![]() | |
![]() | |
![]() |
Real Estate Information |
|
![]() |
How Home Buyer Rebates Work
In today's tight housing market, many buyers are looking for ways to stretch their dollars far enough to make that dream home a reality. One little-known strategy that's gaining popularity with consumers is the home buyer rebate. At the same time, rebates have become a hot-button legal issue for the traditional real estate industry and the U.S. Justice Department's Antitrust Division. Buyer rebates are loved by consumers, at least those who know about them, because they can make getting into a home more affordable. More and more so-called non-traditional real estate companies ¬- those offering alternatives to full-service, full-commission brokers - are offering to share their paydays with buyers. At the same time, many traditional brokers around the nation are trying to block rebates because they threaten fat margins with price competition in the form of commission discounts. Since buyers pay the lion's share of closing costs in addition to down payments, many are interested in receiving rebates to ease the cash crunch of moving into a new home. This can be a real advantage for buyers who have a solid income and credit history, but little cash up front. In this case, the term "rebate" is little confusing because home buyers are not getting a portion of their cash outlay back. The buyer representative (agent, broker or both) is rebating a portion of his or her commission back to the buyer. The rebate process seems confusing to some buyers because it runs counter to the common belief that home buyers don't pay real estate commissions. In fact, commission costs are passed on to buyers as part of the home's sales price. Buyer-agents typically are paid half the standard 5-6 percent of sales price commission. That money doesn't come from thin air?chances are that the sellers have factored commission into their price. When traditional listing agents tell sellers not to stress over commissions, because they can recover the costs through a higher sales price, someone is paying the freight. So how do home buyer rebates work, and what's in it for you? - In traditional real estate transactions, buyer representatives and seller representatives typically share commissions of 5 to 6 percent. Selling brokers usually offer half this commission to a broker who brings them a buyer. As an incentive to drum up business, some brokers now offer to rebate a portion of their buyer-representative commission to home buyers. For example, suppose you buy a $400,000 home on which the seller pays a six percent commission. The buyer and seller representatives split the $24,000 commission evenly. In this case, a one percent rebate means that the buyer representative receives $12,000 from which they pocket $8,000 and "rebate" $4,000 back to the buyer. - Buyer rebates generally depend on the home's sales price, total amount of commission and the commission split. Some rebates may be advertised as a percentage of the buyer-representatives commission. In the example above, the rebate is $4,000, or about 33 percent of the $12,000 buyer-side commission. Other companies offer fixed-amount buyer rebates, such as $1,000 in cash or a $1,000 gift certificate. Homebuyer rebates: To ban or not to ban? At the same time consumers are looking to rebates to help relieve the high cost of home buying, traditional real estate brokers are trying - and succeeding in some cases - to prevent their use. Broker lobbying groups around the nation, concerned about price competition and downward pressure on commissions, have successfully lobbied lawmakers in 10 states to make home buyer rebates illegal. Four more states limit home buyer rebates to credits at closing. Fortunately for Florida buyers enduring record-setting home prices, rebates remain legal in the Sunshine State. Industry watchers recently have looked to the state of Kentucky to see where the rebate debate might lead. In March, the U.S. Department of Justice sued that state's Real Estate Commission, alleging that its rebate ban violated antitrust laws. The DOJ investigation alleged that Kentucky's rebate ban may cost consumers "several thousand dollars" extra for each real estate transaction. In July, rebate fans received a victory when the DOJ and the Kentucky Real Estate Commission reached an agreement permitting rebates in that state. If you're shopping for a rebate, get the facts: Some points to keep in mind if you are a home buyer looking to take advantage of rebates: - Shop around. Some rebate programs included other buyer services, such as contract preparation or review, or escrow services. Even in a sellers' market, buyers have some leverage. After you have established the rebate amount, ask what else is in the package to help simplify your purchase and control transaction costs. - Consider your tax picture. Getting a rebate in the form of funds applied to closing can be double-win because that money may go untaxed when applied to closing costs. If the rebate or a portion of the rebate is not available until after closing, it may need to be reported as taxable income. Of course, this isn't an issue if you have plans for your rebate other than closing costs. Be sure to consult your tax advisor for this and other tax consequences of home buying. - Rebates won't be available on many homes, including sale-by-owner homes and some homes sold by discount brokers. That's because in these cases, the traditional commission percentage and split - from which the rebate is derived - doesn't apply. Some real estate companies don't offer buyer-agent commissions, and owners selling their own homes probably are doing so to avoid commissions. Finally, check to see if rebates are legal in your state. Money Magazine's 2005 Real Estate Guide reported that rebates were banned in Alaska, New Jersey, Kansas, Oklahoma, Rhode Island, Louisiana, South Carolina, Mississippi, West Virginia and Missouri. Rebates were reported as restricted to credits at closing in Alabama, South Dakota, Oregon and Tennessee. If rebates aren't available in your state, you might ask your buyer agent what incentives are available. After all, for being a smart buyer in today's challenging real estate market, you deserve some type of reward. You can estimate your rebate savings at http://www.homekeys.net. Charles Warnock is Interactive Marketing Manager at Homexperts in Miami, Florida. Their Web site is http://www.homekeys.net. Charles writes frequently on real estate, finance, advertising and interactive marketing. This entire article can be reproduced without permission with author bio and link to author's Web site.
MORE RESOURCES: Jeff Bezos' secret $190M Seattle real estate empire revealed Business Insider I'm a Real Estate Investor: Don't Pay Off Student Loan Debt — Buy Properties Instead Yahoo Finance Real Estate Transfers ~ through Nov. 23 The Bedford Citizen Francisco Real Estate: Why Homeowners are Selling at a Loss The San Francisco Standard New Legislation Proposes to Take Wall Street Out of the Housing Market The New York Times Dodge County real estate transfers Fremont Tribune Real estate transfers: Dec. 8, 2023 RiverheadLOCAL Eastern U.P. real estate remains stable despite shifting national trends Sault Ste. Marie Evening News RNR Real Estate Briefs – Texas & more Realty News Report Real Estate Transfers: August 1 - 15, 2023 The Owensboro Times Real estate: Foreign LLC buys Pizza Hut property in Perry Township Massillon Independent Real Estate Sales Include Wealth Management Center Complex, Ranch For Vets Jamestown Post Journal How a Kitchen Refresh Can Help Close a Real Estate Deal How a team approach brings sales, success Behind The Hedges McColly Real Estate Holiday Celebration 2023 | LaPorteCounty.Life LaPorteCounty Life Massachusetts real estate transactions for Hampden, Hampshire and Franklin counties Dec. 10, 2023 edition MassLive.com Real Estate Transactions for Dec. 9-10 | News, Sports, Jobs Nashua Telegraph XPO buys Yellow's Real Estate For $870 Million The Real Deal OT Real Estate Spotlight of the Week: 4404 Fairbairn Court The Owensboro Times I'm a Real Estate Investor: Don't Pay Off Student Loan Debt -- Buy Properties Instead GOBankingRates NJ real estate: $20M Alpine mansion for sale. See listing NorthJersey.com Routt County real estate sales surpass $13.4M from Dec. 1-7 Steamboat Pilot & Today Chad Tredway Rejoins JP Morgan Asset Management as Head of Real Estate Americas | Chief Investment Officer Chief Investment Officer PTK spotlight: 50 commercial real estate projects to know in 2024 Arizona Big Media Real Estate Roundup, Retail Theft Arrests The Eastsider LA Jef Conn: From Lubbock commercial real estate to Texas Chairman of the Board Texas REALTORS KLBK | KAMC | EverythingLubbock.com Real Estate Transfer Dec. 9, 2023 | Records | messenger-inquirer.com messenger-inquirer Charlottesville real estate investor Phaedrus Acgtblu dead in apparent homicide - The Daily Progress A Strong 2024 Market? Get a Real Estate Coach Now | Florida Realtors Bezos Leaving Behind A Massive Seattle Real Estate Portfolio As He And Lauren Sanchez Plan Move Miami Yahoo Finance Greenwich Real Estate Inventory to Hit Zero in March 2024 Greenwich Sentinel Bay Area real estate: Where rent or mortgages hurt residents most San Francisco Chronicle Chad Tredway Rejoins J.P. Morgan as Head of Real Estate Americas, J.P. Morgan Asset Management PR Newswire Real Estate Property Transfers in Franklin for November 13, 2023 Williamson Source Coral Springs Real Estate Market Defies Economic Predictions • Coral Springs Talk Coral Springs Talk What's a Real-Estate Fund Worth? Depends on Who's Doing the Math The Wall Street Journal Real estate news: DoubleTree near South Coast Plaza, JWA getting a $12 million makeover - OCRegister Pacaso, The Real Estate Marketplace, Releases Report That Identifies Fast-Growing Luxury Second Home Markets Crowdfund Insider Could Bitcoin Cause Real Estate Prices to Collapse? DataDrivenInvestor Viral New Berlin jungle home back on market after sale fell through: Open House - Milwaukee Business Journal The Business Journals Wheeler Development exec balances careers in real estate, folk music - Crain's Grand Rapids Business Wheeler Development exec balances careers in real estate, folk music Crain's Grand Rapids Business Is Jeff Bezos shopping for real estate in Palm Beach? The New York Post thinks he is Palm Beach Daily News Valley real estate community steps up to support Operation Santa Claus ABC15 Arizona in Phoenix REAL ESTATE | VIDEO | Charming and inviting 2-story home in West Bend, WI | By Wendy Wendorf, Homestead Realty washingtoncountyinsider.com New Castle News | Newspaper Ads | Classifieds | Real Estate for Sale | BERKSHIRE HATHAWAY Home Services The ... New Castle News Ares Banks $3.3 Billion to Buy Real-Estate Fund Assets - WSJ The Wall Street Journal San Francisco's Russian Hill Mansion Sells for Half Its Asking Price Amid Real Estate Shift Hoodline Canadian Apartment Properties Real Estate Investment Trust Un stock rises Friday, outperforms market MarketWatch Apply for the Longtime Owner Occupants Program (LOOP) | Services Philadelphia Water Department Opinion | Real-Estate Collusion Is Finally Coming to an End The Wall Street Journal REAL ESTATE BRIEFS: DEC. 9 Las Vegas Review-Journal What Accreditation Shift Could Mean for Real Estate Investors Kiplinger's Personal Finance New York City Law Against Body-Size Discrimination: What the Residential Real Estate Industry Needs to Know Jackson Lewis Jeff Bezos's Homes: Inside His More Than $500 Million Property Portfolio Architectural Digest 20 Young Leaders Transforming the Real-Estate Industry in 2023 Business Insider Gardiner nonprofit works to house teachers amidst 'uphill battle' of pricey real estate - Missoulian Are Virtual Tours Still Worth It in Real Estate? Evidence from 75000 Home Sales Harvard Business School Working Knowledge 9 Best Places to Retire in Mexico, According to Real Estate Experts Travel + Leisure |
![]() |
![]() |
![]() |
RELATED ARTICLES
Real Estate Financing - Ten Ways Do you remember when real estate financing meant you saved up enough to put 20% down on a house, and then you got a mortgage loan for the other 80%? Well, you can still do that, but there are many more options now. Here are ten of them. The Perils of the Property Ladder: Has Anyone Noticed the Silence? There was a time when every conversation was focussed on property and every other TV programme was about property makeovers. Everybody wanted to get into property and those already on the ladder seemed fixated on becoming wealthy overnight. Home Owner Association Restrictions - Read Before Buying Many communities have associations for homeowners, property owners, condo owners, or similar associations. The presence of a homeowners association, also known as "HOA", introduces another layer of rules and regulations to consider when buying a home. On the Crossing of Continents Cyprus is situated in the north-east Mediterranean on the crossing of three continents - Europe, Asia and Africa. This strategic location ensured development of the island as an international business center with high-quality service, vast infrastructures and great deal of entertainment facilities. Should You Accept A Full Purchase Offer For Your Note or Not? You could be facing a dilemma when considering payout options on selling your mortgage note! To accept a full purchase offer or a partial purchase offer is not always an easy decision.Sure, to take the full purchase option is an easy decision to make if you're holding a second position note on a property that doesn't have any equity after you add the first and second mortgages, but what if that's not your situation? Full purchase payouts can be good if your primary concern is to just get out of the note and be done with it. Farm Expired Listings For Big Commissions Many real estate agents begin and sometimes sadly end their careers without a plan. And as the saying goes, failing to plan is as good as planning to fail. Real Estate Investors - Red Alert How's the real estate marketing doing? Is the huge jump in home prices that is evident in some areas symptoms of a value bubble? Good questions, yes?Two things to keep in mind when surveying the market:1. All real estate is local,2. Should I Invest in Real Estate While Running an Internet Business? Of course you should. I practice this for quite a while and I never looked back. Selling Your Own Home: 10 More Tips Selling your own home can be a time-consuming and frustrating process. Sometimes, though, in the right market, it makes sense to save thousands of dollars in commission and do it yourself. Customer Service - The Real Estate Revolution Traditionally, real estate has been viewed as a sales industry. But perceptions are changing. Follow-Up - The Key To Successful Closings If everyone always did everything they said they'd do, we'd all be a lot richer. Unfortunately, tasks are overlooked, and the ball is often dropped. Maui Realtors: What You Need To Know Maui is a great place for families of any size. However, before you plan a move to Maui and contact those Maui Realtors, there are some considerations that you should take care of. Death, Taxes, and Foreclosures So how do you find the best foreclosures. Its not easy as the business is very competitive, especially in this current crazy real estate boom. Real Estate Investing In Mexico Mexico is CHEAP! But its getting more expensive. As property values rise, especially in resort areas, investors wonder how they can profit from this. How Professional Property Investors Interpret and Use Capital Growth Statistics Understanding and using yearly price growth statistics in an area of interest is critical to making successful property investments decisions.Property price growth is usually expressed in terms of a percentage i. Selling Your Home - What Can Go Wrong With Pricing and Loans So, you're selling your home (house, townhouse, condo, apartment, land, lot, farm, ranch, etc.), what can go wrong? The sad fact is that a lot of things can go wrong. Buying A Home - Zoning and Architectural Review Board Restrictions When you buy a home, you need to be aware of the various things that can limit your control over the property. This is as true for finished lots and single family homes as it is for townhouses, condos, and apartments. New Homes in Ridgefield Location:Frequent travelers will absolutely delight in this town! As part of the southwest section of Connecticut, Ridgefield is a convenient town to live in since it is only miles away from both the New Jersey Tri-state area and New York City. It is also close to its neighbor, Danbury, and has a steady population that continues to grow. Estate Agents on the Costa Blanca Spain Properties for sale or to rent on the Costa BlancaAs a general rule of thumb, newly built properties on the Costa Blanca are generally cheaper than existing or re-sale properties - cheaper still if you buy 'off plan' (before the house has been started). Property prices have rocketed here over the last five - ten years and many fortunate people have found that their properties have grown in value enormously even before they had moved in! Even though the market is now leveling out, a property in Spain is still an extremely good investment. Investment Property Part 2 of 2: What You Need to Know Before You Buy Welcome to the second portion of a two-part series on investment property. In the first installment, "How Not to Become a Slumlord", we discussed a little of what it takes to own and operate a property as well as some of the do's and don'ts of the property management trade. ![]() |
home | site map |
© 2006 TIGER MEDIA |