Rebate agent is a completely different business model compare to the traditional full service agents. It is hard to say which one is better or worse, it all depends on the situation. In order to compare these agents, lets look at what buyers in general are looking to save while making their biggest purchase in life: Money, Time and Hassle. Let's look at each of these 3 areas and see how traditional agents and rebate agents can offer.
Money:
Without a doubt, the rebate agent will save you some money for your home purchase by offering you a portion of the income as credit back. This could be 1.5% of the offer price, which is half of what he is getting. In a typical bay area home, this could translate to $10K to $15K, which is pretty attractive to a lot of buyers. A traditional agent who doesn't offer any rebates will not give the buyer any money back at all. So in terms of money, at the glance, the rebate agent is the one to go for.
However, before making such a decision, keep this in mind, while you are saving 10k to 15k (if your offer is accepted) from your purchase, are you saving with your purchase offer? See, deciding what price you should offer is an art. If your offer is too low, you are saving more money but you won't get the property; if your offer is too high, you will surely get the property and some rebate, but you are wasting money with high offers. So how do you price your offer just about right so that your offer is competitive and you are not spending too much? A skilled agent who is willing to spend the time to do research and negotiation will likely to help you coming up with the right price.
A rebate agent might claim to offer you the same professionalism, he doesn't have the incentives. If you think from a rebate agent's shoes, you will see that a rebate agent is all about closing so both you and him can get paid and he will move on to the next client. Spending time and energy to determine the right offer price isn't going to be the most important thing if all he is worried about is getting your offer accepted. So while you are saving money by getting rebate, you are not saving money overall if your offer ends up to be higher than necessary and the rebate agent's lack of negotiation.
If you are buying a new home from the builder, go ahead and get a rebate agent. There is no negotiations needed, no contracts and no hassles. Why pay more? But if you are buying from resale, you need to be careful. How do you know an offer at $830K for a $800K home is a good offer? A rebate agent would encourage you to go for it while a skilled, traditional full service agent might be able to get the seller accept it for $810K. How much are you really saving?
Time:
Buying a home is a time consuming job. As a buyer, specially if you are a first time home buyer, have a lot of questions and needs a lot of care. A typical rebate agent needs to focus his business on volumes, will not always be available for you. If you are getting half of his commission, would it make sense for him to work with you for 6 months, write offers many times? Or would he rather you be quick and come up with offer? Which is more cost effective? If you know you need a lot of help with making decisions, you need to work with a full service agent. If you are more into bidding, then a rebate agent will be a good choice for you.
Hassle:
In California, about 90% of the real estate lawsuits involve buyer suing sellers. Why is that? Because those buyers didn't get what they thought they were getting for their purchase. Regardless who wins, it is always a hassle. Do you know getting your rebate can also be a hassle? You can't get paid directly from the escrow account. If you credit it towards your loan cost, you have to find a lender who can use all of your rebate, isn't that a hassle? None of these hassles are of rebate agent's concern. He writes the offer, signs the addendum and gets paid. What about you? Besides getting your 1.5% credited back to you, you are likely to go through hassles to actually get paid, you don't know which purchasing contract you used (There are 2 in bay area and they are DIFFERENT.) and you may not even know what you signed for. After all, each type of purchasing contract is 15 pages long, does your rebate agent have the incentive to go through it for you?
In summary: Traditional agents and rebate agents are operating from very different business model. Their mentalities are very different. One focuses on finding customer the deal which saves them time, money and hassle; the other one focuses on facilitating a pre-meditated purchase decision with a discount. In other words, one is service oriented and the other is volume-oriented. Its never the case that one is better than the other, it all comes down to the individual agent and your specific situation.