I cannot for the life of me understand how rebates like these do not violate RESPA or Do Not get Counted as Interested Party Contributions when obtaining a mortgage. Typically and IPC would reduce the Sales price by the IPC so on a 700,000 loan and 80% LTV would be a loan amount of $560,000. With the 2% Rebate the Sales price would be reduced to 686,000 and the the loan amount at 80% would be $548,000. The loan amount would be lower by $12,000 with a rebate of $14,000 actual cash to the borrower is only $2,000 but they would have a lower loan amount. Definately a positive for the consumer.
My other question would be how could you offer the same level of service, a non rebate realtor offers while working on a much smaller margin. As a realtor or in my case a loan officer my time and knowledge is really all I am selling the mortgage itself is what it is. My time has a value and If I was to work on a smaller margin I would be saying that my time and knowledge isn't worth it. I don't have an issue working on a thin margin when a deal is a slam dunk and it only takes a minimum amount of time to complete the deal. The thing is you don't know it's an easy deal until after it's closed and if you agree to work at a discount and the transaction becomes complicated you have a choice.
1. Work for free (or virtually for free)
2. Don't invest the time the transaction calls for
I would not want to make that choice with what is likely the largest financial decision of a person's life.
Just my .02