The Ultimate Guide to Commission Rebates for Buyers

Buying a home can be time-consuming, emotional, expensive, and stressful, especially if it's your first time! Between the closing costs, realtor costs, and moving costs it's no wonder why most people fear the process of selling or buying a home. Believe it or not, some of the most common questions people ask are around real estate agent commission rates both for the home seller and buyer. For example, many people ask- are commission charges negotiable, who pays the buyer agent commission, and is a home buyer rebate legal? Unfortunately, there's a lot of misinformation on these matters, but we're here to clear the air.

What Is The Buyer Agent Commission?

The buyer agent commission is the fee the agent charges who helps their client (the buyer) buy a home. Generally, the buyer agent commission is typically 3%. However, considering how the internet has allowed the homebuyers to do much of the house searching themselves, the 3% commission seems drastically inflated, correct?

 

Who Pays The Buyer Agent Commission?

Any rational person would recommend that the seller would pay for the listing agent commission, and the buyer gives the buyer agent commission. This is a big misconception. As the home seller, you are responsible for paying the buyer and seller's agent commission! On average, this is a total of 6% of the property price in commission fees the seller ends up paying. The buyer's agent receives a 3% fee, and the listing agent would receive a 3% fee. On a $400,000 home, that is $24,000 in realtor commission fees. That's a lot of money by any measure.

 

Just because the buyer does not have to spend out of pocket to use the services of a buyer's agent doesn't mean they are free. A simple economics curriculum would teach you that the buyer's agent commission is factored into the selling price. Unfortunately, this is why so many buyers try to bypass the services of an agent to get a better price. Luckily, with a home buyer rebate, homebuyers can save on home purchase, thanks to the commission rebate and benefitting from the experience of an authorized agent.

What is a Home Buyer Rebate?

A home buyer rebate also known as commission refund is when the buyer’s agent gives their buyer back a percentage of their commission after the home is sold. Some brokerages provide a set amount, but you’ll have to ask your broker what their policy is. This is also negotiable when you sign a deal with your real estate agent.

 

For first-time home buyers, think of a commission rebate like cashback on a credit card. For example, if a buyer's agent received a 3% commission, or $12,000, they may choose to keep $6,000 of that commission and give the buyer a commission rebate of $6,000. A realtor may choose to do this as a token of appreciation, a simple thank you, or as a way to reach more clients! Commission rebates enable agents to compete for a buyer's business, not just on the level of service they offer but also the amount they charge for that service. It's a win-win!

 

The buyer's commission rebate concept has become increasingly popular in recent years as buyers know that they take on more legwork in the home search process. Buyers also understand that as home values continue to appreciate, a 3% commission on a $100,000 home years ago is a lot less than a 3% commission on a $400,000 home today.

 

How Do I Ask My Realtor for a Rebate?

If you want a home buyer rebate, the initial thing you need to do is ask. It’s more common in some areas of the country than in others. Some online companies also work with agents to provide buyer rebates.