Can I Save Money With Homebuyer Rebates

What Is a Homebuyer Rebate?

The Importance of Telling Your Lender About Your Homebuyer Rebate

Why Cashback is Better than a Home Buyer Rebate

First-time home buyer rebates vs. regular commission rebates

Best Homebuyer Rebate Options

Richr Cash Back

Redfin Rebate

REX Real Estate Rebate

Clever Cash Back

Frequently Asked Questions (FAQs)

Can a realtor give a credit to a buyer?

Can Realtors give kickbacks?

How do you negotiate a rebate?

What is smart buyer rebate?

Can an agent give commission to buyer?

How can I get cash back when buying a house?

Homebuyer rebates may potentially save you thousands of dollars, which is fantastic in this sellers’ market where prices have been soaring over the past year. However, there is a lot of red tape, so you shouldn’t rely on any new home rebate working out to the total amount initially offered. While buyer rebates might potentially save you “thousands of dollars on commission payments,” the fact is that cash back is a much better choice. Home buyer incentives like rebates and cash backs are entirely different and you’ll want to understand the pros and cons of each before signing on the dotted line. Read on to find out how you can save the most money through homebuyer rebates.

What Is a Homebuyer Rebate?

A homebuyer rebate, different than a cashback realtor offer, is an incentive offered by agents that can also be referred to as a commission rebate real estate agents may be promoting to attract new clients. Essentially, the agent is rebating a portion of their commission (typically 1% or lower) where you’ll receive money in the form of a credit. This isn’t cash in your pocket that you can spend, and you can’t use it for a down payment either (but that would certainly make buying a home a lot easier!) This money comes from the seller, who often pays 6% commission (unless they list on MLS for free) to their agent and splits the profits with the buyer’s agent.

Buyer rebates might save you hundreds or even thousands of dollars when buying a home, but they can be hard to qualify for and are not necessarily guaranteed. Buyer rebates are only available in 42 States and vary on the house or agent, or the type of home you are purchasing. Home buyer rebates, like closing credits, must be approved by a lender and can only be used for specific purposes, such as paying closing costs or acquiring mortgage points. These purposes could include:

• Escrow fees
• Appraisal fees
• Transfer fees
• Buying points on your mortgage, etc.

The Importance of Telling Your Lender About Your Homebuyer Rebate

Be careful of any rebates you accept before talking to your lender. You could end up with a finance fallout or, even worse, mortgage fraud. Borrowing money is some serious stuff! The reason for this is that commission rebates ultimately lower the cost of your home. That means the loan-to-value ratio may be different! This is what lenders use to evaluate the amount you borrowed compared to the actual value of the home itself. The best course of action is to speak with your lender before signing any buyer agent commission rebate agreement. That way, you’ll know you’re in the clear before agreeing to anything that may jeopardize you securing your dream home.

Why Cashback is Better than a Home Buyer Rebate

We recommend researching an option that gives cash back instead of commission rebates. Cash back is given in the form of a check rather than a credit after the transaction is completed, which has several advantages. Because you get cash back after the transaction, you may spend it as you wish instead of being limited like you would for a lender rebate or buyer agent rebate. This works out great for anyone borrowing money for the down payment from their parents, buying a fixer upper they’ll need renovation funds for, or just a well-deserved congratulations cheque for buying a home.

A cashback offer is not subject to the same regulations — i.e., lender clearance — since it comes from a third party outside of the transaction. Even so, just to be cautious, notify your lender that you are receiving cashback. You won’t be able to use it for closing fees, but it’s an excellent method to replenish your bank account later.

While cash back technically occurs outside of the transaction, this benefits the buyers’ credit real estate process more than a rebate since it does not come under the jurisdiction of your lender. However, it doesn’t hurt to let them know, just in case. Not only that, but you’ll be able to spend the money on anything you’d like instead of being subjected to restrictions.

First-time home buyer rebates vs. regular commission rebates

Any first-time homebuyer rebate options are different than your typical buyer rebate program or cashback enticement we’ve mentioned. A first-time home buyer rebate is typically an incentive that the federal government offers rather than a buyer commission rebate.

Some rebates or incentives for first time home buyers include:

• FHA loan
• USDA loan
• Good Neighbor Next Door
• VA loan
• FHA 203(k) loan
• State and local first-time homebuyer programs and grants

Best Homebuyer Rebate Options

Richr Cash Back

Richr is the best buyer rebate program because it falls under the cash back category. This means you won’t have to worry about crunching the numbers with your lender to ensure you’ve stayed within their loan-to-value ratio. Not only could you potentially pocket up to $6,000 on a $300,000 home, you also have contactless offers. That way you can buy your dream home from anywhere! They also offer buyers an all-in-one suite with title, insurance, and finance needs. Not only this, but they concierge team is always available to answer any questions you have throughout the process. They’ll take care of all your needs until you get your keys!

Redfin Rebate

Redfin’s real estate rebate program is only available to “qualifying” home buyers in select markets. Redfin cannot guarantee that you will get the amount estimated in advance before you purchase the property.

The company claims that on average, buyers receive a $1,500 reimbursement, however, the amount varies by region. Its structure mirrors most mortgage rebate or realtor incentives, with refunds given as closure credits at times and cash back at others.

To be eligible for a Redfin refund, your buyer’s agent must earn at least $6,500 in commission. You will not be entitled for a refund if Redfin refers you to a partner agent from another business.

REX Real Estate Rebate

REX advertises a refund of up to 50% of the agent’s commission earned. However, there are several restrictions, requirements, and criteria that must be followed in order to be eligible for compensation.

To be eligible for a refund, buyers must acquire a home that is not listed by REX. Furthermore, purchasers are not entitled to half of their agent’s commission in every transaction. You can only obtain a maximum of 1% of the home’s selling price.

Rebates are also designated as a closing credit, which means they may only be used to cover authorised closing costs.

Clever Cash Back

Clever Cash Back is not a refund; thus it is not subject to lender approval or limits. Following the closing, you will be given a check that you can use for whatever you like, but don’t expect it to cover any big expenses. The amount of money reimbursed is based on the value of the home. Anything between $50-150k and you’ll only receive $250 in cash back. Anything over only receives 0.5% of the sale price, compared to Richr’s 2% cash back offer.

You are guaranteed to get your money back as long as you live in a qualified state. This means that there will be no need to jump through hoops to meet requirements or criteria like many rebate programs require.

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Frequently Asked Questions (FAQs)

Can a realtor give a credit to a buyer?

If you’re looking for a cash back realtor, you may be able to get a realtor commission credit to buyer at closing. Since the technology boom, home buying processes have been streamlined. You can write an offer online, browse homes, and even get an immersive video tour before ever walking through the door. Due to the smaller workload but consistent 3% commission buyers’ agents typically receive; they’ll often offer roughly 1% as a realtor rebate to the buyer so you’ll pick them over a competitor. It’s not just out of the goodness of their heart! If you prefer to be in control of the sale process, Richr gives buyers up to 2% back as cash back at closing.

Can Realtors give kickbacks?

In 42 States, including Florida, you are allowed to offer a realtor rebate to buyer that will be exchanged at closing. The best news is that the IRS ruled that the buyer agent commission rebate won’t be taxed either! The only states that have banned it, despite the DOJ promoting buyer rebate real estate options, are the following:

• Alaska
• Kansas
• Louisiana
• Mississippi
• Missouri
• Oklahoma
• Oregon
• Tennessee

How do you negotiate a rebate?

The Department of Justice condones real estate with a rebate in order to offer buyers more incentives to differentiate one agent from another’s benefits. To negotiate any cash back, realtors may be willing to offer, you’ll need to be prepared for them to say no. All buyers deserve a price rebate after the technology has helped agents lower their expenses throughout the process. That’s why Richr offers up to 2% as a home buyer refund that you won’t have to negotiate – it’s a promise!

While negotiating a buyer agent commission rebate on your own is possible, it’s challenging to do for an agent that isn’t already promoting that offer. A commission rebate may only be worth it to the agent you’re requesting it from if:

• You’re purchasing a home that will give the agent a higher commission due to a higher sale price.
• You’re working with a new agent who wants to start their real estate career.
• You’ll be using the same agent to buy a home that you are to sell with.

What is smart buyer rebate?

Prevu is one of the rebate companies that offer a house rebate with a program called the “Smart Buyer” rebate. They promise to give 2% cashback, but as a buyer incentives real estate goes, there is a crucial difference. You’ll only qualify for 2% if your home is worth $750,000 or more, whereas Richr allows any amount to be considered as cashback instead.

Can an agent give commission to buyer?

An agent can’t technically give a commission directly to a buyer, but they can offer a real estate commission rebate to buyer that they will receive at closing. Most of the time, this will go towards closing costs or purchase mortgage points, and the lender has to approve the buyer rebate as well.

How can I get cash back when buying a house?

In order to get realtor cashback, you’ll have to use a service like Richr instead of a rebate program. When it comes to real estate commission rebate, you won’t necessarily see cash in your hand but rather mortgage points, deductions off the closing cost, appraisal fees, escrow fees, transfer fees, and a few other items.

The best way to save money through a real estate rebate is to go the cash back route. That way, you don’t have to worry about lender stipulations or red tape decreasing the amount you’ll receive. Richr offers buyers up to 2% cash back on any purchase to congratulate them on their new home!