For you buyers getting new homes

[SD Realtor]

I have seen a few posts recently from people buying new homes. I also received three phone calls this weekend from lurkers on the site who didn’t want to post but were getting ready to buy. Two of them were buying from developers, one was buying a resale.

I am sure I will be accused of shilling but this is simply a response to the same question I have been asked recently by several people, how do I get a rebate from my realtor if I am buying a new home. The answer is simply ask them. Ask your realtor for a credit back to you that you want taken out of the commission he/she is getting from the developer. How much you ask for is up to you. If your realtor has spent alot of time with you showing you homes for weeks on in, then don’t ask for much or anything at all. However if they have not spent much time showing you places then you will probably be justified in asking for more…

Note that when you use your realtor to register you at the developer, the price of the home does not go up because you are using a realtor. Many people seemed to have thought that.

Conversely if you don’t use a realtor then leverage the developer to reduce the price they quote you by the commission they would have paid the realtor. If you don’t know what that commission is then simply call the developers sales office, tell them you are Judy or Jim from Prudential and you want to register your clients next weekend, and by the way what is the referral fee or commission they are offering to brokers. Generally it is 2.5-3.0 percent.

[Coronita]

SD Realtor,

I have a question about Realtor rebating commision back to buyers. Is it a common practice for the Realtor to send you a 1099 for the rebate?

Back in 2004, we used the same Realtor to sell and buy a home. As such, she rebated us back a good part of her commision on both transactions. The weird part was that we received a 1099 from her at the end of the year.

[Coronita]

SD Realtor,

I have a question about Realtor rebating commision back to buyers. Is it a common practice for the Realtor to send you a 1099 for the rebate?

Back in 2004, we used the same Realtor to sell and buy a home. As such, she rebated us back a good part of her commision on both transactions. The weird part was that we received a 1099 from her at the end of the year.

[Alex_angel]

The co-op offered to brokers from a builder is not an incentive but is considered income and thus a 1099.
If you bought a house for 500000 and there was a 3% co-op, then the realtor will be given $15000 but the realtor is on the hook to pay taxes on all 15 grand. Then you can ask for your post tax split.

[Alex_angel]

The co-op offered to brokers from a builder is not an incentive but is considered income and thus a 1099.
If you bought a house for 500000 and there was a 3% co-op, then the realtor will be given $15000 but the realtor is on the hook to pay taxes on all 15 grand. Then you can ask for your post tax split.

[Alex_angel]

SD Realtor. How long does someone have to claim that rebate? If you never had someone represent you then you signed the papers, is it too late to ask the builder?

[Alex_angel]

SD Realtor. How long does someone have to claim that rebate? If you never had someone represent you then you signed the papers, is it too late to ask the builder?

[SD Realtor]

fat_lazy –

Some realtors may indeed 1099 you. There are a few different ways to get it done but doing it above board and doing it right is what is important. The least expensive way to do it from the buyers point of view is to have the buyers agent reduce his commission, then have the seller credit the buyer directly that amount. The credit should be (could be) applied to non recurring and/or recurring closing costs. Or if the seller wants to do some upgrades/repairs, it could be held back in escrow and paid directly to the contractor.

If it is done in this manner then there is no 1099 to the buyer. It is also all documented and written into the escrow instructions and done early in the process so the lender knows what is going on.

SD Realtor

[SD Realtor]

fat_lazy –

Some realtors may indeed 1099 you. There are a few different ways to get it done but doing it above board and doing it right is what is important. The least expensive way to do it from the buyers point of view is to have the buyers agent reduce his commission, then have the seller credit the buyer directly that amount. The credit should be (could be) applied to non recurring and/or recurring closing costs. Or if the seller wants to do some upgrades/repairs, it could be held back in escrow and paid directly to the contractor.

If it is done in this manner then there is no 1099 to the buyer. It is also all documented and written into the escrow instructions and done early in the process so the lender knows what is going on.

SD Realtor

[SD Realtor]

Hi Alex –

Per your earlier post any commission earned by anyone from new/resale transactions are all taxable. See my previous post to fat_lazy on his question.

There is no real “claiming” of a rebate. If you are working with a realtor make sure you have cleared the air with him/her regarding the policy they have for rebates regardless of what type of home you are buying. (new/resale) If you wait until after that realtor has shown you properties then there may already be unrealistic assumptions on your end regarding getting any rebate.

When you go to ANY development it is PARAMOUNT to have the realtor register you THE FIRST TIME you visit that particular developer. If you visit, then register, then go back two weeks later and try to say you have a realtor they will tell you to pound sand.

SD Realtor

[SD Realtor]

Hi Alex –

Per your earlier post any commission earned by anyone from new/resale transactions are all taxable. See my previous post to fat_lazy on his question.

There is no real “claiming” of a rebate. If you are working with a realtor make sure you have cleared the air with him/her regarding the policy they have for rebates regardless of what type of home you are buying. (new/resale) If you wait until after that realtor has shown you properties then there may already be unrealistic assumptions on your end regarding getting any rebate.

When you go to ANY development it is PARAMOUNT to have the realtor register you THE FIRST TIME you visit that particular developer. If you visit, then register, then go back two weeks later and try to say you have a realtor they will tell you to pound sand.

SD Realtor

[newguy]

Just to add to this, but the Lennar homes seems to only give a flat fee to the real estate agent. I’ve seen $8,000 at Barrington and $10,000 for Prescott. Unless they were just BSing me.

[newguy]

Just to add to this, but the Lennar homes seems to only give a flat fee to the real estate agent. I’ve seen $8,000 at Barrington and $10,000 for Prescott. Unless they were just BSing me.

[what_a_disasta]

Make sure you get any rebate deal in writing right from the get go. In 2004 we bought via an open house we just happened to stroll into. Since we had no buyers agent it seemed fair that we get to share that part of the commision with the sellers agent. The McMillin agent agreed and promised us a 2% rebate. When the deal was closed, they just denied ever making any rebate offer, and that was the end of that. No amount of complaining to McMillin or the BBB helped. That was 13k they ‘stole’ from us, but I guess we only have ourselves to blame for trusting the McMillin agent to act ina an honourable way.

[what_a_disasta]

Make sure you get any rebate deal in writing right from the get go. In 2004 we bought via an open house we just happened to stroll into. Since we had no buyers agent it seemed fair that we get to share that part of the commision with the sellers agent. The McMillin agent agreed and promised us a 2% rebate. When the deal was closed, they just denied ever making any rebate offer, and that was the end of that. No amount of complaining to McMillin or the BBB helped. That was 13k they ‘stole’ from us, but I guess we only have ourselves to blame for trusting the McMillin agent to act ina an honourable way.

[Author]

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