hello folks my name is Chris at Hauseit i'm one of the co-founders here at house
it based in miami florida today we're going to talk about a interesting topic
that a lot of folks ask us about and it's what is a buyer agent commission
rebate and is it allowed in florida and miami is it common here we're going to
talk about all this and more
so yes commission rebates are legal in 40 states including new york and florida
both states where we operate and in fact according to a pop a irs ruling
it's viewed as a reduction of your cost basis should you close
with the commission rebate so essentially
your buyer's broker who provides you with the rebate won't be issuing you a
1099 thus it's not classified as income when it comes time to sell make sure you
keep the documentation as it is viewed as a reduction in your cost basis
so what exactly is a commission rebate
at all well first of all as you may know it doesn't
cost you anything as a buyer to work with a buyer's agent so in
the united states in all states it's common for both the buyer to have their
own agent their own separate representation and for the seller to
have their own agent as well a separate representation and what
typically happens is the seller negotiates with the seller's agent
on a commission for the listing so typically it's six percent might be more
or less but that's the figure you hear most about in the media and this six
percent commission is typically negotiated as a
flat rate that's paid regardless of how the property sells because the
agreements are typically a exclusive right to sell listing agreement so
basically when the property sells the seller in a traditional arrangement will
you know pay six percent for example and if the
agent has to split the commission with a
buyer's agent because the buyer has a separate agent then per the local
broker association or mls rules around co-broking which is another concept
we'll cover in another video that commission is split
automatically per the association or mls rules typically at least 50 50 in favor
of the buyer's agent so then in this case that six percent would be split
three percent of a buyer's agent and the seller's agent keeps three percent
of course if the buyer for some reason foregoes their
right to free representation they kind of just waive that then the the
seller's agent gets a rare payday and collects both sides of the commission so
all six percent now keep in mind that's actually pretty rare because in most
markets anywhere from 75 percent to 90 of buyers
do end up being represented and of course the the the reasoning is quite
simple besides the use it or lose it mentality that we just talked about
it's the fact that you know there's for example 50 000
agents licensed in the new york city metro area every new yorker or even
every miami and has you know at least five real estate agent friends and you
know they'll often mention that hey if you're looking to
buy a place i can help you it doesn't cost you anything it's a seller closing
costs which it is and it's free so you know what person
turns down a free service that's use it or lose it when you know it's the most
important transaction of their lives so anyway that that's why most most buyers
end up getting representation but you know
the buyer agent rebate just to bring it back on on track a bit um
you know it's great because it can be better than free so instead of your
buyer's agent simply you know collecting half of the
the the listing commission the six percent so
instead of just getting three percent calling it a day you got you know free
service and your your agent friend got three percent for representing you on
the buy side well you know it can be better than free i mean what house it
offers is we throw a house it buyer closing credit program one of our
agents or partner agents will give you two two-thirds of that
commission they earn as your buyer's agent subject to us of course keeping
a minimum as of this filming it's one percent or seventy five hundred dollars
whichever is greater um and you know you you keep the rest so
it can be given to you as a check post closing after our check clears
some clients prefer to have it credited against their closing costs so that can
happen prior to closing we simply speak to the closing attorney
or your attorney and they adjust the flow of funds to credit
what commission rebate you would get to you against your closing costs
and that's pretty much it we have a very standard
commission rebate agreement that we can use it's about half a page
it's quite simple and it's really it's for your protection to to outline the
terms that we just discussed that will what and how much will pay you and
also it specifies that it is not an exclusivity agreement
it's very important to understand as a as a pro note
that it's uncommon in many competitive
metropolitan markets such as new york city or miami where there's a lot of
agents chasing deals to not have exclusivity on the buy side so similarly
our agreement is not an exclusivity agreement either
so there you have it that is what a buyer agent commission
rebate is it often is called by a variety of different names such as a
buyer agent rebate a buyer closing credit
um buyer rebate
commission rebate sometimes
you know realtors who are unfamiliar with with the term or believe that it
shouldn't be allowed or isn't allowed for some reason they might call it a
a kickback which is kind of a derogatory term um but
you know regardless that these are all different terms for the same thing
um if you are based in new york and florida where we currently operate it
is legal and in about 40 states and
that's pretty much it let us know if you have any questions it is a very
effective way to not only reduce your your closing costs but to you know
perhaps give you a leg up when it comes time to
bid for for your dream property and if you have more money
coming to you as post-closing equity or perhaps as a way to reduce your closing
costs you know it gives you more firepower when you're bidding against
other other folks in a competitive market so we think it can only help if
you have any questions please drop us a line you can leave a comment below we'll
get back to you we do operate in
new york and florida so in new york we cover long island hudson valley and
new york city where we originally started
and in south florida we cover all five counties of southeast florida
so that's miami-dade county palm beach county broward county st lucie and
martin counties we can help you save up to six percent when you sell with our
Agent Assisted FSBO service or about half the total broker
commission when you sell with our 1% full service program and when
you buy of course the buyer closing credit program we we mentioned we can
help you save 2% or more oftentimes it's a lot more than two
percent here in florida especially if you're buying new construction for
example the Missoni Baia a new construction building in Edgewater, Miami
is offering seven percent and it's not uncommon to see new construction
projects here in miami offering five six seven percent so it can certainly be
more than just the three percent being offered to buyers agents and of
course if you get two thirds of that back the the upside can be quite
substantial so we hope you found this video helpful my name is Chris at
Hauseit and we'll see you on the next one