Cash back by buyer's agent is it true? Is it legal? (real estate, house)

[skaggarwal]

I have heard from some of the folks that some of the buyer's agent give a part of there share (1-2% of sale price) as cash back to buyer. Is it a norm? and is it true?

On surface of it, it does not look legal to me. For instance, I buy a house for 400k, my down payment is 50k. I take a loan of 350, but i got 2% of 400k = 8k from my agent. So I actually put only 42 and house is worth only 392k and bank is loaning for a 400 k house. looks like a fraud to me?

Counter view point is that, once house is closed, what ever happens between buyer and seller or there agents is there personal matter and they are doing there diligence as mature adults.

Please let me know what you think and do some buyer agents really do this.

[Charlottean]

Some agents are doing this. They have to disclose it on the HUD at the closing table. If they simply wrote you a check that would be illegal here in NC.

[businessperson]

Kickbacks are illegal. An agent can make a contribution to the closing cost or pay some of the buyer's expenses, like a home warranty or inspection. Most mortgage companies won't allow the buyer to walk away from a sale with cash. I don't know how a buyer's agent could rebate 1 - 2% of the sale price when they only make 3%. That doesn't make sense. My guess is that something has been lost in communication.

[anonemoose]

The buyers Rebate is very popular at the company I work for , as most of us are on the 100% commission plan we are free to lower our rates at will. I would imagine agents at traditional companies cannot do that. Last saturday I lowered my commission so that a buyer I was working with could get the house they loved. It is a fabulous bargaining point, in my case I usually give a free homewarranty or minimium $300.00 towards closing costs and as long as it appears on the HUD 1 it is perfectly legal.

It's really becomming the standard at my company

[leetounion]

I don't know the law in NC, but in Florida it is legal for an agent to share a commission. The commission may be shared with a party to the transaction, a so-called interested party, as long as there is disclosure.

[Buckhead_Broker]

Rebates are not illegal, at least in Georgia, so long as the party receiving the rebate is listed as a principal on the HUD 1 (settlement) statement. A principal, in this case, would be either the Buyer or the Seller.

In your example of putting $50k down, but getting $8k back, there is nothing wrong with that. You have met the lenders requirements for the necessary downpayment.

Even here in Georgia there are more agents who do not understand this concept than those who do. Instead of asking an agent, call a good closing attorney ask ask him/her.

[TerryMcDonald]

It is different in each state, but as long as it is disclosed on the HUD, and that means approved by the lender, it is legal in NC..

[3johnsons]

I work for a lender and our policy is that any rebates given by the realtor have to be included in any max amount that the underwriter or product guidelines have placed on seller contributions, even though the concessions are not from the seller (Fannie Mae typically limits seller paid closing costs to 3 or 6%). Also, rebates/concessions cannot exceed the actual closing costs that are being charged on the HUD-1.

[Bill Hitchcock]

The only person a licensed North Carolina Real Estate Broker can give a commission to is another licensed North Carolina Real Esate Broker.

NORTH CAROLINA REAL ESTATE COM MISSION RULES
CHAPTER 93A

A.0109 Brokerage Fees and Compensation

"(d) Except as provided in (e) of this rule, a licensee shall
not undertake in any manner, any arrangement, contract,
plan or other course of conduct, to compensate or share compensation
with unlicensed persons or entities for any acts performed
in North Carolina for which licensure by the Commission
is required."

[businessperson]

Originally Posted by Bill Hitchcock

The only person a licensed North Carolina Real Estate Broker can give a commission to is another licensed North Carolina Real Esate Broker.

NORTH CAROLINA REAL ESTATE COM MISSION RULES
CHAPTER 93A

A.0109 Brokerage Fees and Compensation

"(d) Except as provided in (e) of this rule, a licensee shall
not undertake in any manner, any arrangement, contract,
plan or other course of conduct, to compensate or share compensation
with unlicensed persons or entities for any acts performed
in North Carolina for which licensure by the Commission
is required."

Thanks for clearing that up.