Not sure what you are running into Mimi, but I offer military rebates (posted on AR) to all my military clients, monthly, the last 13 years, towards their closing costs, they are allowed by lenders and applied through escrow at close. Easy peasy, legal and doing it all day long.

I have no idea, as I don't do buyer rebates. I suppose you can do a buyer credit for closing costs from agent.

Unfortunatly, Florida does allow buyer rebates.  I wish they didn't allow it and I don't do it,  Many buyer agents advertise it.

First of all, a buyer rebate has to be disclosed to the parties in the transaction (buyer and seller),  I am not aware that it must be on the HUD.

• The rebate can be for services paid outside of closing...the appraisal, the home inspections, insurance etc. 
• Or the agent will reduce thier commission so seller can lower the price,
• Or the agent might be able to pay for the closing costs or points,
• Or they may buy the buyer a new refrigerator or appliance etc.
• Or they just cut the buyer a check at closing
• Or a hefty gift card after closing
• Or cold hard cash under the table

I wish rebates were illegle.

There was a builder that was advertising on their website that home buyers should ask their agent for a rebate or they have "agents" that the buyer can use who will rebate money....grrrr.

Eve

There would seem to be some 3rd party Enity involved ?

Mimi Foster I just do not do it! And I always wondered what are these loopholes - checking other responses.

Not sure if the laws had changed, but my understanding was that you could rebate to your PRINCIPAL.

Credits are pretty common.  You must have a very odd lender.

See if your title company can help with this questions, they may have encountered this situation before and may know how to handle it. 

Find out from the realtors answering here what wholesale lender their brokers ae using that allow what you want to do. Then ask that realtor's mtg broker to ask the account rep from the wholesale lender who the mtg brokers are near you. 

I remember Lenn Harley as a buyer's agent and continually marketing with a buyer rebate offered.... 

And all you want to do is something nice.  So frustrating.

I'm sure a dinner out, or afternoon at an amusement park, to celebrate the event, about a month or couple weeks after it closed would be nice.  If you can do stuff like that for your sphere of influence, that would work.  After all, they stop being your clients when the deal is done.  They aren't clients for life.

Crediting it to buyers closing costs. Some agents want to take it off the price of the house after a price is negotiated but as a listing agent I do like this practice..it devalues the house in a community and does not show the negotiated price before reducing by buyer rebate.

On the subject of money incentives, rest assured it gets to the person

Good question.  I always assumed it was applied to closing costs but don't know the answer.  

We discussed this sometime this week about Redfin. I think it has to be applied to closing costs.

I never knew about how it was done.

That's not good IMO - I know no lender that will allow this at all!

Can't wait to find out!

NH only allows $50, thats it. So there could be a couple of violations here?

Follow the requirements of your mortgage lender.

Mimi Foster I know what you are running into. Some lenders and some loans do not allow credits like that in escrow. In lieu of that credit you can gift the buyers with a VISA debit card for the gift amount.

dinner? 

You can buy them a nice closing gift or give them a gift car, but only $25.00 per person is tax deductible.

I don't do buyer rebates but USAA agents have been rebating for years and I think they get around it by giving a Home Depot gift card or reduction in costs on the clsoing statement. 

     Florida allows Buyer Rebates, but as you point out, it is subject to Lender Approval and disclosure on the CD.   I'm not so sure about RESPA, since the Broker is not getting a kickback from anybody.

     I could blow by this with "see an Attorney" or "I don't do rebates".  Let me say that if I need to or choose to give a rebate (it's not my normal business practice, but it happens), I can find a legal way.   Reduce the commission.  Pay for the repairs that the home inspector brought up.

    When I do give a rebate (again, rare, but it happens), I ask the Title Attorney (long time acquaintances) if I am in the clear.  It's always verbal; maybe I should start getting a written opinion from a lawyer to protect myself.

Park and reading on this one.

My impression is that this is a give back is "outside of closing" which means the agent is still paying taxes on it...and may ...Lord Knows I am not the tax expert...deducting the rebate as a business expense ?

I just gave a buer a credit due to medical emergency, etc, but I had to send a note to the lender and get underwriter approval. It was designated to be usde for closing costs assistance. I'm sure you can do something after the closing, but you might have to wait a while.

I have done what Nina is doing a couple of times. I'm surprised to hear about the closing cost credit. I have done several through my Heroes Home Advantage program

I have often wondered the same thing and I believe they mostly apply to cash transactions (no mortgage).

I won't have any part of it Mimi, it comes out of our commission right?

Mimi, While I have not done it a lot .... I have done a buyers credit toward closing costs deducted from my commission ... all reported/disclosed on the HUD.  The last time I did that was about 2.5 years ago. 

I give "gifts" to my client after the closing. I feel that is between me and my "friends" and none of anyones business.  

As a non realtor, of course I don't know.  But, why don't you call a couple of realtors that do this.  Maybe find one from Redfin and maybe another place.  probably a non local agent (so no perceived conflict) but maybe one in another part of colorado.  Maybe also ask some other lenders.  Maybe ask the ones in your are who their lenders are...or look them up. sometimes those preferred lenders are listed on their ZTR profile or on their website.

Clearly there must be a legal way as many are doing it and not having issues.  It could vary by state though (obviously).

"Lenders in my area will not allow a Buyer's agent to give the Buyer credit toward their closing costs"

Why not? Is that a Colorado thing? That's certainly not a RESPA violaton. It doesn't come up often, but I can certainly arrange that on a Closing Statement...

BTW, there is no such thing as a HUD anymore...

I've done it a few times for members of my Frequent Buyers' Club, and have had no issues whatsoever with any lender - you do have to be certain that the entire amount, your credit and any seller credit, do not go over the lender's limit for closing cost credits in general .  And it always goes onto the HUD.  The amount is subtractred from our brokerage fee and show up as a credit in the buyer's column.  

I have done it with Wells Fargo as the lender.  I just read the other answers, and perhaps your lenders are misunderstanding what you are trying to do, because the practice is pretty widespread around the country and certainly in this area.  Or is there some quirky law in Colorado?

I have no idea Mimi Foster 

They are illegal in Wisconsin

These are gray areas that we do  not involve ourselves with. I like my freedom.

I have not seen a problem when the rebates are disclosed.

Mimi Foster I always heard if it's not on the HUD statement, it's not legal.

Ditto Lyn Sims comment.

Closing costs?

It is done via a special C.A.R. form with a permission of your broker. 

 Redfin, for example , credits it back with a 1099 on all sales except Oregon and one or two states in East. Often factored in the price or coming out of realtors compensation. Agents needing work openly advertise 50% rebate. I see a bus with a huge size ad:" I gave back 50% and list for 1%". 

Check what the laws are in your state first with the DOJ and your real estate licensing authority.  https://www.justice.gov/atr/rebates

Your state may have its own rules on how it can be given and to who.

In New Jersey we could give buyers rebates as of 2009 they changed the law, 2010 they defined the rules how we can offer it and in NJ trying to advertise it makes it difficult, as if they want to prevent agencies from offering rebates to buyers the way they wrote the restrictive rules. First they passed a law making it legal to appease the DOJ then they make the advertising rules so messed up that nobody would want to because all the disclosures and they must be in type no smaller than the text in the ads headline or largest type.

It is true all parties must be informed of the rebate being offered, I'll do that while it's in attorney review to make sure the rebate offer doesn't compromise the buyers bargaining position after the offer has been negotiated and accepted. To me it's really none of the sellers business if I'm offering my buyer client a rebate or not but they do need to be informed.

Yes lenders can and do often deny the rebate for unknown reasons but I've been told because of the loan parameters that don't allow it. Some just don't know how to write it on the HUD now called the CD.

You must disclose in writing to the buyer that you are offering a rebate and how much it will be at the time you begin working with them, I do it in an exclusive buyer agency agreement for several reasons I wont get into here.

In NJ rebates can only be offered if the broker allows it and they can only be given to buyers of a primary residence and the buyer must be notified to consult with a tax professional about the consequences of receiving the rebate because they may have to pay taxes on that money.

Hope that helps.

do it the right way

My recommendation to you is to assign this research task to your summer intern, a market researcher or work from home mom.. Have the intern et al  enroll in the Redfin and any agents program offering rebates and get the contractual details.

IT is your choice whether to assume to know through the guesses of others are bite the bullet and do what you need to do to get the facts.

If you discover they are delivering the rebate 'off the books' are you gonna throw them under the bus?.