Are Buyer Commission Rebates Legal In The United States?

Are Buyer Commission Rebates Legal In The United States?

Many people wonder if buyer commission rebates are actually legal. This kind of rebate is paid to the buyer from the agent’s commission for the property sale. This can be a great way to attract more business, but some people have concerns about the legality of this business practice.

We will discuss the legality of buyer commission rebates in this guide. Becoming more familiar with this practice can be helpful for those looking to buy homes in today’s market. It should be noted that we are not legal professionals, and this article should not be used as a source of financial advice.

How Much is a Buyer Rebate?

When these rebates are offered related to home sales, they are usually between 1% and 2.25% of the total purchase process of the home that someone is buying. The actual amount will depend on various factors, such as the amount of money spent on the home, but the commission rates involved in the sale also come into play.

These buyers’ rates are also often negotiable, which means that you might be able to get the rebate that you want just by negotiating during the sale. There are agents who offer these incentives frequently, and they will be familiar with the process of providing them and negotiating for a number that everyone involved in the sale is comfortable with.

Are Buyer Commission Rebates Legal?

This is the real crux of the matter for home buyers. It can be attractive to see this offer associated with a home sale or an agent, but you might be worried about jumping in if you think that the practice is not legal. This kind of offer is not legal in all states, but thankfully, most states allow buyer rebates, and in fact, the justice department has gone so far as to encourage them, arguing, “Rebates can be powerful tools for price competition among brokers. Rebates are permitted in most states, and brokers in these states may freely advertise their willingness to offer rebates that save consumers hundreds and often thousands of dollars per transaction.” The real estate market as a whole likes to utilize this buyer perk, but states like Alabama, Louisiana, and Missouri have unfortunately made these rebates illegal.

If you are not sure if a buyer commission rebate is legal in your state, you might need to look at online references and speak with a legal professional to verify that this rebate can be offered to you. It is always better to be cautious about accepting or negotiating for this kind of rebate unless you are certain that the rebate can be legally offered in your home sale.

What Are the Benefits of Buyer Commission Rebates?

There are many benefits that are associated with offering these kinds of rebates. The most important is that it can help entice buyers who do not have agents working with them. This means that there is one less commission that has to be paid out on the sale, and that means the realtor selling the home makes more money when the deal closes.

Rebates can also sometimes help to align buyers with agents who have the same goals in mind. Motivated sellers and motivated buyers tend to come together in these kinds of deals with great ease. Being able to attract customers who are ready to buy right away is really the goal of all real estate professionals, and a rebate like this can be very attractive to those shopping for homes.

What Can You Use Buyer Commission Rebates For?

These rebates can help to cover closing costs and moving costs, and they might also help with expenses like furniture purchases or surprise costs associated with the purchase of the home. There are drawbacks to this kind of rebate, but these benefits can often outweigh the negatives for those who are looking to buy a home right away.

No matter how attractive the use of these funds can be related to a home purchase, you have to be absolutely certain that the practice is legal in the state that you are buying a home. There are various legal penalties and other kinds of problems that can arise with your home purchase just by accepting a rebate that is not legal. Making sure that you are not assuming that the seller of the home knows what they are doing can help to protect you from being taken in by someone offering these kinds of rebates illegally.


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