How to Get a Homebuyer Rebate

Table of content

• What is Homebuyer Rebate, and Why Does It Matter?
• Where Does the Money to Pay a Homebuyer Rebate Come From?
• Do Sellers Lose Money on a Homebuyer Rebate?
• Why Do Real Estate Agents Give Part of Their Commission?
• What Types of Properties Qualify for Homebuyer Rebates?
• How to Get a Homebuyer Rebate
• Research Before Agreeing to Work With an Agent
• Find an Agent and a Refund that Works for You
• Be Sure to Read the Terms and Conditions Carefully
• Sign the Agreement
• Get Your Refund
• How Can You Increase Your Chances of Getting a Rebate?
• People Also Ask
• What is a rebate?
• What is buyers rebate?
• How do rebates work?
• How do I ask for a rebate?
• What is a rebate at closing?
• How can a buyer get money back at closing?
• Are rebates legal?
• Are real estate commission rebates legal?
• Do dealers lose money on rebates?
• Why do companies offer rebates instead of discounts?

Buying a home is an exciting time and the most stressful because of the large investment homeowners need to make. Not only are they paying a sale price, but they also have to front any inspection costs, save for closing costs, possibly even hire a real estate lawyer. The good news is, there is a way to get some of this back – this is called a home buyer rebate.

Who wouldn’t want to get cashback for their home? The typical buyers’ rebate, for example, would be a 1% agent rebate. On a $300,000 home would save you $3,000. However, homebuyer rebates can be complicated, and not to mention is not guaranteed for every sale.

What is Homebuyer Rebate, and Why Does It Matter?

Even though purchasing a property can be an expensive and sometimes exhausting process, there is a way that buyers can get some of that expense back in their pocket – it’s through a real estate rebate to the buyer.

A first-time homebuyer rebate is a way for you to save thousands of dollars. This can come from the government as a tax rebate for buying a house. Another way to get the cashback rebate is when your agent, flat fee company, or iBuyer gives you a part of the commission fee they earn from your purchase. But guess what – it’s not just for first-timers. Homebuyer rebates in Florida are available with an even higher cashback- 2%! This is only attainable through companies that offer an alternative to the realtor rebate, like Richr.

However, is not as simple as it seems because it’s not legal in all states, and in the ones where it is legal, there is no guarantee you can get it back in commission. You’ll also need to have lender approval, and they can dictate how you should spend the buyer agent rebate.

Where Does the Money to Pay a Homebuyer Rebate Come From?

The money to pay for a homebuyer rebate comes from the buyer agent’s fee; this fee is typically paid by the seller, who agrees to pay 6% in commission per listing with their seller. Different companies use different methods to pay for this service, which is why it’s crucial to compare rebate incentives. For example, Richr offers 2% cashback when you buy a home using their Richr One program. They provide everything through an online service, saving on office space, mileage, and commuting back and forth.

When you and your agent or flat fee brokerage agree to a homebuyer rebate percentage, they decide to give you a part of their commission in return. That’s why you don’t need to worry about the real estate commission rebate to buyer taxable: is money that was already yours. Tax-free and straight to your bank account.

Do Sellers Lose Money on a Homebuyer Rebate?

The seller does not lose any money on homebuyer rebates. Although they are the ones who pay the commission to both the buyer and seller’s agent (typically at 6%), they aren’t paying anything extra for a buyer to get a rebate.

In your usual circumstance, the listing agent splits the 6% equally with the buyer’s agent.

Since the rebate comes directly from the buyer’s agent’s commission, directly back to the buyer, the only one who “loses” money is your real estate agent or service provider. That’s why it’s imperative to ask beforehand if you will get a rebate before choosing an agent and signing an agreement.

Why Do Real Estate Agents Give Part of Their Commission?

There are various reasons why a realtor rebate to buyers may be available by refunding a portion of their commission to their clients. A cash rebate can be an enticing offer to buyers looking to save some money and put it towards a renovation, vacation, or straight into their emergency fund. Agents and companies offer a beneficial relationship to buyers to gain their business by promising a service with the bonus of a real estate rebate to buyers.

Many companies have a homebuyer rebate program, and to avoid losing clients, more and more companies offer real estate rebates to buyers to remain competitive in the business. Richr’s mantra is to reward buyers by making homeownership more affordable through their 2% cashback.

On the other hand, not all real estate agents or flat fee companies embrace the idea of an agent rebate to buyers. Some agents even feel personally offended when the buyer asks them for a rebate. Even though not everybody is on board, this practice is slowly being adopted by some top realtors.

What Types of Properties Qualify for Homebuyer Rebates?

Typically, most homebuyer rebates are valid on all types of properties, including single-family homes, multi-family homes, condos, and townhomes. However, you will have to do your research to make sure the kind of home you want is allowed to have a rebate since some brokerages may not allow it for certain ones.

How to Get a Homebuyer Rebate

Research Before Agreeing to Work With an Agent

You must do your research and evaluate all your options before deciding who you want to work with. If you’re a do-it-yourself person that prefers to lean on the expertise of a concierge while shopping yourself, a brokerage that supports that process is your best bet. However, if you want to work with an agent that will be available throughout the process to show you homes physically, you can find one that has a rebate option.

Find an Agent and a homebuyer rebate that works for you

When deciding on which agent and refund to choose, it’s vital to research the offers and calculate the potential returns since the amounts and the services offered can vary greatly.

For example, with Richr on a $300,000, you’ll get $9,000 back on your purchase. If it’s $500,000, you’ll receive $15,000 and so on.

Be Sure to Read the Terms and Conditions Carefully

You have to meticulously read the terms and conditions of the homebuyer rebate to understand the amount you will actually receive.

Some homebuyer rebates require a minimum commission to give you a refund, which means that the real estate agent has to make a certain amount of money before giving a rebate. On the other hand, some refunds tend to decrease depending on the number of homes you request to tour. But most of the time, the homebuyer rebates amount you will receive is based on the purchase price.

So before deciding on any company, you should calculate the refund that can make you save the most money possible.

Sign the Agreement

The final step to ensure your real estate rebate as a buyer is signing a buyer rebate agreement. This agreement will outline the terms and conditions to get your refund and express that you agree to purchase your property with the agent offering the rebate.

Get Your Refund

Now is the time to take your money back. Some companies will give you a check at closing for you to spend as you like. These are the best rebates; some others will apply the refunded amount to the closing costs. Either way, you will end up saving thousands of dollars.

How Can You Increase Your Chances of Getting a homebuyer rebate?

To increase the opportunity of successfully negotiating to get a rebate, there are three key steps:

• Do some of the homework for your agent, like looking at houses that cover the specifics and characteristics you are looking for. If you negotiate with your agent beforehand and do most of the work for them, they could be willing to compromise.

• Use the same real estate agent you’re hiring to buy a property and sell your present home. Earning two commissions is an incentive for an agent to give back to the buyer.

• Buy a property your real estate agent is already selling. However, it might not be legal in all states. You also have to be fully aware that there might be a conflict of interest since your agent is also representing the seller.

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People Also Ask

What is a homebuyer rebate?

A rebate is a return of a product’s purchase price from the seller to the buyer. You can see this from homes to appliances. This return happens typically after the sale has taken place and the customer has paid the total price. You make the purchase and later receive a partial return for your money; this is a common sales tactic that drives additional business.

What is buyers rebate?

A buyer’s rebate or commission rebate is the same thing as a buyer’s refund. The rebate is stated as the percentage of the commission that is to be refunded to the buyer. When we talk about commission rebates, we refer to the dollar amount to be refunded to the buyer.

How do homebuyer rebates work?

When you buy a house, the purchase price typically includes a commission of around 6% of the total cost. This 6% is divided in two: 3% goes to the seller’s broker, and the other 3% goes to the buyer’s broker. A part of the buyer’s agent’s commission (the rebate percentage) goes back to you.

The amount you receive depends on the buyer agent commission rebate agreement; the payment can be delivered in the form of

• Cash
• A gift certificate
• Closing cost payment
• Free services (for example, home inspections or moving services)
• Part of the down payment (if the lender allows it)

How do I ask for a homebuyer rebate?

It’s important to know that you first need to ask the real estate agent for a homebuyer rebate, and the time to negotiate for a refund is before signing the representation agreement.

However, some companies and realtors offer the rebate to the buyer due to demand and services and as an incentive to get your business and remain competitive.

Another important thing is to clarify with the buyer agent whether the percentage of the rebate agreement refers to the commission fee or the home’s sale price.

What is a rebate at closing?

It’s an incentive used by buyer agents, consisting of crediting a portion of the buyer agent’s fee to the buyer when the deal closes, or it can be given to the buyer by check post-closing the sale.

How can a buyer get money back at closing?

The buyer can get money at closing the deal if they negotiate with their real estate agent beforehand. They can agree that they accept giving a percentage of their commission to the buyer as a buyer agent commission rebate.

Are homebueyr rebates legal?

When a subcontractor “secretly” accepts a rebate from a contractor in return for obtaining a job, it might be illegal. When it comes to your standard agreements from a trustworthy source, they are absolutely legal.

Are real estate commission rebates legal?

Homebuyer rebates are legal in 42 states, although some states limit the type and the size of a rebate; you can always check the regulations in your state.

The states where homebuyer rebates are banned include:

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

In Iowa, homebuyer rebates are technically allowed. Still, it limits them to dual agency sales (when the same real estate agent represents both the seller and the buyer) because the agent might not be neutral. It’s a stigma that the agent would not give the buyer the best deal and look out for the seller’s interests instead since they are paying them. Note that is entirely legal a homebuyer rebate in Florida.

Do dealers lose money on rebates?

The lender is the one who decides whether or not you can have a homebuyer rebate because it affects the loan of your home. The only person that loses money on rebates is the buyer’s agent, but only on paper. The time, energy and efforts saved are almost always worth it to them.

Why do companies offer rebates instead of discounts?

A discount would imply that something is being offered at a lower price when that is not exactly true. The home will cost the same, the listing agent’s commission will likely be the same to the seller, but you will receive money back from the sale instead of paying less.

Before hiring a real estate agent or flat fee brokerage, you should ask if a homebuyer rebate is an available option for you. This gives you time to look for someone who can offer you a deal that can make you save some money. While the typical rebates max out at 1%, Richr generously offers buyers 2% cashback on their purchase so they can make their dream home a reality.