Real estate commission rebates can be a great tool to help clinch a deal. What exactly is a commission rebate? How do they work? Here’s what buyers and sellers need to know.
How does a commission rebate work? A rebate — often a percentage of the price of the home — is granted to the buyer or seller by the real estate agent. The rebate may be be in the form of cash, a gift card, reduced closing costs or a free service.
How much money is involved? That depends on the agreement, but it could add up to thousands of dollars. A 1 percent rebate on a $200,000 home would be $2,000.
Are rebates customary? No. In fact, many states currently prohibit their use. In states that do allow rebates, it’s up to the individual agent or real estate firm to make that call. Always check with your agent about any policies regarding rebates.
How are rebates used? Agents may be hesitant to offer rebates because they reduce the amount of money made on a deal. However, in certain markets, rebates can be an effective way of closing a deal. They can also be a useful enticement when the deal involves an unusual or unattractive property. Finally, rebates can be part of an agency’s special programs. For example, an agent or firm may choose to give a set portion of the commission to military veterans.