First, make certain your broker or office approves the practice. Second, notify your Escrow Company of your intentions, they can handle the HUD. Typically as long as no cash is being given to the buyer and their down payment contribution is whatever they initially submitted it to be, you should be okay.
As far as my opinion of agents who rebate, I believe that each agent has to decide what their business model is and live according to it. At some point in most agents career a situation presents itself where we contribute or reduce our commissions for specific set of circumstances.
As a long term plan, you really have to ask yourself if it will produce the results you are after. Often clients who focus on price, will always feel they paid too much whatever it is. Rebating your commission as a standard practice up front removes a tool you may later use to bridge the gap between a buyer and a seller when all else has been tried.
Take a look at the offices in your area who advertise this as their model, and the ones who did a few years ago and are now out of business. There is a reason, in my opinion most â€œdiscount or rebateâ€ companies are not around long, it costs us more than people think to be in business and stay in business.
Itâ€™s a free market and you should do as you feel best, but take everything into consideration before you commit to a plan you canâ€™t afford to keep.
I say a one point in time, you will find yourself in a situation where you need to give in a little bit to help close the deal. For example, the selling agent and I were caught in the crossfire between buyer and seller who were $2,000 apart on completing the deal on a $700k house (imagine haggling over such a small amount for this sale). To move things along, the other agent and I agreed to go half on the difference, And our contribution was shown on the HUD not as a rebate but rather as a credit towards closing costs.
in California, rebates are legal, but they are not in several states, See http://www.justice.gov/atr/public/real_estate/rebates_details.htm
Whatever you do, make sure this rebate/contribution is on the HUD. No exceptions.
Unless you ARE the Broker, the Broker needs to approve it
As for an opinion about it, I think giving commission away cheapens our profession - except - if you are doing the transaction "Pro-Bono" as a charitable action.
Broker / Owner & Certified HAFA Specialist
Thom Colby Properties
Newport Beach, CA
Moving Lives Forward (TM)
We NEVER DOUBLE-END Transactions in our Brokerage. IN MY OPINION, there is NO benefit to the Seller or Buyer and only benefits the Agent. Also, NEVER use your RE Agent / Broker as your Lender or vice versa. Also, be careful when using Real Estate Broker-owned Escrow and Title Companies - they can be loads of trouble.
888-391-5245 Direct Cell
Yes, you are correct. The Underwriter may alsorequire a letter from your Broker stating that he authorizes you to give the rebate to the buyer.
All the best,
Roswell Moore, CMPS
Certified Mortgage Planner
We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund, in-house, FHA, 203(k), VA, USDA, Jumbo, Conventional, loans to Canadians, Australians & other Foreign Nationals, on time.