This is probably one of the biggest kept secrets in the real estate industry: 8 out of 10 home buyers do not realize they can legally get thousands of dollars back from their real estate agent at closing. As a former top producing banker with over 100 million dollars in sales per year this is something that I didn’t realize until later on in my career: When I asked my real estate agent how much she usually gives back to the buyer, her answer was “Only one client has asked me for a cash rebate in 12 years!” I found this astonishing since asking that one question can easily get you thousands of dollars back at closing.
Cash rebates are encouraged in 38 states to help home buyers save money: The US Department of Justice even recommends real estate agents give cash rebates to buyers, and files lawsuits against states that ban rebates because these states are discouraging fair competition. The 12 states that do not allow a buyer to get a cash rebate are: AK, AL, IA, KS, LA, MO, MS, MT, NJ, OK, OR, and TN.
Now I realize my fellow agents may not like me giving this information, and some may not even realize it is completely legal. When I posted a similar article on My Blog an agent left the following comment:
“ah, legally, unless you are licensed, an agent cannot give you fees, it is illegal and considered kickbacks, sorry bad idea!”
She apparently must have missed the part about the Department of Justice encouraging cash rebates, and is more than likely referring to referral fees. However we are not talking about referral fees here. I am talking about cash back to the buyer. Keep in mind many agents help buyers with closing costs, but buyers can also request cash back at closing.
HOW MUCH CAN I GET BACK?
If you pre-approved, know what you want, and are not going to take up much of the agent’s time you can request more back. A common objection from agents is, “You get what you pay for.” This is partially true; you get what you shop around for!
There are plenty of great “full service” agents that will offer you part of their commissions back. If an agent does not want to give you cash back they can simply decline to work with you, and you with them.
Remember the point is you want a GOOD agent. Some agents may try to imply that they are better because they don’t offer rebates. Keep in mind there are many factors which enter into the professionalism and skill of a real estate agent, and whether or not they offer you a rebate is not the only factor.
HERE IS AN EXAMPLE
When I purchased my first home (at which time I was not an agent) the agent showed me four houses over the course of a few hours and he earned over $9,000 in commissions. If I would have known I could have gotten cash back at closing you can bet I would have asked for a few thousand back.
BE RESPECTFUL TO THE AGENT
To get an idea of how much you can get back please see my CASH BACK CALCULATOR. The thing to keep in mind is not to be greedy. Real estate agents work hard for their pay and can go months without selling a home. In addition to that agents may have to split their commissions with their broker. The broker is the company or person that the agent works for. So commissions are often split four ways. To be fair to the agent I recommend asking for a .5% rebate of the purchase price of the home. So for example: if you purchase a home at $500,000, it is fair to ask for a $2,500 rebate ($500,000 X .5% = $2,500). At Bargain Agents I make it easy for you as a buyer to get cash back from your agent by using the Name Your Price feature of the website.
For more information and to get cash back from your agent see the How it Works Page. At Bargain Agents many agents will give you a cash rebate, AND provide you with the Full Service VIP treatment you deserve.
Article Written By Tony Dosanjh
Questions? Call Me: 415-290-6647
Founder/CEO Bargain Agents Inc.
BRE License # 01151194
