker-in-charge of AgentOwned Realty in Mount Pleasant, followed the rebate issue as it went through the legislative process. She said the law passed quietly, without attracting much attention.

Agents at her firm have since given out rebates occasionally, she said. Sometimes, they are offered to out-of-state agents who buy South Carolina property but, because they aren’t licensed South Carolina, can’t represent themselves. Also, a newer agent might offer rebates to drum up business.

Reach Katy Stech at 937-5549 or kstech@postandcourier.com.