Buying a house is most likely the biggest investment in almost everyone’s lifetime and should be thought out carefully. With all the information easily accessible online, it’s becoming increasingly common for people to venture into the home-buying business by themselves. After all, going solo means no commission, which means you get to save some money, right? But, what if you could have both the help of a real estate agent and a significant portion of commission money in your pocket? Why deny yourself the help of a knowledgeable professional when there is a commission rebate? Have we caught your attention yet? Keep reading to find out more about this real estate trend!
A closer look at the definition
What is a commission rebate, otherwise known as home buyer rebate? The simplest way to put it is cash back at closing. However, there is a bit more to it than that, so let’s start at the beginning. When a home is purchased, a significant portion of the total price is reserved for paying off commissions to the agents involved. Usually, it’s 6% of the purchase price, which is then equally split between the buyer’s and the seller’s agents, leaving them both with 3% of the home purchase price. A commission rebate is the partial refund of that 3% to the buyer at closing. Programs like Top Agent Rebate will not only connect buyers and sellers with the top real estate agents but will rebate as much as 15% of their commission as well. Basically, you end up with the desired dream home and get a portion of the money back in your pocket. Now that’s what a real bargain looks like!
Benefits of commission rebate
Apart from the obvious benefit being that it makes buying a home less expensive, let’s take a look at the actual sum. The average home price in the US is around $226,000. Each agent gets 3% of the purchase price as commission, which in this case is $6780. Now, 15% of this sum is $1017, which you get back. Mind you, this is by no means a negligible amount of money! In fact, here is a list of examples where an extra grand can facilitate the settlement process:
• Practically free moving service – find a reputable Florida-based moving company like City Movers who will gladly assist you on your move
• Shop for your new home – whether it’s a carpet, kitchen countertop or a refrigerator, your savings account will be grateful!
• Small improvements to the new home such as new paint or energy-efficient exterior lightning
• Ready cash – even if you don’t plan on spending it right away, it’s always good to have some money to fall back on
Sounds too good to be true – why would my agent pay me back?
First of all, know that not all buying agents will agree to give you a rebate. In fact, so many buyers working with traditional brokers never even learn about this option. After all, why would they give you money out of their own pockets? Thankfully, companies like Park Place use a smarter approach by introducing a commission rebate which enables home buyers to save some of their money. They usually provide these rebates as a way of persuading you to choose them over other agents. Not only that, but technological improvements have reduced the operating expenses for real estate agents.
Because of this, some agents decide to pass those savings on to you, hence the commission rebate. There is no fee to this service and the way to repay them can simply be future recommendations. These are the buyer agents you want to work with, so have this in mind if you’re relocating anywhere in Florida or within 40 states throughout the U.S. Our company will gladly connect you with the agents who will return your 15% share of the commission.
Are there qualifications for a buyer agent commission rebate?
If you’re wondering whether you’re eligible for a refund, we have some good news. Absolutely all buyers qualify, no exceptions. However, know that buyer rebates aren’t legal in these 10 countries - AK, AL, IA, KS, LA, MO, MS, OK, OR, TN. Department of Justice which regulates this practice is trying to lift rebate bans in the remaining ten countries.
The only qualification, then, is to live in any other of the 40 countries where you can easily receive your rebate. If this is the case, your only job is to fill out the application form and the rest will be done for you.
Is a buyer agent commission rebate taxed?
A home buyer’s rebate can save you a bundle of cash, no doubt about that. But, does it count as taxes at the end of the year? Some more good news, no it doesn’t. According to IRS, rebate is classified as an adjustment of the total purchase price and is not counted as taxable income. Essentially, this means that rebates need not be reported on Form 1099-MISC. They are only applied when there has been an increase in the value of the home being sold. However, this is not for the buyer to worry about, as sellers are the ones who pay capital gains taxes.
All things considered, you have nothing to lose, and we mean this literally. In fact, a commission rebate is a customer-oriented service that can only bring you benefits. See it as a bond of trust between your real estate agent and yourself. However, know that not all buyer agents will provide you with this opportunity. Instead of devoting time and energy in search of reputable agents who offer rebate, turn the job over to professional companies. They can easily connect you with real estate agents who’ll be pleased to assist you in your home-buying journey. After all, the most important purchase in your life deserves all the professional help there is.
Written By: Lisa Robert with US Moving Experts