A buyer’s agent will generally receive a commission paid by the seller when they help a client purchase a home. To put things simply…the buyer’s agent commission rebate is when the buyer’s agent gives a portion of their commission back to their client at the time of the property closing.
Why would a real estate agent do that?
These rebates can be used to benefit both the agent and the client in various ways. Real estate agents can use it as an incentive to attract buyer clients. It can also be used to potentially save a real estate transaction. For example, if the buyer and seller cannot agree to a repair item the agent can step in to contribute a certain amount of funds to help settle the disagreement in order to make sure the transaction actually closes.
- IMPORTANT NOTE: Not all mortgage lenders allow buyer’s credits or commission rebates. If mortgage lenders do allow credits or rebates they may limit the amount of money a buyer can receive. Please check with your lender regarding the use of buyer’s credit and rebates.
How much money is a buyer agent commission rebate?
The rebates can be negotiable and completely depends on what the buyer and agent have agreed on, however these rebates are often times a percent of the purchase price of the home or it can be a fixed dollar amount.
- For example, a buyer’s agent is offering a 1% commission rebate on the purchase price of the home. The buyer purchases a home for $300,000. The agent’s total commission is 3% of the purchase price and gives the buyer a 1% commission rebate. The buyer would receive $3,000 at closing and the agent would receive $6,000 at closing.
How can buyers use these funds?
There are many different ways these buyer’s credits can be used. The most common uses are as follows:
- Using the funds to buy down interest rates – this is very handy in today’s market with higher mortgage interest rates. Many lenders offer ways for buyers to pay more cash upfront when they purchase a home in order to “buy down” the interest rate.
- These funds can be used as part of the buyer’s cash they need to bring to closing. Here is a very basic example of this. **We have removed extra closing costs and fees in this example to simplify our point.***
- A buyer has a loan that they are required to bring 5% of the property’s purchase price as their down payment. The property will be purchased for $300,000 so the buyer is required to have $15,000 in cash to bring to closing for their down payment. The buyer’s agent is providing a 1% buyer’s agent commission rebate which equates to $3,000 in this example. Now the buyer only has to bring $12,000 for their down payment vs $15,000.
Looking for a real estate agent that does buyer rebates?
For a limited time Wayfinder Homes LLC is offering a buyer rebate program. Click here for more information.
