|Posted on September 20, 2019 at 3:45 PM|
The real estate market represents an enormous business section of today’s economy. There are so many options, legal rules and tactics to keep up with when buying or selling a property. Realistically, both buying and selling real estate is equally tricky to handle. Since there are so many details to know and cover, many miss some crucial points that can be beneficial to them during a real estate venture. Did you know that you can get some money back when buying or selling a property? In case you didn’t know, it is time to learn about real estate rebates when buying a property.
What is a real estate rebate?
First, you should know that real estate rebate is also known as commission rebate. It is essentially the same thing and the way it works is that funds are returned to the buyer by the buying agent once the purchasing of the property has been closed. Hence, you buy desired real estate and you get a portion of the paid commission back in your pocket. When you think about it, it does sounds like a sweet deal.
Why would a buying agent say yes to giving you a rebate?
Be prepared that not all buying agents will want to give you a rebate. After all, in a way you are taking money directly out of their pockets. On the other hand, you are bringing them business and profit. So as you can see, there is a thin line between arguments that both sides might use. Some real estate agents may persuade you to choose them by offering real estate rebates. Also, not only would they want to be chosen, but they would also do it for future recommendations. Surely, we all prefer to use services that are recommended to us by friends, family, and co-workers. Or, you can use a company like Park Place who will find you a top agent that will rebate you back 15% of their commission. There is no fee to use their service.
How does it really work?
First things first, we have to point out that percentages can differ from one state to another and from one deal to another. However, for the most part, the presented percentages are in a similar ballpark. To begin with, a seller agent will get a 6% commission from the final selling price. Then, that amount would get split between the selling and the buying agent. Only after that will the buying agent will provide a certain amount back to the person that is buying the property. In this scenario, that can potentially be you. In theory, it is quite simple. The buying agent basically gives up a part of their commission to the buyer.
How much money can you expect in return?
Once you agreed that you will receive a real estate rebate from your agent it is time to negotiate the wanted amount. This is another part of negotiations that you must handle with care. You do not want to end up in a situation where you push the negotiations too far and you risk the quality of your real estate agent for a few hundred dollars. To get the best offer, you should interview a few agents. Do not be lazy and set aside time to do this. Just like in many other instances, patience is a virtue.
How can a real estate rebate help me as a buyer?
How can extra cash help you? Purchasing any property is a bank account killer. In many instances, loans must be taken out to compensate for all the expenses. A rebate can be a great financial injection for your budget. Also, it is good to know that a rebate can be received in the form of cash right after the closing of the property has been finished. Getting a few thousand dollars in cash sound pretty sweet.
The art of negotiation
It is important to realize that this needs to happen at the earliest stage of negotiations of any kind. If you want the best possible terms for you, you cannot be afraid to negotiate. However, there is always a thin line during negotiations that you shouldn’t ever cross. Some real estate agents might get offended if you ask for a real estate rebate. On the contrary, some might do rebates as a regular practice with every buyer. If you enter the world of negotiations, be prepared that at some point you might have to walk away from a deal. Of course, this type of negotiation carries risks just like any other. Park Place can negotiate for you as we have the leverage over these agents as we can supply them back future business.
How can I know if I qualify for a real estate rebate?
Commission rebates are legally coordinated and monitored by the Department of Justice (DOJ). Legally, rebates are supported in 40 out of the 50 states within the United States of America. Therefore, make sure you live in a state that makes you eligible to receive these refunds. It is a known fact that the DOJ is working on making this practice legal in all 50 states. Hence, if you are moving out of state do not forget to make sure that the same laws still apply. You must be well informed to successfully handle this situation. In this case, like in many others, knowledge truly is power.
Do you need to pay taxes on this financial return?
The most reliable information regarding any taxes comes directly from the IRS (Internal Revenue Service), so that is where we got our confirmation. The IRS confirmed that the money you receive as a real estate rebate is not taxable. Thus, you can actually use the entire amount for something productive like new carpeting, mortgage bill, etc.
Ultimately, finding a great real estate agent that also provides real estate rebates takes a lot of time and energy. You must be prepared to interview multiple people. Also, as we already mentioned, be prepared to play hardball and negotiate. Moreover, there are websites and firms that can make a match for you. They can connect you with buying agents that always offer a rebate to their clients. Either way, whatever your method of searching may be, take this process seriously and get informed as much as possible.
Written By: Lisa Robert with US Moving Experts