What is a real estate rebate? Most home buyers don’t know that they can negotiate with their real estate buyer broker (the realtor representing the buyer in the transaction) and receive substantial savings. Real estate commissions and or fees are negotiable (not fixed). If commissions are negotiable then that means that buyers can negotiate a discount in the form of a buyer broker rebate and not miss the opportunity to save money when purchasing a resale home or a home from a new home builder.
How does it work? For example, if you are planning to buy a home worth $300,000.00 and you are using Jim Cadwalader with HowToBuyAHome.com inc. as your realtor and the commission offered to your realtor is 3.5% of the purchase price (the commission offer in the MLS may vary but is usually 3 to 3.5%) Your Rebate (the portion of my commission that I am going to give back to you) would be $4,375.00. As you can see, the real estate rebate can provide significant savings for you the buyer and most certainly will become an essential part of price competition amongst real estate buyer brokers in the future.
Why a rebate? Buyer broker’s fees or commissions are paid by the seller and built-in to the sales price, a rebate from your buyer broker is the principal method that can be used to negotiate a discount otherwise the commission’s on the buyer’s side are essentially fixed. I firmly believe that broker to buyer rebates are a morally good thing because such rebates make it possible for buyer brokers to negotiate or discount their commissions. Buyer broker rebates reduce the cost of housing for the consumer and promotes healthy competition and innovation between real estate brokers.
Are cash back rebates from your buyer broker legal? The “built-in” buyer broker commissions are legally protected by federal anti-trust laws ( U.S.A. vs. Kentucky Real Estate Commission). The Department of Justice has indicated that such broker to buyer rebates are beneficial to the home buying consumer and are “key to broker competition”. According to the Department of Justice, real estate broker rebates or cash back to buyers makes home purchases less expensive.
Overall, buyer broker rebates on resale or new home purchases are a smart way for home owners to save money when purchasing real estate. HowToBuyAHome.com offers these savings to home buyers.
