Are Realtors Able to Rebate Commission to Buyer? (Howe: real estate, mortgage)

[theblanco]

We've been talking to a few realtors that states that state that they would rebate anywhere from 1% to 4% of the purchase price depending on their commission. Is this illegal or legal with stipulations. I've read some information that the rebate would go toward closing and other's stating it would come in the form of a cash rebate, and, as well, others stating that it is not allowable. If rebates are true know of any realtors that perform this.

[Austin97]

it's fine, they are just giving up their profit to entice a buyer.

[countrylv22]

My understanding is that they can reduce the % amount of

the commission that they are charging, for example instead of taking the

usual 3%, they reduce it to 2%. But you are not able to hand them a cash

amount or rebate, I know it sounds like a technicality. However, this is the

way that the State prevents FRAUD from taking place.

The REALTORS office (for example ABC REALTY) takes the 3% or whatever %

is agreed upon, and then from that amount the Realtor will pay the Real

Estate Agent that took care of your transaction.

Now, remember that each side or firm charges the usual 3%, the firm

representing the buyer, the firm representing the seller. Each side can agree

with each respective client to charge the full 3% or reduce it to 2%,

everything must be agreed upon from the beginning on PAPER.

And all of this comes out of the closing costs.


I hope that made sense. Professional & Honest Real Estate People need to

stick to these details, or else they put their license in jeopardy.

Read everything before you sign it. Just my humble opinion

Good luck!


Countrylv22

Originally Posted by theblanco

We've been talking to a few realtors that states that state that they would rebate anywhere from 1% to 4% of the purchase price depending on their commission. Is this illegal or legal with stipulations. I've read some information that the rebate would go toward closing and other's stating it would come in the form of a cash rebate, and, as well, others stating that it is not allowable. If rebates are true know of any realtors that perform this.

[gigi927]

A 3% commission to a realtor is really a standard practice and not a legal rule. Everything is negotiable between the parties. A contract between a broker and a buyer/client can specify what is paid to the broker in the event a desirable property is procured. In some cases a buyer might actually agree to pay more than 3% to a broker; in other cases, the broker agrees to rebate $ back to the buyer. It can be in the form of closing cost credit or a cash rebate after closing. As long as the contract between broker and client is not illegal in some other way or for some other reason, all pertinent terms are negotiable!

[Derek ATX]

rebates in a real estate transaction are fine. You just have to make sure that they are disclosed at the closing. If you don't you can get into some grey areas. These types of transactions are looked at much more closely these days due to the rise in mortgage fraud. Is this a rebate from an agent that is listing your home or helping you buy a home? If it is for an agent that is assisting you in buying a home then it's probably just fine. If it is from an agent that is selling your home then I would be a little more concerned. Most agents that will discount or rebate are ones that are new to the industry and looking for any business they can get (not all though). Also, if you are using a realtor to list your home at a discount, then you will not get the level of marketing and service of a full commission agent. It costs quite a bit to market a home correctly, and a discounted commission will directly effect the amount of money an agent can and will spend on marketing.

[countrylv22]

I forgot to mention in my previous message, that I do not live in Texas.

Each state has different rules & regulations on how they do things.

However, if you feel that you do not have the answers you need, or if

something does not feel right. You can always contact the Texas Real Estate

Commission (TREC) Buying a home is not like buying a pair of shoes.


Good Luck to you!


Countrylv22

Originally Posted by countrylv22

My understanding is that they can reduce the % amount of

the commission that they are charging, for example instead of taking the

usual 3%, they reduce it to 2%. But you are not able to hand them a cash

amount or rebate, I know it sounds like a technicality. However, this is the

way that the State prevents FRAUD from taking place.

The REALTORS office (for example ABC REALTY) takes the 3% or whatever %

is agreed upon, and then from that amount the Realtor will pay the Real

Estate Agent that took care of your transaction.

Now, remember that each side or firm charges the usual 3%, the firm

representing the buyer, the firm representing the seller. Each side can agree

with each respective client to charge the full 3% or reduce it to 2%,

everything must be agreed upon from the beginning on PAPER.

And all of this comes out of the closing costs.


I hope that made sense. Professional & Honest Real Estate People need to

stick to these details, or else they put their license in jeopardy.

Read everything before you sign it. Just my humble opinion

Good luck!


Countrylv22

[wrock]

As a Realtor, I have done this for clients and it is not illegal. I generally rebate it as cash after closing, but make sure that you get it in writing from your Realtor. I think some folks confuse this with paying for referrals. It is illegal for a Realtor to pay more than $50 toward a referral but not illegal to rebate commission to a client.

Thanks

Walt

[scgraham]

Originally Posted by theblanco

We've been talking to a few realtors that states that state that they would rebate anywhere from 1% to 4% of the purchase price depending on their commission. Is this illegal or legal with stipulations. I've read some information that the rebate would go toward closing and other's stating it would come in the form of a cash rebate, and, as well, others stating that it is not allowable. If rebates are true know of any realtors that perform this.

Yes, I offer rebates to my home buyers in Georgia.

I would not, however, suggest that a home buyer merely select an agent based on the best rebate, but rather a combination of the service to be provided as well as a buyer’s rebate. A good buyer’s agent will go to bat for the home buyer that potentially saves the home buyer thousands extra through strong negotiations in all aspects of the transaction; one can be “penny wise, pound foolish” when selecting an agent solely on the amount of the rebate. What’s most invaluable is when a buyer’s agent will contend on your behalf for the numerous issues that usually arise during a real estate transaction.

[TexasGirl@Heart]

How does the commission work with the seller? What are they required to pay?

[TexasHorseLady]

It's fine, and it's done through closing and the title company is the one that cuts the check. Which is to say, the commission is collected by the title company and checks are written by the title company to disburse the funds, upon written instruction by the buyer's broker, to the broker, the agent, and the buyer (in the amount or percentage that was written into the buyer's rep agreement). Thus, all funds appear on the HUD and a third party (the title company) handles the funds.

Of course, you do have to consider if the agent gives up their own paycheck so easily, how good they are going to be at protecting your interests during negotiations.