Common Home Buyer Rebate / Home Commission Rebate Questions
- What is a home buyer rebate or buyer commission rebate? A home buyer rebate is where the buyer's agent "Rebates" or gives back to the buyer part of their commission on a home sale / purchase.
- Where does the money come from for a home buyer rebate? From the seller. Remember, in most all transactions, the seller pays the commission to the Realtors. The buyer's agent simply splits their commission to you as a buyer.
- Why would a buyer's agent do this? It is an incentive for you to work with us. It increases our business. It also gives you cash at closing. It's a win-win for both buyer's rebate broker and the buyer!
- Are home buyer rebates legal? Yes, in most all states. Here is a map detailing the few states that home buyer rebates are not legal.
- How can I verify I'm going to get my home buyer rebate? It is paid to you at closing. However, it is critical that as you contact listing agents you tell them you already have an agent and you do not wish to use them as a listing agent. If you do, the listing agent will think you are their buyer. We have to be involved from the initial contact. If we as your buyer's agent can't establish we are your agent then no commission. No commission = no rebate.
- What if I'm working with another agent? Just cancel the agreement. Legally you can make an offer with who you wish to use.
- What can I use a home buyer rebate for? Cash back at closing or to help offset closing costs.
- Do I need to tell my lender about my home buyer rebate? Yes, definitely. The lender must know of all costs and credits for your approval.
- Are home buyer rebates taxable? Consult your C.P.A. but no the IRS views it as a price adjustment.
- Do home buyer rebates have to be on the closing statement? Yes. According to HUD's RESPA rules and guidelines, anyone receiving a home buyer rebate as a closing credit must list the home buyer rebate as a credit on page 1 and provide the names of the party issuing the credit on your settlement statement.
- Can I use a home buyer rebate or home commission rebate as my down payment? No but it is a tremendous help toward your closing costs and will allow you to buy the home for less out of pocket money at closing.
- Jeff Kermath
- 734-649-4903
