What is a commission rebate and why should I care?
A commission rebate, sometimes called a buyer rebate, is essentially an act whereby a broker shares part of their commission with the buyer in exchange for the buyer saving the broker time. Where is there time to be saved these days? The Internet, of course. Now that there is online access to so much information, including MLS listings, self-directed buyers have an opportunity to take a much more active role in the search process. In fact, many of today's consumers much prefer to take on that active role, reducing the value added by the traditional full service real estate agent of yesterday. Many of today's progressive brokers recognize that they shouldn't earn the same as years past for doing less in today's environment, so they provide commission rebates of some sort.
And while some people tell buyers not to worry about commissions because "the seller pays" for them, all seller's consider what they will net after commissions when evaluating offers. Consequently, buyers pay for commissions by way of a higher sales price, and buyer's would be wise to discuss commissions with prospective brokers earlier rather than later.
| rebate calculator |
| Use this calculator to find out how much you can save when the buyer's broker offers a rebate. |
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| *The Buyer Broker Commission Percentage can be found in the official listing of a property. It is often around half of the total commission that a seller agrees to pay, but is always negotiated with local custom and conditions in mind. The pre-filled 2.8% is the most common percentage used in the State of Colorado. |
I can save thousands of dollars! This sounds too good to be true. Are commission rebates legal?
The United States Department of Justice puts it best:
| "In most states brokers compete on price for consumers' business. However, ten states have enacted laws that forbid brokers from offering refunds, denying consumers the benefits of price competition and driving prices higher than they would be in a more competitive market." |
Click here to see a list of states where commission rebates are legal, and find out what the Department of Justice is doing in the states that ban them. |
