Home > Real Estate Commission Rebate
Yes I will Rebate to the Buyer a portion of the commission that I receive when they use me as their Exclusive Buyers Agent. I will rebate (refund/give back) to the Buyer 1 % of the Purchase Price of the home. For example:
- $150,000.00 Purchase Price = $1,500.00 Rebate
- $200,000.00 Purchase Price = $2,000.00 Rebate
- $400,000.00 Purchase Price = $4,000.00 Rebate
I am able to offer this rebate because I do not have the high overhead seen in other real estate offices, like expensive office space, local and national advertising, franchising fees, and costly management overhead along with many other expenses. HowToBuyAHome.com Inc. is structured to avoid these extraneous expenses, and I pass the savings on to my clients.
As the Residential Real Estate market continues to soften it has become more common for brokers to rebate or reduce brokerage commissions. All Indiana Brokers, Agent/Realtors At their option can reduce there commissions and return a portion of the money they earned to the Buyer in the form of a rebate.
You may hear that Rebating (giving back a portion of the fee that I am paid to you the Buyer) is not legal in the state of Indiana and that is just simply not true.
The United States Department of Justice Antitrust Division thinks that this is a great idea that makes home buying less expensive. Rebates can save consumers several thousand dollars in a single transaction. http://www.justice.gov/atr/public/real_estate/rebates.htm
The Indiana Real Estate Commission says that it is LEGAL!
Title 876 INDIANA REAL ESTATE COMMISSION
ARTICLE 1. >GENERAL PROVISIONS
876-IAC-1-1-40 Incompetent practices
2. Accepting or offering any inducement or rebate for the purposes of obtaining a listing or inducing a sale, where full disclosure in writing has not been given to all parties of the transaction at the time of the offer or acceptance.
When I send over our initial offer to purchase, a form is attached that discloses to all parties involved in the transaction that I intend to rebate a portion of my commission to the Buyer.
Go to www.PLA.IN.Gov, enter Real Estate Commission in the search box (click) then choose PLA:Indiana Real Estate Commission, Scroll down to Licensure Law and Administrative Rules (click) then scroll down to Indiana Real Estate Commission Laws and Regulations (click) and go to page 58 and find 876 IAC 1-1-40 #2
The Department of Housing and Urban Development (HUD) says that it is ok!
For more information, download the HUD Real Estate Settlement Procedures Act (RESPA) Rule FAQs. Scroll down to New RESPA Rule FAQ's Updated 4/2/2010 and click, go to the bottom of page 47 item #4 (and the top of page 48.)
As this Q & A explains:
"Q: May a real estate agent rebate a portion of the agent's commission to the Buyer? If so, how should the rebate be listed on the HUD 1?
A: Yes, real estate agents may rebate a portion of the agent's commission to the borrower in a real estate transaction. The rebate must be listed as a credit on page 1 of the HUD 1 in Lines 204-209 and the name of the party giving the credit must be identified. Real estate agent or broker commission rebates to borrowers do not violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business.
HUD does say that the rebate can only be used to pay closing costs and pre-paid items Usual and customary closing cost are about $2,000.00 to $2,500.00, if points are paid the closing cost can be much higher. Pre-paid items include:
As you can see Closing Costs and Pre-Paid items can total anywhere from $3,000 to $10,000 or more. If the entire amount of your rebate can not be spent on closing costs and pre-paids there are other legal and acceptable ways to get the rest of your money to you that I will be happy to discuss with you.
- Funding your escrow account
- First year home owner's insurance premium
- Interim interest
If the rebate money is used to pay closing costs and pre-paid items that you would normally pay out of your pocket at the closing then that money stays in your pocket and you can spend it on something else like a new washer, dryer and refrigerator or furniture or whatever else you will need around your new home.
And the IRS says that it is NOT Taxable Income!
Download the IRS Ruling PDF file or search Google for IRS 200721013
The ruling holds that a rebate is not includable in a customer's (Buyer's) gross income; rather, it represents an adjustment to the purchase price of the home.
Now comes the challenging part. FHA and VA lenders sometimes say NO, you are not allowed to get a rebate; some conventional lender's and Title Companies will also say NO. You will have to have them explain why since the Department of Justice, The Indiana Real Estate Commission, The Department of Housing and Urban Development and the I.R.S. don't seem to have a problem with me returning to you a portion of the commission.
I have identified large, well known and honest lender's out there that are more than willing to work with you and help you get your rebate. And as I have stated before there are other legal and acceptable ways to get your money to you. Obviously we need to shop hard for your lender in advance and make sure that they know about the rebate from the very beginning. A few of these Lender's are.
- First Indianapolis Mortgage, Call Jason Hartmann, Office # 317-815-3866
- Indy Mortgage, Call Ken Blaudow, Office # 317-570-6300 ext. 208
- Primary Residential Mortgage, Call Jeff Day, Office # 317-238-3972 ext. 169
Of course if you are a cash Buyer there is no problem because there is no lender.
Click below for answers to questions we get asked most frequently about the Cash Rebate:
- How much does your service cost the Buyer?
- Why should I use you as my agent??
- So what's the catch?
- Is there a home purchase price limit on which you will pay a rebate?
- How does HowToBuyaHome.com Inc. get paid?
- Can I get the Buyer's rebate If I buy a brand new home, even one built from the ground up?
- Is the Buyer's rebate taxable income?
- What are the Rebate Program Terms & Conditions?