A hot button topic in real estate is “Commission Rebate.” Typically, when selling a home, the seller pays the commission for the listing and buyer’s agent. It varies state by state and deal by deal but, with the typical home in Massachusetts, the seller pays a 5% fee to brokers. Many real estate companies use a form of a rebate – either reducing the seller’s commission or rebating a portion of the buyer’s commission.
If you’re a buyer or seller, it is most important to hire the right person. Even with the internet, phone applications and the latest technology, it’s people that move real estate. In fact, if you look at the top real estate agents, most offer no discount.
How the Buyer’s Rebate Works
The terms of the buyer’s rebate MUST be disclosed in the sales contract, and the seller MUST acknowledge acceptance and awareness of the rebate.
You do not want to surprise the lender, because the appraisal has to include the review of the rebate in the appraisal report. If the appraisal report does not have the rebate, the report might have to be rewritten. You do not want to cause a delay, so be upfront with your loan officer.
Also, there is a limit of the amount of rebate you may receive. Typically, the rebate can cover closing costs and pre-paid items like taxes, interest and insurance, but cannot be used for a down payment.
If you have any questions please call me directly.