Home Buyer Rebates, aka Realtor Commission Splits

When it comes to buying a home, every penny counts. That’s why it’s important to understand how real estate agent commissions work and if there are any opportunities to save money.

In most real estate transactions, the seller pays the commission fees for both their agent and the buyer’s agent from the Buyer’s money at closing. These Agent fees are typically a percentage of the final sale price of the home and are agreed upon in the listing agreement. The seller’s agent then splits the commission with the buyer’s agent, usually on a 50/50 basis.

But did you know that as a homebuyer, you may be able to negotiate a rebate from your real estate agent? In at least 40-States and DC, it is legal for real estate agents to provide a portion of their commission as a refund to their clients.

This Home Buyer Rebate is typically a percentage of the agent’s commission fee, and it can be a significant amount of money. For example, if the Buyer’s Agent earns 2.5% commission on a purchase price of $400,000 would be $10,000 and a 30% Buyer Rebate would be $3000 back to the Buyer at closing.

Home Buyer Rebates ar typically in the form of a Credit at closing to offset the Buyer’s Closing Costs. Importantly the IRS considers this Commission Split an “Adjustment to the Sales Price” and therefore Non-Taxable to the Home Buyer.

To take advantage of this opportunity, you’ll need to find a Realtor that offer such Home Buyer Rebates. Not all Realtors at BestHomeSearch.com are willing to provide this service, however since our network Members do not pay us a Referral Fee, they can better afford to do so.