Can a listing agent advertise that he will rebate some of his commission to a buyer?

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01/21/2015 | Author: Editorial Staff

I’m the listing agent for a property that has received little interest from buyers. Can I advertise that I will rebate part of my commission to a buyer to help attract offers?

Yes. The ad must disclose that the rebate is subject to the seller’s consent since the rebate is to a party you do not represent. Also, if the rebate is contingent upon certain restrictions, such as the use of a particular service provider, the ad must contain a disclosure that payment of the rebate is subject to restrictions.

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Categories: Legal
Tags: legal, legal faq, advertising, buyers, sellers


Comments

John M. Schreiber on 01/22/2015

Call me stupid or nieve or what ever,I have been licensed for over 18 years and will not REBATE.  Once you start you never quit. Keep it clean and open and you have no problems later. We all know most Realtors attempt to sell their listings first so the best way to get other Realtors to show and sell your listing if it is not getting shown is to get your seller to allow you to advertise a bonus to selling agent ( I usually am able to get $5,000.00 ) and you would not believe how many I have had shown and sold by doing that AND it is completely legal.

Rick Chumsae on 01/22/2015

Kathy,  Yes, that is what I am referencing.  I am aware that agreeing to accept a buyer with an attached Affinity agreement will take, usually, a third of the commission but that is not so different than accepting most any client tied to a relocation company.  Except, not all relo-assited clients receive a cash payment, but they do receive services which may be worth money, is not taxed, and which the Realtor pays for, while nearly all Affinity clients do receive money.  In fact, for the most part, that is all that affinity companies do; take a third of the commission, remove a fee, and pass on to the client.  They do not pretend to do anything else.

My broader question is this.  Why is this allowed, legal, and unregulated?

Kathy MOORE Cloud on 01/22/2015

Rick,  would that be like a third party company that you agree up front as the buyer’s agent to accept the buyer as a “referral” and pay a “referral” fee to the referring company?  And wouldn’t that be a prudent question to ask the buyer before you commit your time and energy AND fiduciary duty?  “Mr Buyer…are you a part of any employer relocation plan or any group where you expect to receive some incentive for using their services when purchasing a home?”  I’m thinking that you are suggesting you and others have been caught “unawares” and I have heard others mention same….would you share the particulars for us?  I would be interested in hearing TAR’s take on such a transaction.

Aleshia Sandel on 01/22/2015

Steve your comment suggests you yourself participate in cash rebates after closing.  Probably not the impression you were going for there but none-the-less…I believe this discussion is for those of us who wish to adhere to the laws and regulations as they pertain to cash rebates.  Of course, we all know that cash rebates after closing happen.  But this discussion is to inform those of us whom are wanting to adhere to rules and regs while rebating. smile  You cannot regulate the ethical behaviors of other agents- believe me many of us wish we could!

shelley cartier on 01/22/2015

The first sentence says it all:  “I’m the listing agent for a property that has received little interest from buyers. ”  This listing agent has receive little interest because it is either priced too high or it looks terrible…or both.  This agent is going in the wrong direction by advertising to pay a rebate. This agent needs to get the seller to lower the price and/or clean up and stage.  More buyer interest only comes when a house shows well and is priced competitively.

Kathy MOORE Cloud on 01/22/2015

Hi Shelley,  My thought was that the listing agent was advertising an incentive for perhaps well qualified buyers who needed a little help with closing cost monies for instance….thus opening the door for perhaps more buyer interest.  TAR’s answer to whether she can advertise that…. is YES.  And, they tell us to be sure to “disclose” as always with our advertising.

Bali,  By creating more “buyer” interest, the listing agent has created an opportunity for a buyer agent to actually be able to bring a buyer to the table that otherwise might not have closing cost monies ....so now the agent has an opportunity to earn a commission.

Steve,  tsk tsk tsk. Naivity?  I’m thinking that TAR is bringing questions/answers to those with intent to operate above board.  Anyone at any time in any profession can do business illegally.  Doing “behind the scenes” activities as you describe oftentimes is not simply “flying underneath the radar” but may inadvertently cause trust issues when potential future bs presents itself.  REALTORS who adhere to higher standards wish to “raise the bar” in our Industry and enjoy a profession that is respectable in the consumer’s eyes.  Taking the high road….and staying up to date on the rules and regulations seems to ward off most of those nasty fines, penalties, and license revocations also.

Thank you TAR for bringing us another update to be mindful of.

Shelley Cartier on 01/22/2015

Okay, am I the only one noticing the elephant in the room?  If the house is not selling, paying a buyer to buy it is not the solution. Obviously, the home shows poorly or the price is too high.  These are the ONLY 2 reasons why a home does not sell.  The listing agent has to have the strength to have an honest conversation with the seller.  Either Staging, Curb Appeal, or a Price Adjustment needs to happen…or possibly all three.

Bali Mind Realty, LLC on 01/22/2015

Why is the rebate to the buyer, instead of buyer’s agent? Please, educate…

Steve Golson on 01/22/2015

How naive!  So, nobody is aware of Agents passing CASH to their clients after closing?  I’ve seen it happen in restaurants, in public, out in the open!  This discussion is all about rebating LEGALLY….like I said….HOW NAIVE!

Richard Woodward on 01/22/2015

My insight comes from years of working with a national real estate company that provided rebates to buyers.  I would definitely check with the buyers lender first but from our company attorney review, as long as the buyer received the rebate on the HUD and applied it towards closing cost and prepaid items, the rebate was acceptable to HUD, VA, USDA and both Fannie Mae and Fredie Mac.

Le Velazquez on 01/22/2015

I wonder if Richard’s input is as a loan officer or an under-writer. Besides, it is different from Lender to Lender and it also depends on what type of loan. One must check with Buyer’s Lender before committing or even so prior advertising the rebate, a listing agent does not know who Buyer’s Lender is until the listing is under contract, which occurs months later after posting the rebate.

Kathy MOORE Cloud on 01/22/2015

Cindi,  I’m glad that you mentioned the necessity of checking with the buyer’s lender.  And Richard, I appreciate your input as a lender so that we understand that it is “doable”.
HOWEVER, I have to go back to Cindi’s statement since we all have had such difficult closings due to lender requirements.  It seems prudent to verify with the specific buyer’s lender before writing up the offer, frankly.  We would want to handle according to the specific lender’s requirements while adhering to all the regulations we are bound to as licensees or via our “scope of authority” from the sponsoring Real Estate Broker’s policy and procedures.

Rick Chumsae on 01/22/2015

Richard and Cindi confirm what I have been thinking regarding cash rebates; that no cash back is allowed.  However, that is exactly what happens with Affinity companies. They contract with the buyer to send the buyer cash back after the closing.  Of course, that money comes from the buyer agency’s commission, reduced by a fee to the Affinity company, and then sent to the buyer.

I am not talking about mom-and-pop affinity companies either.  I’m talking about worldwide, major corporations doing this on a regular basis for buyers using conventional, FHA and VA lending.

So why or how is that kosher?

Richard Woodward on 01/22/2015

As a lender, we would not have a problem with this incentive Cindi Bulla.  As long as it is properly disclosed and recorded on the HUD as Realtor credit to closing cost, this would be just fine.  What wouldn’t be allowed is for the listing agent to provide more “cash back” than actual and customary closing cost.

Cindi Bulla on 01/21/2015

Better check with the Buyer’s lender first.  I would be concerned that cash paid to the Buyer by any party related directly or indirectly to the transaction, especially conditioned on the occurrence of that transaction, might constitute mortgage fraud.  As a broker, I wouldn’t permit my agents to make that offer.


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