How to Get A Homebuyer Rebate in Florida
Nov 18, 2020
Homebuyer rebates also known as home buyer commission refunds were pioneered more than 10 years ago. In the US, 40 states allows rebates from real estate brokers and about 15% of agents offer some form of a commission rebate at the time of closing.
When a buyer’s real estate agent offers a commission rebate or refund, this just means that the agent is willing to give their home buyer client a set portion of their earned commission fee (which is typically 2.5-3% of the final sale price in most states) at the time of closing.
Homebuyers can apply these rebates to their closing costs or in some cases, even take the rebate as a cash payment.
While this sounds like a great deal, most agents won't offer a commission rebate unless you specifically request it. In addition, some real estate brokers (who employ the agent) will not permit rebates unless they are negotiated up front, and many brokers do not permit them at all.
If you're interested in getting a commission refund when you buy your home, then the best way to do this is to find a buyer’s agent that works at an established brokerage that permits commission rebates such as SimpleShowing Real Estate.
SimpleShowing employs agents that contribute up to 50% of their commission ($5,000 on average) to homebuyers when they purchase any home in Florida. To get started, all you have to do is a book a showing of a home you'd like to tour, and then they will connect you with an agent in your area.
If you’re interested in trying your hand at negotiating a rebate on your own and want to work with a non-SimpleShowing agent, here are a few things you should consider.
What is a home buyer rebate?
A home buyer rebate, also known as a commission rebate, is given by a buyer’s agent to their clients when they help them buy a home. The buyer's agent will give the home buyer a portion of the commission they receive from the seller.
As a buyer, you can use this rebate to put towards your closing costs to offset the upfront expenses needed to purchase your home, and sometimes you can even take the rebate as cash at closing. It’s important to note that if you’re using a mortgage lender to finance your home, they have to approve how you use the rebate. Many lenders won’t let you take the rebate as cash at closing.
Commission rebates allow you to afford a more expensive home and save on the upfront costs for your next home.
In a seller’s market, a home buyer rebate is a powerful tool that savvy buyers can use to stand out from their competitors. If a home is listed at $400,000, a buyer that’s receiving a rebate could potentially offer more, depending on the amount of the rebate.
For homes that receive multiple offers, this could be the difference between your offer being accepted and months of searching for another home.
How do home buyer rebates work in Florida?
In a traditional real estate sale, the seller hires a listing agent and offers ~5-6% to their agent to sell the home. Their agent then offers about half of that to the buyer's agent.
If the buyer has hired an agent that offers a commission rebate, the agent will give them a portion of the commission offered by the seller's agent. This amount varies based on the agent you select, and can even vary based on how many homes you tour.
At SimpleShowing, our agents offer 1.5% back, or $5,000* on average.
Where are home buyer rebates legal?
Commission rebates are legal in 40 states, and the US Department of Justice supports making rebates legal in all 10 remaining states.
In fact, the Department of Justice actively investigates any organization that tries to regulate real estate commissions. The DOJ is also leading a broad effort to educate states about the benefits of competitive real estate commissions to legalize rebates in all 50 states.
Are commission rebates taxable in Florida?
If you’re wondering if a commission rebate is taxed as regular income, we have good news for you: they aren’t.
After much speculation among real estate brokers across the country, the IRS released confirmation on Nov. 30, 2006, that stated:
“In the present case, Taxpayer does not have an information reporting obligation under section 6041 of the Code because, as concluded above, a payment or credit at closing represents an adjustment to the purchase price of the home and generally is not includible in a purchaser’s gross income.”
In the eyes of the IRS, your rebate is part of the settlement from purchasing the home. Since it’s treated as one small part of a real estate transaction — instead of as an independent payment afterward — it’s not taxed as a source of income.
How much of a rebate will I receive in Florida?
Typically, home buyer rebates are negotiated on a one-to-one basis between you and your agent. Your ability to negotiate ultimately determines the rebate that you receive.
To receive a higher rebate, it’s smart to shop around and interview multiple agents to compare quotes until you find an agent that’s willing to give you a large rebate.
However, you don’t want to sacrifice on quality—and it’s hard to find a top agent who's willing to offer a rebate.
The process of searching for an agent that's great on both price and quality can take many hours of interviews and negotiations. And while it’s important to push for the best terms for yourself, remember that long and unpleasant negotiation isn’t the best way to start a relationship with your agent.
How can I get a home buyer rebate in Florida without negotiating?
Getting a commission rebate doesn’t have to be difficult. SimpleShowing has experienced, local real estate agents who have already agreed to offer a commission rebate of $5,000 on average. No negotiation is necessary.
Our local agents are experienced at helping buyers find the home of their dreams, making a competitive offer, and helping you through inspections, paperwork, negotiations, final walk through, and any unforeseen hiccups.
SimpleShowing agents sell 3x more homes than the average agent. While their peers might not normally offer such a large rebate to an individual client, our marketing team makes sure they are constantly busy and as a result of high volume, can afford to contribute a rebate to each homebuyer they work with.
If you’re thinking of buying a home, make sure you're working with a top-rated real estate agent from SimpleShowing.