Kentucky Real Estate Agents
In the fiercely competitive battle among Kentucky real-estate agents to sell homes and gain clients, the opening shots have been fired under new marketing freedoms.
So far, there haven't been too many direct hits.
Bowing to pressure from the U.S. Justice Department, the Kentucky Real Estate Commission agreed in July to stop enforcing its ban on inducements and rebates that Realtors can offer consumers to win business. The Justice Department had sued the state in March, claiming the ban restricted competition and caused homebuyers to pay higher prices.
Agents can now legally offer all kinds of perks. Among the first salvos:
Global 1 Realty offers to pay moving costs of up to $1,500 to consumers who buy particular properties.
Fairman Realty offers a $500 rebate to the seller if a house isn't sold within 90 days, under certain conditions.
Nearly 400 Kentucky consumers could soon receive retail gift cards through RealEstate.com, an online network of Realtors.
Overall, though, agents haven't enlisted in the rebate fray in large numbers.
"I was afraid it was going to be like Wal-Mart on a Friday night after Thanksgiving with everybody at the door and piling in," said Harrell Tague, broker/owner of RE/MAX Properties East, which has about 110 agents and is Louisville's largest RE/MAX franchise. "But I really haven't seen too much of a major reaction. Change usually happens a little slower in Louisville."
Rebates aren't being offered by Louisville's largest residential realty firm, Semonin Realtors, which has about 800 agents in Kentucky.
"At this point we see no reason to make any significant changes in the way we do business," CEO Brad DeVries said. "We feel we provide a service for a fair price. In our opinion, price is what you pay, but value is what you receive."
Kevin Farris, a Realtor and managing broker for Coldwell Banker/McMahan in Elizabethtown, said many Realtors might not be fully aware inducements are legal.
In early August, the Kentucky Real Estate Commission -- which regulates licensed real-estate agents -- sent notices to 26,500 licensees informing them of the change, which took effect July 13, said Lee Harris, the commission's general counsel.
"The law basically says you can do any type of inducement and rebate you want, as long as it's disclosed in writing, to prevent any disputes or misunderstandings," she said.
Among the first agents to offer a freebie was Scott Cowles, owner of Global 1 Realty in Louisville, which offers buyers a rebate on moving costs. He hasn't sold any houses under the incentive yet, but "I've had quite a few more showings because of it. It created interest and got more people in the door, and that's really what I was looking for."
Carol Fairman, who runs Fairman Realty out of her Highlands home, offers a $500 rebate to sellers who agree to a six-month listing. The rebate applies if the house isn't under contract within 90 days and is paid only if she later sells the house.
"I moved here in October from Florida, where real-estate laws allow agents to offer inducements," Fairman said. "This was a common thing we did down there."
She's not had any takers yet because the offer has been advertised only once so far, she said.
"New concepts and new ideas take more than one ad," she said. "It may take a month or two of running the ad before people actually see it and start to respond to it."
RealEstate.com, meanwhile, extended its incentive programs to Kentucky residents about a month ago, said Mindy DuQuette, a spokeswoman for the Charlotte, N.C., company.
She said buyers or sellers who complete a transaction through a Realtor belonging to the network can receive a Home Depot or American Express gift card worth up to $1,000 per transaction, or can qualify for frequent-flier miles through five airlines.
DuQuette said 138 Kentucky Realtors are part of the network and that with the change in the law, 368 consumers who have deals pending are eligible to receive the company's incentives upon closing.
Realtors also now have access to a benefits program offered by Lowe's that includes a 10 percent discount on a one-time purchase of up to $10,000.
Farris said he isn't routinely offering inducements, but in one recent case pitched in $500 to help a young home-buying couple purchase a refrigerator. "They needed the help. They couldn't do it all on their own."
Fairman said that in Florida, "inducements were important. They were a factor -- not the only factor -- but a factor in just about everybody's marketing."
She predicted that in Kentucky, "I think you're going to see over the next year or so that it becomes more commonplace. Which I think is good. It enhances competition, and when you enhance the competition, it makes all of us do a little better and try a little harder."
Tague is more critical. "People think, because of everything they hear on TV, that the best way to pick an agent is to go out and pick the one that will give them the biggest discount, or the biggest rebate or the biggest TV. Guess who's going to be giving it to them? The person with the least education, the least professionalism -- granted, not all across the board -- but the people who can compete only on the plane of givebacks. In the long run, it could diminish the professionalism of our industry, and that will hurt the customer."
Farris countered: "It will only hurt the real-estate business if real-estate agents let it, because we're the ones that make the choice." He said if agents try to rely too much on gimmicks, "eventually, people will notice that. Clients are too smart. People are not likely to want to buy a $300,000 home because they're getting a stove or dishwasher."
Only a handful of states still ban inducements. Indiana allows them as long as there is full disclosure to all parties to the transaction at the time of offer or acceptance.
The Justice Department settlement still requires a final court ruling, expected this fall. The settlement could be accepted, modified or rejected. Kathy McGann, president of the Greater Louisville Association of Realtors, said she's not aware of any formal opposition to the change in incentive rules.
So far, there haven't been too many direct hits.
Bowing to pressure from the U.S. Justice Department, the Kentucky Real Estate Commission agreed in July to stop enforcing its ban on inducements and rebates that Realtors can offer consumers to win business. The Justice Department had sued the state in March, claiming the ban restricted competition and caused homebuyers to pay higher prices.
Agents can now legally offer all kinds of perks. Among the first salvos:
Global 1 Realty offers to pay moving costs of up to $1,500 to consumers who buy particular properties.
Fairman Realty offers a $500 rebate to the seller if a house isn't sold within 90 days, under certain conditions.
Nearly 400 Kentucky consumers could soon receive retail gift cards through RealEstate.com, an online network of Realtors.
Overall, though, agents haven't enlisted in the rebate fray in large numbers.
"I was afraid it was going to be like Wal-Mart on a Friday night after Thanksgiving with everybody at the door and piling in," said Harrell Tague, broker/owner of RE/MAX Properties East, which has about 110 agents and is Louisville's largest RE/MAX franchise. "But I really haven't seen too much of a major reaction. Change usually happens a little slower in Louisville."
Rebates aren't being offered by Louisville's largest residential realty firm, Semonin Realtors, which has about 800 agents in Kentucky.
"At this point we see no reason to make any significant changes in the way we do business," CEO Brad DeVries said. "We feel we provide a service for a fair price. In our opinion, price is what you pay, but value is what you receive."
Kevin Farris, a Realtor and managing broker for Coldwell Banker/McMahan in Elizabethtown, said many Realtors might not be fully aware inducements are legal.
In early August, the Kentucky Real Estate Commission -- which regulates licensed real-estate agents -- sent notices to 26,500 licensees informing them of the change, which took effect July 13, said Lee Harris, the commission's general counsel.
"The law basically says you can do any type of inducement and rebate you want, as long as it's disclosed in writing, to prevent any disputes or misunderstandings," she said.
Among the first agents to offer a freebie was Scott Cowles, owner of Global 1 Realty in Louisville, which offers buyers a rebate on moving costs. He hasn't sold any houses under the incentive yet, but "I've had quite a few more showings because of it. It created interest and got more people in the door, and that's really what I was looking for."
Carol Fairman, who runs Fairman Realty out of her Highlands home, offers a $500 rebate to sellers who agree to a six-month listing. The rebate applies if the house isn't under contract within 90 days and is paid only if she later sells the house.
"I moved here in October from Florida, where real-estate laws allow agents to offer inducements," Fairman said. "This was a common thing we did down there."
She's not had any takers yet because the offer has been advertised only once so far, she said.
"New concepts and new ideas take more than one ad," she said. "It may take a month or two of running the ad before people actually see it and start to respond to it."
RealEstate.com, meanwhile, extended its incentive programs to Kentucky residents about a month ago, said Mindy DuQuette, a spokeswoman for the Charlotte, N.C., company.
She said buyers or sellers who complete a transaction through a Realtor belonging to the network can receive a Home Depot or American Express gift card worth up to $1,000 per transaction, or can qualify for frequent-flier miles through five airlines.
DuQuette said 138 Kentucky Realtors are part of the network and that with the change in the law, 368 consumers who have deals pending are eligible to receive the company's incentives upon closing.
Realtors also now have access to a benefits program offered by Lowe's that includes a 10 percent discount on a one-time purchase of up to $10,000.
Farris said he isn't routinely offering inducements, but in one recent case pitched in $500 to help a young home-buying couple purchase a refrigerator. "They needed the help. They couldn't do it all on their own."
Fairman said that in Florida, "inducements were important. They were a factor -- not the only factor -- but a factor in just about everybody's marketing."
She predicted that in Kentucky, "I think you're going to see over the next year or so that it becomes more commonplace. Which I think is good. It enhances competition, and when you enhance the competition, it makes all of us do a little better and try a little harder."
Tague is more critical. "People think, because of everything they hear on TV, that the best way to pick an agent is to go out and pick the one that will give them the biggest discount, or the biggest rebate or the biggest TV. Guess who's going to be giving it to them? The person with the least education, the least professionalism -- granted, not all across the board -- but the people who can compete only on the plane of givebacks. In the long run, it could diminish the professionalism of our industry, and that will hurt the customer."
Farris countered: "It will only hurt the real-estate business if real-estate agents let it, because we're the ones that make the choice." He said if agents try to rely too much on gimmicks, "eventually, people will notice that. Clients are too smart. People are not likely to want to buy a $300,000 home because they're getting a stove or dishwasher."
Only a handful of states still ban inducements. Indiana allows them as long as there is full disclosure to all parties to the transaction at the time of offer or acceptance.
The Justice Department settlement still requires a final court ruling, expected this fall. The settlement could be accepted, modified or rejected. Kathy McGann, president of the Greater Louisville Association of Realtors, said she's not aware of any formal opposition to the change in incentive rules.
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