Home Buying in 32250>Question Details

D Nicolas, Home Buyer in Jax Bch, FL

Some Brokers offer 75% rebate of their commission to the buyer. Is this legit?

Asked by D Nicolas, Jax Bch, FL Thu May 8, 2008

I have found a Broker that says if I know exactly the property I want and use him, he'll rebate me 75% of his commission. This sounds too good to be true. Is this legit? It certainly can be a big check.

Other choices would be, go directly to the developer and hope to get a good deal or use a regular realtor and not get anything in return.

What is the down side to working with a Broker that is williing to do this? What should I be leary of if anything?

Thanks.

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Answers

42
Looks like it's perfectly legal in Mass, as well as California- for all, this is a good site to visit so that you are on top of rebates.
Web Reference: http://optionsrealty.com
4 votes Thank Flag Link Wed May 21, 2008
To discover if it's legal, go to the department of justice website set up for consumers- it details the areas in which rebates are fine. http://www.usdoj.gov/atr/public/real_estate/rebates.htm
If that doesn't link, just google US Department of Justice real estate website.
Web Reference: http://optionsrealty.com
4 votes Thank Flag Link Wed May 21, 2008
D Nicholas

Yes. The Florida Real Estate Commission (FREC) Rule 61J2-10.028(2) provides that a licensee may share brokerage compensation with a party to a transaction as long as full disclosure is given to all interested parties.

The seller or builder must receive full disclosure and must agree.

Many mortgages will not allow a buyer to receive funds back from a transaction. Depending upon your mortgage you may want to research the legality in reference to your mortgage.

Negotiation to reduce your sales price by taking the balance of the Broker's commisson as a discount may be necessary. I recall a couple of years ago that one builder's sales contract had specific wording dis-allowing commission rebates.

Many Realtors have been know to give Buyer Rebates of commission on new construction. I have never heard of 75%. I have extended a rebate or commission earned when my client sold an existing home and purchased the builder home using me as their Selling agent and Buyer's Agent for the new home.

I see that you are willing commit to purchase without a Realtor, taking advantage of the Broker's offer will give you some advantage. If your main concern is the dollars the 75% represents, the Brokers offer may be a viable option for you to acheive the goal of saving $$$. Other Broker duties may not be of concern to you.

New does not mean perfect and it does not mean that the building process will go smoothly. Many who engage the services of a Buyer's Agent want and desire the representation. To many of us who are dedicated to Buyer's Agency the duties are taken seriously. Our commitment to the buyer is just as or more involved in the negotiating, building process and closing of the transaction as the buyer.

Questions you may want to ask the Broker to define and determine value of any service he may or may not provide in addition to the commission rebate are as follows:

What is his experience

Will he negotiate price and terms on your behalf?

Can he negotiate terms that do not affect the sales price but may affect ultimate price such as interest rate buy downs, lot premiums, upgrades?

Will he monitor the construction of the home?

Will he be involved in taking care or monitoring the resolution of problems that may arrise during the building process? How about a few weeks after the closing?

Will he review and take an active part in closing the transaction?


I bring up these points because of one of my experiences. During closing, a very well know builder in our area tried to "slip by" a copy of the survey and asked the buyer to sign the survey that he reviewed. They did not give me a copy. I requested my client for his copy to review before the he signed.

Eight (8) feet of his 12 x 14 ft porch was within the BRL (Building restriction line). A discussion arrose with the builder declaring that the porch would be no problem. Upon checking the title policy. The portion of the porch in the BRL was exempted.

If it was no problem I concluded that the Builder needed to contact the county and get the "written exception" and correct title policy before we completed closing.

The resolve. After 2 weeks the Builder could not get an exception, the county required the builder to remove the porch. We closed 4 weeks after the original closing date, I renegotiated the sales price to refelect no porch and one months inconvenience for the purchaser.

If we had not caught this at closing the Buyer would have been responsible for removing the porch when the county caught the BRL violation.

Occasionally problems do arrise.

Best of luck in your purchase.

Cathy Sloan
RE/MAX Specialists
Jacksonville, Floirda
Web Reference: http://www.cathysloan.com
4 votes Thank Flag Link Wed May 21, 2008
Dear Nicolas,
Working with a buyer takes dedication, time and at today's gas prises......this is what i think,
If your Boss askes you, to work only for 25 % of your Salary..... would you do it ?
As a Buyers Agent we really deserve our Commission !
3 votes Thank Flag Link Thu Jun 12, 2008
Lots of opinions and discussion here, but remember that you are in FL and anything all these other folks are telling you is different from state to state. Bottom line is that you don't need to be penny wise and pound foolish, especially if you are a buyer. Realtors do this stuff for a living and you don't. Find a competent Realtor and have him/her assist you in the purchase of your biggest investment: your home. Make him/her earn the commission by filling out all the forms, explaining the process, doing a CMA on the house you want to buy to make sure it's priced right, and then let them negotiate the deal for you.
Remember: all Realtors are NOT created equal. In the NEFAR (your local Realtor Assoc in Jax) 75% of the member Realtors make less than three transactions per year. Choose carefully.
Whatever they get paid, it's worth it for the work involved. You only frustrate yourself by worrying about the fee and whether you could have been rebated or saved it or whatever. I could spit statistics at you but the gist of it is that in the vast majority of circumstances it PAYS (not costs) you to use a Realtor.
3 votes Thank Flag Link Thu May 22, 2008
Hi there,

Answer number 27 here. You've received some very good answers from Realtors around the country.

As a Realtor in your home town I'd advise you to be very very careful working with a Broker that wants you to do all of the work, all of the due diligence, and then collect $$ for that. What happens is YOU don't do the work and the discount broker doesn't do the work...the other agent ends up being the work horse for both sides.

I've had a transaction with a local broker who offered large $$ back to the Buyer. It was a nightmare. As the Seller's agent, I ended up doing ALL OF THE WORK involved to close the transaction...I did all of the things the Seller is required to do AND every single solitary thing the Buyer's agent is supposed to do. I spent hours doing the Buyer's agent's job. And guess what, that agent/broker told me more than once, when i'd ask him to do his job..."well, we'll walk away...there are plenty of other homes...this buyer will stay with me because I'm giving her $$ back". Bad Bad Broker :-(

The Buyer, not my customer, was very happy because she walked away with $$$ - which should have been paid to an agent who actually WORKED for it. I was paid my regular commission and the seller got his $$. And the Buyer was paid to sit back and watch me do the job her agent should have done. Both the Seller and I were so burned out by the lack of participation from the Buyer's side that the Seller requested a separate closing.

I hope and hope that I never have that experience again. This job is full of difficulties...being an impediment to a fellow agent is, IMHO, a reprehensible way to do business.

One final thing...I'd like to hearken back to the response from Michael in Baton Rouge. He said "Bottom line is, a "buyers agent" is asking the buyer to finance a cash rebate for 30 years at 6% or so interest!:

Beware...First, you are getting a mortgage on the FULL PRICE of the contract, which includes that commission rebate. Second, if that "rebate" isn't on your settlement statement, then you and that agent are breaking the law.

BE...VERY...WARY...

And, other than the above..I really don't have an opinion :-)

Katherine at Watson Realty Corp 904-422-8262
2 votes Thank Flag Link Sun May 24, 2009
I hope this helps your question,

Sincerely,

Juan Oliva
Mortgage Consultant
Asap Mortgage & Investments Inc.
Mortgage Banker/Correspondent Lender
561-719-3094
Fax 561-969-9087
Approved FHA Lender
jolivamortgage@aol.com
Apply on Line @ http://www.asapmortgage.org or http://www. asapmortgage.com.web-loans.com/


State of Florida Allows Real Estate Commission Rebates
Florida Statutes - Chapter 475, Part I
61J2-10.028 Kickbacks or Rebates.
Click Link Below visit Department of Justice Antitrust Webpage
http://www.usdoj.gov/atr/public/real_estate/florida.htm

(2) The sharing of brokerage compensation by a licensee with a party to the real estate transaction with full disclosure to all interested parties is not considered a violation of Chapter 475, Part I, Florida Statutes.
Specific Authority 475.05 FS. Law Implemented 475.25(1)(b), (d) FS. History-New 1-1-80, Formerly 21V-10.28, Amended 6-28-93, Formerly 21V-10.028, Amended 12-30-97.

You must be a Party to the Transaction (the Buyer), and Rebate Must be Disclosed in HUD-1 Settlement Statemen
2 votes Thank Flag Link Sun Jun 8, 2008
Cindy, rebates are legal in your state of New Mexico as well- we REALLY need to watch the information offered to consumers here. Go check the link.
Web Reference: http://optionsrealty.com
2 votes Thank Flag Link Wed May 21, 2008
The question does not involve "kick backs" - it involves REBATES. Please go to the map of the US on the DOJ LINK, and click. Then, click on the state of California. Rebates are permitted. That was the question. I'd review the site in it's entirety, just for clarity, as a real estate professional.
Web Reference: http://optionsrealty.com
2 votes Thank Flag Link Wed May 21, 2008
Yes. It's the agents money (their property) and one can dispose of one's property, including giving it away. However, you are about to make one of the largest purchases in your life, and you appear to have an agent who is desperate. Will this person represent you diligently, just push you into a transaction, or leave you to fend for yourself?
2 votes Thank Flag Link Wed May 21, 2008
This is not legal in Oregon.

I wonder how quickly this broker will give up your equity.

And will he be able to work in your best interest or his?
Cristina John
cjohn@kw.com
2 votes Thank Flag Link Wed May 21, 2008
Be sure and check the legality of the method in which your ultimate purchase price is reduced..In most cases it is accomplished buy a reator contribution th the cost of necessary repairs.
Good Luck,
Jack Burke
2 votes Thank Flag Link Tue May 13, 2008
I'm not practising law or can give legal advice, but it is perfectly legit in Florida to give up part or all of the commission to _one of the parties involved_ in the transaction.

Searching and showing property can take up an immense amount of time, so the broker probably figures that with what is left to do - negotiation etc - s/he can still be profitable at 25% of the normal commission due.

Do NOT count on getting a good deal from a developer - you may or may not, but if you contact the developer first, your friendly realtor is now catapulted out of the transaction, once and for all.

What I would adise you to do: ask the realtor in question for references, contact the local board and find out if there were any complaints, and if all checks out fine, it may very well be a good deal for both of you.

All the best,

Tobias Kaiser, MS, CIPS
Greater Fort Lauderdale Real Estate Broker + Consultant
Certified International Property Specialist
2 votes Thank Flag Link Fri May 9, 2008
There is no statute in Florida law that would prohibit this broker from doing a BROKER CREDIT at the closing table to you. If you agreed on that professional fee, if they want to share it then they can. You cannot be paid at a closing table if you are representing yourself and are unlicensed but once a broker gets paid, they can certainly credit you something.

What you've outlined though is a limited service broker... one that is only in the deal to write the contract. you have to ask yourself if you're getting fully covered in your transaction.

If you deal with a seller of any sort, your agent protects you..they work for you. No matter what you know/do in real estate - your agent gets paid by the seller to help you.

If you go to the developer, they already have that money built in - and developers will likely cut their fees more with a skilled negotiator than if someone walks in to do it themselves. Remember, their onsite person may make more without an agent! so they'll try to tell you to do it yourself but from contract verbage to upgrades to simply selling you more than you can afford - a realtor on your side will saveyou money and not cost you anything
1 vote Thank Flag Link Wed May 21, 2008
In Florida a Rebate or compensation. to a unlicensed person is illigal unless the unlicensed person is a party to a transaction such as a buyer or seller.

Cathy Sloan
RE/MAX Specialists
Jacksonville, Florida
Web Reference: http://www.cathysloan.com
1 vote Thank Flag Link Wed May 21, 2008
Cindy, I'll say it one last time with respect: REBATES DIFFER from "kick backs", and when they are offered, are found on the HUD1 statement with full disclosure, as mandated. Rebates have absolutely nothing to do with the local real estate commission. The DOJ is very adamant that consumers receive correct information; providing information that doesn't accurately answer a rebate question is a bad plan. In the questioners state, it's legal; that it's also legal in yours and a few others was offered so that the consumer can arrive at the correct conclusion (because it's not being found with this thread)- hence, the website reference. The DOJ has achieved the right for consumers of rebates in all states indicated. I can't add any more- it's right there for you to acknowledge.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Wed May 21, 2008
Quote, unquote from the NM Real Estate License Law, Real Estate Commission Rules Statute 61-29-17.2. Unlicensed activity, civil penalty: The commission may impose a civil penalty in an amount not to exceed on thousand dollars for EACH violation and assess administrative costs for any investigation and administrative or other proceedings against any person who is found, through a court or administrative proceeding, to have acted WITHOUT a license in violation of Chapter 61, Article 29 NMSA 1978." Furthermore, this very well might be a violation of RESPA. RESPA was enacted in 1974 to provide consumers with disclosure about closing costs and to PROHIBIT unearned fees (kickbacks/referral fees). "No person shall give and no person shall accept any fee, kickback, or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally-related mortgage loan shall be referred to any person...". Going back to NM statutes, I have a Broker duty to disclose in writing. Bottom line, who's truly paying the commission anyway. There are legit ways to negotiate a contract, keeping all above board and still having a happy seller and a happy buyer!
1 vote Thank Flag Link Wed May 21, 2008
Sounds odd, I would question the ethics of this person. Doesn't sound like they value their own time either.
Web Reference: http://GetPrequalified.com
1 vote Thank Flag Link Wed May 21, 2008
In California this is illegal and you may report it to the Dept. of Real Estate this would be called a kick back and is not permited by the department of real estate you may get a referal fee for refering someone though. New Home builders are closing there doors on a daily bases you may see the dark side of 1 out of 100 new home buyers comments from angry people that do buy new homes line. Some even have web sites like XYZsucks.com etc.or go on blogs so that you may read some of the nasty comments and you'll read stuff that's been done to them.
1 vote Thank Flag Link Wed May 21, 2008
REBATES VARY FROM STATE TO STATE, SO CHECK YOUR STATE LAW , THIS COULD BE CONSIDERED AN INDUEMENT SO MAKE SURE YOUR STATE IS AN INDUCEMENT STATE.
Web Reference: http://www.lake-barkley.com
1 vote Thank Flag Link Fri May 9, 2008
Be very leary and read all the fine print. In Massachusetts a licensed real estate agent is forbidden from kicking back his or her commission to the client. If I'm not mistaken this is also a RESPA violation, which could potentially cost this agent his or her license.

On the other hand he may be referring to the commission due to him from you, the buyer... Let me explain, for the most part the buyers agent is paid out of the selling agent proceeds. Some agents however, charge a fee to their buyers. What he may be saying is that he will only charge you 25% of the broker fee due from you.

In any event I suggest you have a very clear conversation with this Broker and have him explain to you in detail how this "deal" works. Shortly after that conversation you may want to contact your state licensing board to verify that this practice is legit. If in fact it is appropriate business practice, be sure to get this deal in writting and make sure it explains the services provided in great detail.

I hope this info helps you. If you need any other assistance feel free to give me a call or shoot me an email.

Take care,

Cynthia Nina-Soto
(978) 882-4676
cninasoto@kw.com
Web Reference: http://www.NinaSoto.com
1 vote Thank Flag Link Thu May 8, 2008
Hi there! I've done over 300 new home rebate deals in our area (Northeast Florida) alone. It is very common. Remember one thing, under the Fair Housing Act it is illegal for a builder to negotiate the commission off of the price of a home! If you DON'T use an agent, that money will go down the drain! Search all new home communities in Jacksonville and Northeast Florida and find out more information about our rebate program here - http://cashbackflorida.com
0 votes Thank Flag Link Wed Feb 25, 2015
If it has a mortgage, It should be illegal

"No person shall give and no person shall accept any fee, kickback, or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally-related mortgage loan shall be referred to any person..."
0 votes Thank Flag Link Thu Jun 20, 2013
sorry--didn't pay attention to date..newbie mistake!
0 votes Thank Flag Link Thu Jun 20, 2013
Yes, in Florida, a realtor can in fact rebate a portion of their commission to their buyer. Just like they can sell a home for less then the traditional commission rates.
0 votes Thank Flag Link Thu Jun 20, 2013
Thank you brother Ron...I really hate when these things spring back to life!!
0 votes Thank Flag Link Thu Jun 20, 2013
FIVE YEARS AGO!!!!!

How old does it have to be?
0 votes Thank Flag Link Thu Jun 20, 2013
We work hard for our commissions. This may be legit, but why this broker is willing to give up so much of his hard earned money, is beyond me!
0 votes Thank Flag Link Thu Jun 20, 2013
I guess everyone is wrong, Buyers are greedy asking rebate or kickback what ever you call even though they are not charged any fee. Realtors have families and they need feed them like any other salaried worker. Most of the human beings ignore the fundamentals of life and look other avenues to make free money. Buyer and sellers should respect what Realtors do for them. It is professional job like any others. Respa & DOJ makes rules that hurt ultimately consumers. just an example I worked with a buyer for 2 years spending for gas, time and my efforts estimated more than 10 grand. And he went away and bought with another agent who must have offered the rebate. Remember folks do not encourage rebating, plainly refuse and explain them how it hurts the buyers, sellers and the industry ultimately.
0 votes Thank Flag Link Thu Jun 20, 2013
I have seen this in California. The Buyer's Agent will only collect 1% and award the additional monies to the Buyer. I do not think that it's illegal (of course I am not an attorney) but the problem becomes specially when doing an FHA loan and the Buyer must still come in with the mandated 3.5% of their own money. This "rebate" can be used towards closing costs or buying down the rate.

Now what does it do for the other Realtors in the area? It does not necessarily mean they cannot compete for the business. That Realtor needs to find a niche or a reason to sell to their Clients in order to justify keeping their full commission. It is a free market and therefore the Broker, (Not the Buyer's Agent/Realtor) is allowed to do what he or she wants with his commission.

Sorry for the bad news.

Respectfully,

Eddie W. de Leon
Senior Loan Officer
951-210-2101
NMLS #238369
0 votes Thank Flag Link Tue Apr 23, 2013
First, you as the buyer do not pay the realtor commission. The seller pays the realtor commission!
I know of no reputable agent or Broker that will simply give up 75% of their commission. Realtors work very hard for their commissions. We put a lot of time, effort and money into our continuing education to maintain our license. We also put a lot time into researching the current market conditions to allow us to assist our customers. Then we spend a lot of time with our buyers and sellers pairing the two. Realtors are educated and trained to navigate buyers and sellers thru the entire purchase and sale transaction from showing the first property to closing day. I don't think your 75% off agent/broker is going to offer you that same quality service. It's the old saying of "you get what you pay for".
0 votes Thank Flag Link Tue Apr 23, 2013
Laughable! house cost $100,000, borrower gets a loan for $100,000.

To make it easy, assume, Seller receives $100,000 and pays a commission to rebating agent of 6000.00 to which he gives $5000.00 back to buyer


Congratulations! You just just got back $5000.00 of a loan that you will pay interest on for 30 freaking years.

LAUGHABLE!

Fire the agent, negotiate the home down another 5 grand, at $95,000! and save heck of alot more money from the interest! Duhhhhhh


Think people, think !!!!
0 votes Thank Flag Link Sun Mar 31, 2013
I have sold 4 houses in last 10 years and got listed them by flatfee listing services (there are many of them). In these cases I paid "0" commision since we did not have a seller agent.

For purchase of house can use use a discount realty such as "http://buyerrebatesrealty.com/" who will give you back 1.5 of buyers commision or you can go to "http://www.hungryagents.com/index.html". on this site buyer or seller agent will compete with each other to get your business and will offer a discount.

I believe it is completely irrational to pay 6% or more commision if you are buying or selling a house. In this day and age most of the buyers or seller are finding/narrowing down the property themselves.

I have used "http://buyerrebatesrealty.com/" in past and planning to use "http://www.hungryagents.com/index.html" this time.

I am planning to buy a house in Ponte Vedra area. I will appreciate if you can give me the contact information of this "realtor agent" who is willing to give cash back "75%" of buyer agent commision.
0 votes Thank Flag Link Sun Mar 31, 2013
Please remember, you as a Buyer DO NOT pay the Realtor commission. If you are buying through a Builder, they love if you are working with a Realtor. Why, because it is actually less work for them. I am the 2012 Realtor Association Beaches Chapter Chair and work with several Builders in the tri county area, I am also a member of the Realtor Builder Chapter. I have answered you in another post, let's chat and figure this out for you! 904-482-8666
0 votes Thank Flag Link Sun Aug 26, 2012
It is allowed in Florida to a party to the real estate transaction with full disclosure on the purchase and sale contract.

1) Any real estate licensee who receives, or makes any arrangement or agreement to receive, directly or indirectly, any kickback or rebate, for the placement of, or favor in, any business transaction which forms a part of, or is incident to, any transaction(s) negotiated or handled by said licensee, is a violation of Section 475.25(1)(b) or (d), Florida Statutes, or both of said subsections of the Florida Statutes, unless prior to the time of the placement of, or favor in, said business transaction, the licensee shall have fully advised the principal if any and all affected parties in the transaction(s), which the licensee is handling, of all facts pertaining to the arrangement of kickbacks or rebates.

(2) The sharing of brokerage compensation by a licensee with a party to the real estate transaction with full disclosure to all interested parties is not considered a violation of Chapter 475, Part I, Florida Statutes.
0 votes Thank Flag Link Tue May 22, 2012
If it smells like a kickback then it may be a RESPA violation, thus maybe illegal


The problem as i see it, is that, on a financed deal, the buyer is receiving "cash out" on his loan as a kickback from the Realtor as part of a deal to use his services.

It smacks of mortgage fraud and probable respa violation



Stay above board, always insist that all transaction must be disclosed on the HUD
0 votes Thank Flag Link Tue May 22, 2012
I appreciate the message that "Voices Member" is trying to hammer home. We have an obligation, as RE Professionals, to answer questions accurately or not at all. I think sometimes agents are just trying to help when they offer inaccurate advice, but even worse is when they do so because they are tyring to build their presence on Trulia. A presence built on misinformation is NOT one you want to build. Make sure you know what you're talking about before you chime in, for everyone's sake...
0 votes Thank Flag Link Tue May 22, 2012
True and I do not understand agents from other states answering questions pertaining to Florida law...
Flag Sun Aug 26, 2012
sure they can, but you may find that a competent real estate professional with market data and just limited experience can probably save you more than 75% of their pay just by doing the job of helping determine an offer price.
0 votes Thank Flag Link Tue May 22, 2012
D-
You always get what you pay for so do not expect anyone to be at you beck-and-call for a 25% paycheck but it is legal as long as it fits within the lending guidelines for your mortgage type and down payment. Realtor commissions rebated must be counted within the contribution limits. As a lender, we often refer to these as seller contibution limits and many realtors do not know that they also apply to them as well. They are actually called interested person contibutions and anyone benefiting from the sale has collective limitations that govern the contribution.
0 votes Thank Flag Link Wed Apr 28, 2010
As a full-service Florida discount broker, specializing in rebates, 75% seems extremely aggressive. If you do use this broker, make sure everything is in writing & disclosed to all interested parties (i.e. on the HUD-1 settlement sheet). I offer 40% commission back with FULL-SERVICE to all of my customers which is pretty much boarderline to make a profit while not sacrificing service to my customers. To answer your question, YES it is is legal if disclosed.

Best,
Aram Shah
http://www.rebatebackrealty.com
Web Reference: http://rebatebackrealty.com
0 votes Thank Flag Link Tue Jun 10, 2008
In my state this not only illegal but highly unethical. You need to ask yourself if you are working with a REALTOR (member of the local board of REALTORS, State Association of REALTORS and the National Association of REALTORS). In NM, it if illegal for you to receive a commission (compensation) and in accepting such you could subject yourself to legal ramifications and fines.
0 votes Thank Flag Link Wed May 21, 2008
This web site includes nothing on California
http://www.usdoj.gov/atr/public/real_estate/rebates.htm
In CA. this would be considered a kick back and NO it's not lagit & Real Estate 101.
0 votes Thank Flag Link Wed May 21, 2008
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