I will try to answer your question but I am doing it in a gingerly manner because I don’t want to be accussed of shilling or promoting fraud.
A “possible” and what I would term “very much recommended way” to get a rebate would be as follows:
– Lets just say for instance you struck a deal to say split the commission 50/50 with your agent. Lets say the seller was paying 3% commission to the buyers agent.
– When you submit the offer, in the purchase agreement you include a request of 1.5% credit towards non-recurring closing costs. Your Realtor will also submit a coop commission agreement agreeing to only take 1.5% commission rather then the 3% of the commission.
– Now, all parties involved, including the lender, appraisers etc will see that a credit is involved here so there is nothing being hidden.
Now as Bugs can correctly chime in and say that lenders scrutinize credits. So the bottom line is that these credit should be used AS STATED, for non-recurring closing costs. Don’t expect that the credit will come back to you as cash. However, you can effectively use it for your loan origination fees, buying down the loan, etc…
From the perspective of the IRS it is no different then any other credit in a real estate transaction.
Now there may be brokerages that issue credits or rebates in the form of writing a check directly to the client after the transaction is closed and then sending them a 1099 at the end of the year. I cannot comment on that because it is not something I am familiar with.
JJG – Also yeah simply reducing the purchase price and asking your Realtor to simply accept a lower commission is just as easy and effective.
SE – You can ask your agent for a commission rebate or to reduce the commission he/she will take and lower the purchase price. All she can say is no. She most likely will not have any say in the matter because it is up to her broker not her.
These sort of statements don’t exactly make me a darling among my peers.
I think that each case merits insight. If you are a buyer and have only had your Realtor show you a few places, then yeah perhaps a commission rebate is warranted. However, if your Realtor has shown you 30 different homes, spent weekends driving around for you, sent comps all over the place, and put in alot of time and effort for you then most likely they are earning thier money. Remember most/all realtors who work for the big boys share a slice of that pie.
