The process of getting a Realtor commission rebate in NY and NYC begins with signing up with a local Realtor who has already agreed to discreetly credit you back a portion of the commission she or he will receive from the seller.
As you’ll learn in the following article, discretion is the single most important factor to consider when signing up for a Realtor rebate as the last thing you’ll want is to jeopardize your home purchase over a few thousand dollars!
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A Realtor commission rebate, also known as a commission rebate to buyer or a real estate buyer agent rebate, is a monetary incentive offered to home buyers by Realtors to encourage them to work with the Realtor on their home search.
A broker rebate can take many forms and does not necessarily need to be a check or cash. A rebate could be a gift card to a popular retailer or even a physical gift like a flat screen TV!
If you really want to be creative, it could even be a complimentary cruise vacation package paid for by the buyer’s Realtor post-closing.
However, a home buyer rebate is usually just a check for a portion of the commission paid to the buyer’s Realtor.
The rebate check is usually mailed to the buyer immediately after the Realtor’s commission check has cleared. Because money only changes hands post-closing and because the buyer’s Realtor has exercised discretion in providing the rebate, no one except the buyer and the buyer’s Realtor will know that the buyer got a better deal!
Receiving a buyer agent commission rebate is a great idea, but not if it impairs your ability to negotiate the best possible deal terms or possibility kills your deal altogether.
Do not compromise on the quality of your buyer’s agent just because you like the commission rebate terms they’re offering you. An agent’s experience, reputation and overall track record really does matter. Just remember: buying a home is one of the most important financial transactions in your life.
An inexperienced buyer’s agent could lead you down the path of overpaying, and this may negate any financial benefit of receiving a buyer agent commission rebate in the first place.
Before signing-up with a rebate broker, make sure that she or he has adequate experience. Aside from having a strong deal history and being familiar with your specific purchase parameters (i.e. co-op or townhouse), your agent should also have recent experience negotiating similar deals.
The real estate market in NYC is ever evolving, so it means nothing if your buyer’s agent negotiated a similar deal 18 months ago, or even 9 months ago. Market conditions and industry norms in NYC can change on a moment’s notice.
If you or your spouse happens to have a broker’s license, should you try to secure a co-broke for yourselves directly?
This is something that lawyers who also happen to have a broker’s license often think that they can do. However, these lawyers are usually not active real estate brokerage practitioners and are often not a member of the local Realtor association or MLS.
As a result, they often learn the hard way that Realtors are not obligated to split commission unless there is a pre-existing agreement between them, such as your typical MLS co-brokerage agreement.
Because the lawyer in our example is not a member of the local MLS or Realtor organization, he will not have any existing co-brokerage or commission sharing agreements in place!
We’ll go over a real world example of a buyer whose husband was a lawyer with a broker’s license who managed to get the seller and listing broker to agree to a 50% co-broke.
Unfortunately, this direct Realtor commission rebate scheme became ingrained in the seller’s mind and caused resentment throughout the process. The seller always resented the fact that the buyer was getting a better deal, and took any opportunity to try to shop the buyer’s offer to other competing buyers.
Eventually, the seller held a best and final offer auction process, and even though the buyer won by improving $10,000, the seller was still not pleased. The seller ended up letting a neighbor purchase the apartment instead at a slightly higher price without giving our winning buyer a chance to improve. All of this happened because the seller knew that the buyer was getting a better deal and resented it.
This is an example of why it may be advantageous to work with a traditional buyer’s agent who discreetly offers you a rebate, as opposed to a ‘loud’ discount broker who makes no secret of the fact that you’re getting a better deal than other buyers.
There’s no need to request a real estate agent commission rebate if you’re a home seller. This is because you can simply negotiate a lower commission rate with your listing agent. Any negotiated savings on commissions will be memorialized in your listing agreement.
There are several reduced commission options for home sellers in NYC, including 1% Full Service and Agent Assisted FSBO.
Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.