That being said... let's get real.... For the sales person to offer that behind your agent's back is both unethical, and really bad business. Especially if that builder's rep knows you are currently working with an agent. If the builder were to find out about that, they would likely be fired for it.
What he is trying to do is get his wife to get a free 3% commission from the sale of the home behind the builder's back. As a bribe for your cooparation, he is offering you a $1500 kickback.
I would really love to know who this sales person is. That kind of back handed behavior is what drives people to look at Realtors and Builder reps as little more than used car salesmen, when in realtiy, a solid buyers agent is worth their weight in gold.
A solid buyer's agent can get you a better price, better incentives, and better financing. They can watch your back on every aspect of the sales process, and help you with inspections and repairs. Prices for the homes do not change if you have a buyers agent or not, so it does not cost a penny to have a good agent helping you and making sure you are getting the very best deal possible.
Stories like this one make me a bit ill.
What people always forget is the many hours a Realtor spends finding you homes, helping you to narrow them down, spending their time and gas to show them to you, guiding you with their experience and educating you on the market, financing, and what the best options are. When a home is finally found, they are paid in the back end. What people don't see is all the hard work it takes to finally get that point.. Your agent deserves to pay their bills like every one else.
Its like you going to work for 40 hours, and when payday comes, someone offers your boss a little kickback if they send your paycheck to someone else.. Likely, you would be up in arms and ready to sue your employer back to the stone ages... But this is exactly what this rep is trying to do..
Not only would I stick with your current agent, but I would inform the builder of this Reps actions, and ask them to give you the extra $1500 off the price or towards your closing costs, or a free upgrade. Your agent should make their full 3%.. This buillder rep made a huge ethical mistake by trying to steal from your agent, and from the builder. This kind of thing should not be allowed to happen and should be stopped at all costs. Let's keep honest people honest... Just my 2 cents.
On a side note.. DON'T DEAL WITH THAT SALES PERSON ANY LONGER! If he tried to lie about this and cheat and steal... what else is going on that you can't see? Call the builder and request a different sales person handle your home purchase, and be sure your agent is there to make sure your butt is covered.
Leah hit the nail on the head and answered all of your questions. You may want to think about switching builders or at least getting another sales person.
Rebating is not illegal as long as it's fully disclosed; however, just because a sales person offered you this "better deal" really doesn't mean that it's fair that your agent give you something that wasn't agreed to upfront. It puts them at a disadvantage. If you do a job and expect to get paid a certain amount, and then someone comes and undercuts you, how would you feel?
Additionally, if you and your agent signed a buyer's representation agreement then you may still be responible for the entire amount owed to the Broker because your agent fulfilled their part of the agreement. So, not only is this sales person wrong for having offered you this "deal", you may be in breach of contract if you accept this "deal" in order to gain $1500.
In the purchase of a new home, $1500 is really minimal. Since the salesperson was unehtical in offering you such a deal, I would have your Realtor(r) disclose that and negotiate another $1500 off of the price of the home or have them pay more closing costs for you or get you another upgrade at the design center. There are all types of ways that agent can help you to take advantage of $1500 in my opinion.
Some of the previous answers are partially correct, but none of them address four key issues:
(1) Whilst it is perfectly legal in Texas for a broker representing a buyer to rebate part or all of their commission to the buyer, it is insufficient to simply notify the party who is paying the commission (in this case, the builder), that the broker wishes to do so. As the party paying the commission, the builder has to agree to the payment of the rebate.Not all builders will permit this, in fact I have a pending contract representing a buyer in a new home purchase, where the broker agreement between me and the builder specifically states that I am not permitted to give any part of the commission to the buyer. In your case however it may be that the builder is OK with a rebate.
(2) If you are obtaining a loan for the purchase of the property, the lender must also approve any rebate of commission to you, and even if they are OK with it, there may be a cap on the amount that can be rebated to you and still have you in compliance with all of the terms and conditions of the loan.
(3) If you have signed a buyer's representation with your existing Realtor, the new home sales person may be guilty of tortuous interference with a contract by attempting to get you to work with any other real estate agent, if you have a contractual agreement with your existing Realtor.
(4) If you were to accept any money from the salesperson which was not disclosed on the HUD1 settlement statement, and assumimg that you are obtaining a loan for the purchase of the property both you and the salesperson would have committed felonies under Federal law. Simply put that is mortgage fraud.
Having said all of that, the parts of the previous answers that are correct include:
- any approved rebate must be disclosed on the HUD1 closing statement.
- If the wife of the salesperson is a member of the San Antonio Board of Realtors she could be guilty of an ethics violation by being party to interfering with your relationship with your existing Realtor.
I suggest that you do the following;
(1) Immediately report the salesperson to his superiors.
(2) Report his wife to the San Antonio Board of Realtors.
(3) As Jason said earlier, given the circumstances, I suggest that you have your Realtor ask senior managment with the builder to take $1,500 off the price and let them pay your Realtor what he/she is due. Any reputable builder will fire the salesperson in question and reassign you to someone way better.
Leah McNamara BPOR CRS GRI
The program offered to you by the builders rep is not illeagal, it's unethical. The ultimate decision is up to you. Ask yourself if you are comfortable working with someone who acts to better his circumstances (and yours) by slandering one of his colleages - one who brought you to his attention.
Good luck on your decision and your future home buying experiences.
Five conflicting answers!
I believe that the kickback would not be illegal, at least it isn't here.
What is unethical is soliciting a client when we know that they are working with an Agent.
Do you want to deal with someone like that?
You probably should stick with your agent and have her negotiate $1500 off the price.
Possibly the sales person wouldn't want his offer to become widely known.
Whenever any agent tells you something is illegal, tell him to show you written evidence of such. Seldom will they be able to provide it because often they are simply regurgitating what another poorly informed/educated agent told them.
It is absolutely LEGAL to rebate your client a portion of your commission as long as all parties are notified of such rebate. Now, perhaps your agent would rather not rebate you a portion of their commission, and that is understandable, but the fact of the matter is this is done all the time.
Have you already signed representation paperwork with them? If not, I would be happy to represent you after you terminate your realtor/buyer relationship.