real estate commission rebate

Smart Homebuying: How to Get a Real Estate Commission Rebate

3 minutes, 42 seconds Read

Purchasing a home is likely the biggest investment you’ll ever make. With home prices continuing to rise across the country, buyers need to get savvy to maximize savings. One way to potentially put thousands of dollars back in your pocket is to negotiate a real estate commission rebate. This creative strategy is gaining popularity, especially amongst first-time homebuyers.

Keep reading to learn what exactly a commission rebate is, when they are offered, pros and cons, and tips to prepare for the rebate discussion. With some proactive planning and research, you can take advantage of this win-win arrangement. Both you and your agent walk away satisfied, while you gain instant equity in your new home.

What is a Real Estate Commission Rebate?

When a home is sold, the sellers pay the real estate commission which is usually 5-6% of the total sale price. This full commission amount gets split between the listing agent and the buyer’s agent. For example, on a $300,000 home sale the total commission could be $18,000 ($300k x 6%). That full amount generally gets divided evenly so the buyer’s agent receives around $9,000.

So in summary, a real estate commission rebate puts cash from the transaction directly into the buyer’s pocket. Many agents will rebate between 25% to 100% of their commission split.

When Are Commission Rebates Offered?

Commission rebates are most common in real estate markets that strongly favor sellers. When housing inventory is low and multiple buyers are bidding on homes, buyers want any competitive edge they can get. A rebate lets buyers bid higher, cover appraisal gaps, or waive contingencies to win the home.

Rebates are also appealing to first-time home buyers who want to maximize savings. Veterans and repeat buyers may also seek rebates to get the best deal. Rebate prevalence depends on the local market and individual agent’s policies.

In general, rebates work best when:

  • Inventory is very limited vs. buyer demand
  • Prices are steadily increasing and homes sell quickly
  • Buyers need to stretch their budget and down payment
  • Competing bids require pre-inspection or escalation clauses
  • Personalizing, renovating or furnishing is important

Conversely, rebates are less common in buyer’s markets with high inventory and lower prices. Sellers may resent splitting the commission too much in these conditions.

Pros of Real Estate Commission Rebates

There are many advantages to negotiating a commission rebate:

  • Rebate amounts often range from 25% to 100% of the buyer agent’s commission. On a $300,000 home purchase, this could be $2,250 to $9,000 back in your pocket.
  • The cash rebate can allow you to buy “more” home, cover closing costs or have extra funds to personalize the property.
  • You don’t have to sacrifice on your agent’s quality, services or experience. A good agent on your side is still vital.
  • Unlike seller credits, the rebate comes directly to you rather than the seller.
  • Rebates may give buyers a competitive edge in hot housing markets with bidding wars. Submitting a strong offer becomes affordable.
  • First-time buyers benefit the most from rebates saving for a down payment.

Tips to Negotiate a Commission Rebate

With some diligent searching and negotiation, a commission rebate is a smart strategy to reduce costs on your home purchase. Here are a few tips:

  • Search online for “rebate real estate agents” or “rebate brokers” in your area. Results will include traditional and discount brokers.
  • Check with your lender for recommendations. Many lenders work frequently with rebate agents.
  • Consider joining a rebate network like Homeland Rebates which matches buyers with agents nationwide.
  • Ask friends who have purchased recently if they scored a rebate and seek referrals.
  • Once you find a few rebate agents, vet them carefully based on reviews and interview them. Make sure you click well and they understand your needs.
  • Be ready to explain why you deserve a rebate and how it will help you achieve homeownership. Sympathetic agents will work to accommodate you.
  • Don’t assume you must go with the agent offering the biggest rebate. Service and trust should be your top priority, followed by a fair rebate amount.
  • Get any rebate agreement in writing upfront. The percentage and total dollar amount should be explicitly clear.

Conclusion:

A real estate commission rebate benefits smart homebuyers ready to negotiate creatively with their agent. While not every agent will agree to a real estate rebate, the cash savings can make a huge difference in affording your first home.

Just remember that purchasing the right home for your needs and family should still be the top goal. 

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