How A New Home Rebate Works?

Home rebates are undoubtedly one of the best opportunities to take advantage of when it comes to home buying. Home rebates are available in most states, including Colorado and 39 others, and more often than not carry a nice incentive. Home rebates have started becoming popular within the last decade. This has been the case for a few different reasons, mainly thanks to real estate agents having more clients in recent years, due to their ability to showcase properties on online websites. The modern format allows them to lower their commission rates and even share them with their clients (you!). Luckily for buyers, this is usually a pretty simple process, but today we’re going to explain how home rebates work, so that you may make better educated decisions when you purchase your dream home.

How Rebates Work

The best part is that even though this may sound confusing at first, we’re going to explain all of it to you in detail. After you find your preferred broker/agent and proceed by purchasing a home, the broker/agent will start discussing this incentive with you now that they’re able to hone in the sale price. 

In most cases, the commission altogether is 6%, which is split between both the selling and buying agent, leaving them with 3% each. This 3% that your agent is left with will then be split yet again, leaving you and the agent with an even 1.5% cut of the sale price of the house each. 

For example, if you purchase a home for $200,000, 6% of that sale price would be split and 3% given to both the buying and selling agent, leaving them each with 3% ($6,000). This 3% left to your agent will at this point, be split with you, leaving you a hefty $3,000 that could be used to invest back into the home (ie. carpet, maintenance) for various miscellaneous needs, or even put into the closing cost. 

Why Do Brokers/Agents Offer Rebates?

Home rebates have substantially grown in popularity in the last several years, especially after the housing market crash in 2008. Once the market started rising after the recession and buyers started reaching out to brokers/agents, the realization of much tougher competition would come into play then, which motivated brokers/agents to begin offering incentives to use their brokerage over others. 

This is especially the case now, because of popular websites such as Zillow that allow brokers/agents to have a much higher number of clients without spending as much on marketing. 

Part of this reason is due to the buyers using online websites to seek out properties themselves, instead of realtors paying for billboards or pricey commercials. This gives the broker/client the ability to lower their commission and the ability to split this with the buyer, due to the reduced cost of operation. A total win for all parties involved, to say the least.

Are Rebates Taxed?

When someone is lucky enough to win something like a million-dollar lottery for themselves, they’re often left with hundreds of thousands less than they won, due to taxes. This same concept is, however, rarely the case with home rebates, as paying the home rebate taxes is normally left up to the broker/agent. 

This is great news, but to confirm all this, you need to inquire about it to whichever broker/agent you have your eyes set on. Doing so should also remind you to inquire about any fees or other deductions, while you’re at it.

Helpful Advice

Finding A Broker/Agent

This is usually an easy process, as most are readily found online. This is the first step to taking advantage of a home rebate. Not all will offer what’s in your best interest in terms of highest refund, so do your research and make sure your cut is fair, while comparing it with other brokers/agents in your area. We offer many great benefits for home rebates, including fantastic incentives not offered by many other brokerages.

Reading The Fine Print

Be certain to read the fine print, as some brokers/agents may have something that could deduct from your cut, like fees or other deductions. This isn’t always the case, but you would appreciate finding out beforehand rather than at a time where switching brokers/agents would be a challenging situation, such as close to buying day. We are proud to say we do not take advantage of our clients, and are always happy to explain our fine print when requested.

Overview

Buying a home is not a daily practice, so not understanding exactly what a home rebate is, particularly if you are a first time property buyer, is much more common than you may think. Home rebates are essentially refunds, made by your real estate agent splitting their commission with you. 

This rate is usually 1.5% after the buying and selling agent has split the 6% between each other, leaving them each 3%. The amount you get rebated mainly depends on the sale price of the house, which we have covered in the article. Overall, make sure to do your research and do not settle on the first deal you see, so you can ensure that everything fits right with your individual situation and end goal. 

Changing your mind on brokers near the end of the home buying process can be a very challenging task, so ask and ask again before you settle. We are happy to assist you with any questions you may have; so feel free to contact us by using our contact form here.