Groupon Offer a Good Deal for Home Buyers?

A Chicago broker leapt into the Groupon space this week by offering $1,000 cash back to any buyer or seller who lists or closes a deal with them in the next two years. All you have to do is fork over $25 to Groupon to qualify; the home must sell for $150,000 or more.

"Our Groupon deal is a natural extension of the way we work," said Yuval Degani, president and co-founder of Dream Town Realty, which has office locations in Lincoln Park, West Loop, Lincoln Square and on North Sedgwick. "For anyone thinking about or currently shopping for a home, our Groupon deal is intended to put money in your pocket."

So far 173 people have purchased the offer.

Social commerce consultant Patrick Kitano, the founding principal of Domus Consulting Group, hopes "no consumer would purchase this kind of offer without due diligence." It's not like trying out a new restaurant, where if you don't like the food you don't have to go back. Buying or selling your house is a big deal, with a lot of money at stake. "Couponing real estate services will likely require ... pre-transaction interaction," he says.

Vet the Agent Anyway

A potential buyer of such a coupon should first do a little investigating. How much commission does the agent typically get? Say 6 percent, split in half with the other agent, is standard in your area. Does the broker offering the coupon have agents who often are willing to negotiate the commission down just to close the deal?

For example, when I sold my last home, the listing agent I used discounted her side of the Search Homes for Sale See photos of homes for sale in your area and across the country on AOL Real Estate commission simply because I asked. The half percent drop in her commission equaled a $2,050 savings to me at closing, and I didn't have to pay $25 up front for that.

Also it would be good to know the broker's standard commission; what if 5 percent is standard for listing, but under the Groupon deal you're told it should be 6 percent? We've all seen the fine print on special offers: This coupon cannot be combined with other offers and is based on standard (i.e. premium) pricing. Again, you might get a better deal negotiating on your own than with using a coupon.

Great Deal for Brokers

It's a great deal for real estate agents, however, because it amounts to lead generation--the only people who will sign up will be in the market to buy or sell soon. The broker will receive more contact information from one Groupon than it would from a couple of weekends of holding open houses.

And that might be why HouseTipper thought of it first. HouseTipper is a collective buying savings operation just like Groupon, except it specializes in real estate. Every day you'll find deals, ranging from locking in a free home inspection if you sign up with a particular agent to getting discounted origination fees with a deal from a mortgage broker.

"In almost all states, brokers are permitted to rebate a portion of their commission back to their client," Walt Molony, a spokesperson for the National Association of Realtors told AOL Real Estate, so long as it is fully disclosed to both sides.

Downside to Real Estate Coupons

The only thing to watch out for, he warns, is a lender behind a short sale. "A lender in a short sale may say no to a seller receiving this money. But as long as state law permits rebates to clients and the terms are disclosed to the parties in the transaction, there is nothing inherently illegal."

For brokers looking to foray into a group coupon, whether it is with Groupon, HouseTipper, or some other company, just be aware of the state laws, New York real estate attorney Neil Garfinkel told AOL Real Estate. If a portion of the $25 is being kicked back to the real estate agent, that could be against the law in states such as New York, which has laws that prevent an agent from collecting an unearned commission.

Meaning, if you buy the Groupon but don't close a house deal before the deadline, the broker may have to give the money back, whether you close eventually or not. The $25 ultimately becomes a money-back guarantee if the broker doesn't close on your house by the expiration date. But an agent can also get around this by simply letting Groupon keep all the proceeds, or perhaps by donating its percentage of the sales to charity.

"What are [the agents] trying to accomplish?" says Garfinkel. "Is this a way for the broker to get new business? Or is it a clever way to get $25 from each person?"



Sheree R. Curry
, who has owned three homes and successfully negotiated lower agent commission, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the
Wall Street Journal, TV Week, and Fortune. She's been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher -- or at least a lender who'll give a reasonable mortgage rate to a self-employed mom.

These AOL Real Estate guides can help, whether you're in the market to buy, rent or sell:

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Ms. Hankins

This was definitely a great deal and if you're in search of a Realtor in the Hampton Roads area of Virginia contact Candice Nesbitt-Allen, with ERA Real Estate Professionals at chank26964@aol.com.

April 18 2011 at 11:30 AM Report abuse rate up rate down Reply
mandy4realestate

Oh yeah, if you're looking for a realtor who takes pride in her work and goes the extra mile for her clients in Las Vegas, NV, send me a line. I would be happy to help you out.

Mandy Hoffman
Prudential Americana
mandy4realestate@aol.com

April 14 2011 at 12:25 PM Report abuse rate up rate down Reply
mandy4realestate

Okay so you saved a half percent or $2050 on the last house you sold because the agent reduced her comssion. So that would make your house a $400,000 sale. Do you know that the average house out there they days is not $400,000 in most cities? So reducing a comission is quite a bit of money out of a realtor's pocket. This $1000 is a good deal. The realtor usually has to split her comission with her broker, so on a $150,000 deal at 3% going to her side, that comes to $4500 and then after she splits that with her boker it could be somewhere around $3375 or less and then she rebates $1000 to the buyer or seller and that leaves her $2375. And it might take 3-4 months or longer of searching and looking or advertising and negotiating depending on what side she is on and then she has to go through escrow. With the banks that she is working with on these REO's and especially short sales these days, and the aggravation and frustration of trying to get the deal done, this could come down to $10 an hour. I don't think that is too much to ask for making sure your client gets a great deal and isn't inconvenienced too much. And for $25 to get a $1000 back. Wow. People spend that on fast food lunches a couple days a week. People buy raffle tickets to get back less. Give the realtors a break. Most of them are honest and represent their clients very well.

April 14 2011 at 12:23 PM Report abuse rate up rate down Reply
michael

HI All,

Michael Picone @ Welcome Home Realty, (Phoenix, AZ) Locates, Negotiates & Delivers.
mp4results@aol.com

April 13 2011 at 3:47 PM Report abuse rate up rate down Reply