Rebates

[the.irvine]

I know some realtors offer rebates. Lets say if rebate amount exceed closing costs, how does escrow handle that?

 

[Mety]

I know some realtors offer rebates. Lets say if rebate amount exceed closing costs, how does escrow handle that?

Exceeding closing costs? Man, that's some MAX rebate, we're talking about.
The escrow company will apply all those amount to the closing costs and if there is any remaining balance, they will write you a check. I haven't had this kinda experience though, so I could be wrong.

 

[usctrojancpa]

The lender will only allow a buyer to get a agent rebate and/or seller credit of up to actual closing costs.  The lender will not allow the escrow to rebate any excess agent rebate to the buyer.  Any excess agent rebate will need to be rebated outside of escrow. If the buyer is paying cash, then the all of the rebate/credit will be applied to the buyer's escrow even if it exceeds the buyer's closing costs.

 

[woodburyowner]

Can't you just negotiate a lower sales price to account for the rebate? 

 

[usctrojancpa]

Can't you just negotiate a lower sales price to account for the rebate? 

Only if the seller agrees to it and I'll tell you that not all listing agents are keen to do that as I'm sure the request doesn't even make it to the seller (I've experienced that a handful of times, including when I was buying my home).

 

[the.irvine]

Lets say.

Price: 1,000,000
DP: 20% or 200,000
Loan: 800,000
CC: 10,000
Agent writes to escrow and says, to cover CC and rest rebate to buyer: 15,000
///// Question: How Escrow will handle $5,000?

 

[usctrojancpa]

Lets say.

Price: 1,000,000
DP: 20% or 200,000
Loan: 800,000
CC: 10,000
Agent writes to escrow and says, to cover CC and rest rebate to buyer: 15,000
///// Question: How Escrow will handle $5,000?

Lender will only allow escrow to credit the buyer $10,000 towards closing costs and the remaining $5,000 of the excess rebate needs to be rebated outside of escrow if the seller does not agree to lower the price by $5,000. 

 

[usctrojancpa]

Don?t know if this is helpful, but Redfin gives an option to apply their refund to the closing cost and if there?s still a refund sum leftover, it?s issued as a check after closing, (once Redfin receives their proceeds).

Redfin rebates are currently only around 20% of the buyer's agent commission (0.50% of the purchase price if the buyer's agent commission is 2.5%) which will not close the buyer's closing costs (they tend to be around 1% of the purchase price).