Rebate on New home purchases - Discuss

[eyephone]

The agent I fired registered me two months ago, can I register again with a new agent?

I wonder how the conversation went. Did it go like this? I like you a lot and your a nice person, BUT your not the agent for me. Your fired!
(joking around)

 

[AW]

The agent I fired registered me two months ago, can I register again with a new agent?

I wonder how the conversation went. Did it go like this? I like you a lot and your a nice person, BUT your not the agent for me. Your fired!
(joking around)

Lol.
Or went something like .....yadda yadda yadda.... 1099....

 

[eyephone]

The agent I fired registered me two months ago, can I register again with a new agent?

I wonder how the conversation went. Did it go like this? I like you a lot and your a nice person, BUT your not the agent for me. Your fired!
(joking around)

Lol.
Or went something like .....yadda yadda yadda.... 1099....

Like this:
OP: (I need to call my agent to ask about the 1099 situation before we start the process)
OP: So are you going to give me a 1099 at the end of the year for the rebate you give me?
Agent: Yes
OP: Your not the agent for me. Ends the call

Lol

#whoknows

Waiting for the op to respond.

 

[usctrojancpa]

Hahaha  Too funny guy.  But seriously, if any agent trying to 1099 for a rebate that they gave or will give you....JUST SAY NO!

 

[Borg5000]

Please explain:
https://www.justice.gov/atr/competition-real-estate-questions-and-answers

May a real estate agent rebate a portion of the agent's commission to the borrower? If so, how should the rebate be listed on the HUD-1?

According to HUD, yes, real estate agents may rebate a portion of the agent's commission to the borrower in a real estate transaction. The rebate must be listed as a credit on page 1 of the HUD-1 in Lines 204-209 and the name of the party giving the credit must be identified. Real estate agent or broker commission rebates to borrowers do not violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business.

 

[usctrojancpa]

Please explain:
https://www.justice.gov/atr/competition-real-estate-questions-and-answers

May a real estate agent rebate a portion of the agent's commission to the borrower? If so, how should the rebate be listed on the HUD-1?

According to HUD, yes, real estate agents may rebate a portion of the agent's commission to the borrower in a real estate transaction. The rebate must be listed as a credit on page 1 of the HUD-1 in Lines 204-209 and the name of the party giving the credit must be identified. Real estate agent or broker commission rebates to borrowers do not violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business.

So what am I supposed to do if the builder doesn't allow me to credit the rebate through escrow?  Ok and who will turn me or my client in if I choose to give a rebate to my client outside of escrow? 

 

[sgip]

I think the Redfin model assumes that the so named "Redfin Refund" is not a rebate of commissions, but a refund for work performed (and so earned...) by the buyer of the property. Their post closing refund is not listed on any HUD I've ever seen. This is a completely grey area, as if obscured intentionally by HUD and the various Real Estate oversight boards. The practice needs to be clarified to keep everyone on a consistent page.

That said, traditional agents are loath to share commissions with buyers which is why they are beginning to age themselves out of the industry, replaced by more flexible, consumer oriented RE models.

My .02c

 

[usctrojancpa]

I think the Redfin model assumes that the so named "Redfin Refund" is not a rebate of commissions, but a refund for work performed (and so earned...) by the buyer of the property. Their post closing refund is not listed on any HUD I've ever seen. This is a completely grey area, as if obscured intentionally by HUD and the various Real Estate oversight boards. The practice needs to be clarified to keep everyone on a consistent page.

That said, traditional agents are loath to share commissions with buyers which is why they are beginning to age themselves out of the industry, replaced by more flexible, consumer oriented RE models.

My .02c

The traditional commission model is flawed and very long in the tooth.  Unfortunately more agents are sheople and just follow what they have learned from their team leader or broker.  Realtors and innovative aren't two words that people will use in the same sentence.  I guess I've been the rogue agent for over 10 years that chooses not to follow the same old protocol, times change and you have to keep up.

 

[Borg5000]

We worked with Redfin.  They said they can't do rebate when builder prohibits it.  I don' think they provide their rebate after closing as they disclose the rebate to lender and clearly state that it is subject to lender approval.

I like to know my risks going into anything.  I am not mad at my agent for paying my company and me having to deal with the taxes.  If an agent says no problem and doesn't explain the risks, that is more concerning. 

You and your buyer might not tell anyone but IRS can audit you and see the rebates as expenses.  Isn't it possible they say its not an allowed expense as it was done outside of escrow and then will you go back to buyer and ask for some money back or just realize you are paying taxes on money you no longer have? 

I don't think 1099 to buyer is right either but entire thing is broken and I dont blame agents for not wanting to take that risk. 

 

[usctrojancpa]

We worked with Redfin.  They said they can't do rebate when builder prohibits it.  I don' think they provide their rebate after closing as they disclose the rebate to lender and clearly state that it is subject to lender approval.

I like to know my risks going into anything.  I am not mad at my agent for paying my company and me having to deal with the taxes.  If an agent says no problem and doesn't explain the risks, that is more concerning. 

You and your buyer might not tell anyone but IRS can audit you and see the rebates as expenses.  Isn't it possible they say its not an allowed expense as it was done outside of escrow and then will you go back to buyer and ask for some money back or just realize you are paying taxes on money you no longer have? 

I don't think 1099 to buyer is right either but entire thing is broken and I dont blame agents for not wanting to take that risk. 

I don't understand what the difference is giving you the money on a pre-tax basis after closing and post-tax after closing in terms of your position, in both circumstances they violate RESPA rules about money going from an agent to the buyer outside of escrow without the knowledge of the lender.  The IRS has audited me and has reaffirmed that my rebates do in fact reduce my gross commission from my 1099 (the check has to have the same name as the closing statement)...I basically provide the IRS agent this inf...
http://www.nsbar.org/content/compensation-to-buyerseller
https://ttlc.intuit.com/questions/2...-i-required-to-issue-a-1099-form-to-the-buyer
http://www.prnewswire.com/news-rele...ssion-refunds-as-taxable-income-51646237.html

Your agent was lazy and didn't take a little time to do some research on the matter, simple as that.  There are no risks to the buyer as the tax position is fairly clear that agents can rebate their clients commission without having to issue them a 1099.

 

[Borg5000]

Ordering services from my company is not a violation of RESPA.  My company provided the services he requested and was paid accordingly.  I happened to use him to buy my house.  I did not receive a rebate from him. 

 

[usctrojancpa]

Ordering services from my company is not a violation of RESPA.  My company provided the services he requested and was paid accordingly.  I happened to use him to buy my house.  I did not receive a rebate from him. 

I see what you did there.  haha  I hope that I've provided you and the rest of the folks on the forum with the knowledge that their agents should not 1099 them for rebates made outside of escrow. 

 

[Borg5000]

You are very knowledgable and I can see why clients like working with you.  I also can see how confusing this issue is and why other agents are nervous.

 

[usctrojancpa]

You are very knowledgable and I can see why clients like working with you.  I also can see how confusing this issue is and why other agents are nervous.

Thank you for the compliment, I represent my clients the same way that I would represent myself on a transaction and that seems to work very well.    The matter is definitely not straight forward and does take some effort to try to understand and unfortunately most realtors will not do the legwork needed to understand and make an informed decision and then try to 1099 either client due to their lack of knowledge and willingness to do some research.  Realtors should become more of consultants to their clients than just used car salesmen looking to book some commission dollars. 

 

[upon9k]

Thank you for the compliment, I represent my clients the same way that I would represent myself on a transaction and that seems to work very well.    The matter is definitely not straight forward and does take some effort to try to understand and unfortunately most realtors will not do the legwork needed to understand and make an informed decision and then try to 1099 either client due to their lack of knowledge and willingness to do some research.  Realtors should become more of consultants to their clients than just used car salesmen looking to book some commission dollars.

That last sentence is the real life truth about Martin.  When we were looking at new constructions and one sales office was pushing us to take a less desirable lot without the conservatory option, he actually said to stand firm and wait for the better lot.  Keep in mind he was pushing his commission payout almost another 6 months out, but he said couldn't advise us being hasty and paying a higher $/sq ft just to close earlier. 

 

[potsticker]

I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

 

[usctrojancpa]

I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

Yeah it's crazy, some agents make you feel like they are doing you a favor and asking for a rebate is insulting to them because they consider themselves as "full-service" agents.  The majority are uneducated, pompous, arrogant, huge attitudes, pushy, and/or know-it all's.  You don't understand how refreshing it is to work with a good agent (speaking for myself on the other side of a transaction), makes the transaction so pleasant and easy.  If they only made it as difficult to get a real estate license as they do a CPA license (college education requirement/s, work under a broker/experience agent for 1-2 years, make the exam lengthier and more difficult with a lower passing rate), that would weed out a lot of the dead weight out quickly but alas the NAR and state realtor associations love collecting their realtor dues.  *SIGH*

 

[eyephone]

I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

So do you offer a max rebate?  ;D

 

[potsticker]

I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

So do you offer a max rebate?  ;D

You better believe it. MAX!

 

[eyephone]

I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

So do you offer a max rebate?  ;D

You better believe it. MAX!

Do you give a 1099 after you give the rebate?