Rebates to Buyers or Sellers
Sep 21st, 2007 by abr
Diclosure and Approval
Greg Dunn covers the Georgia Real Estate Commission’s Rules & Regulations on an agent giving part or all of their commission back to the buyer or seller.
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“Rebates are typically cash payments from the real estate broker to his or her client after closing.”
http://www.usdoj.gov/atr/public/real_estate/rebates.htm
It’s very confusioning. Lenders don’t want that. Who’s right? USDOJ? or Lenders?
Do refunds and incentives pose any risk to consumers?
Some have argued that refunds and incentives can tempt consumers into closing on real estate transactions against their best interests. The Antitrust Division has found no evidence that refunds and incentives harm consumers. On the contrary, they can dramatically lower the price that consumers pay for brokerage services.
http://www.usdoj.gov/atr/public/real_estate/rebates.htm
Since DOJ says that rebates aren’t inducements that would harm the lender’s position (inducing a buyer), can a lender legally object to a broker rebate to the buyer? To do so might be construed as “tortuous interference”. Just my thoughts…
Remember all loans have, by law, a maximum that the seller can contribute. This gift of commission can be an attempt to avoid this law. The seller gives money to the agent (commission) who then gives money to the buyer. This makes the lender concerned about the agents gift to the buyer. If there is no attempt to circumvent the law it is not a problem.
What is the law? There are 10 opinions and no straight answers. Aren’t seller concessions considered “sourced funds” for the closing? Does a post-settlement rebate fall in the same category?
From the Maryland RE Commission: http://www.gcaar.com/legalcorner/docs/rebates_closing_costs.pdf
That is a pretty clear and concise interpretation for their State.
Lastly, in all of the DOJ’s writings on this issue, they never mention the lender. Why?
There needs to be clear protocol for buyers, agents and lenders alike.
Thanks For Your Feedback!
the DOJ say rebates are typically cash payments after closing.
Ponder this: if lender approval is required, then there is absolutely no way that cash payments after closing would be “typical”. Lenders object to this tooth & nail.
Maybe rebates are looked upon by the DOJ in a different manner????
Fannie Mae guidelines state that there is to be no cash back to the buyer. Yet, the DOJ says “rebates are typically cash payments from the broker to his/her client after closing”.
What’s going on here?
Hello!
I have some questions about the “cash back” incentives; also, what can you legally say if you want to help the buyer pay down their mortgage, etc. It would be on the same lines as CENTEX that works with ERA, C21, Navy Federal Credit Union, etc. How and where could you stipulate that and be within the realms of the License Law & Rules and Regulations.
Next question…how to legally help a seller sell their home; but not represent them. Any place I can find more information on this? I would charge a flat fee and let the Seller take their own pictures and give me a write up to put on the GAMLS; I would provide them with a lockbox, sign (what could be put on the sign?), 2 local websites that are high ranking on Yahoo! & Google, and access to print their own fliers.
Any comments, suggestions, experiences, training, etc; would be greatly appreciated. Please let me know ASAP; I appreciate your time and efforts in this matter.
Thanks for your feedback.