qwerty said:It is not income, it is an adjustment to the purchase price of the home, see here:
http://www.redfin.com/about/press/releases/pr-irs-ruling
gld2 said:Thank you. Does the agent need to report the income with full commission or the real income ( commission minus rebates) in the tax return?
Thank you.
qwerty said:It is not income, it is an adjustment to the purchase price of the home, see here:
http://www.redfin.com/about/press/releases/pr-irs-ruling
sgip said:I've seen $$$ left on the table unspent because the closing costs did not equal the rebate.
sgip said:Most of the situations where the credit is unused will cause a mad scramble at the zero hour trying to find ways to spend the credit for costs not originally considered. Some escrows don't know that Realtor credits can be used for pre-paids. When they draw up the closing statement and list only hard costs (escrow, appraisal, points) they don't include things like insurance or interest. Sometimes we can re-do closing instructions in time to include pre-paid costs. We've had loan documents in escrow with a credit that shows up at the zero hour, laying there like a dead body, then everyone tries to piece it out hither and yon. When that happens the lender has to re-approve the deal (24-48 hours), re-draw documents (24 hrs), and re-gather everyone around the closing table which can be a miracle unto itself.
The highest credit left over I've seen was about $2,000. The buyer could not improve their rate because of a lock expiration issue and could not pay for anything else. He simply had to watch the credit evaporate. Piss poor planning on everyones part I'd have to say.
sgip said:The buyer could not improve their rate because of a lock expiration issue and could not pay for anything else.
Either buydown your interest rate or have the seller reduce the sales price.gld2 said:I got around $15,000 rebate from seller and agent. The loan cost with no points will be $1500, escrow $1500-2000. Is there any way to spend that money?
For the most part yes, however if the owner is putting down a large down payment (like over 40%) I don't see there being an issue unless the lender raised the red flag. I'll rely on SPIG to confirm that though. Whenever I make my commission rebate contributions to my buyers, I typically have this kind of language...."Buyer's agent to contribute $xxxx from buyer's agent commission to buyer's escrow for recurring and non-recurring closing costs." Most lenders will allow a buyer's agent to make this contribution directly to their buyer (seller and listing agent don't need to be made aware of it either which is good because listing agents will throw a fit about it and lecture me on why I shouldn't do it...screw them!), but for the lenders that don't allow me to do it directly then I have to go through the seller where they reduce my commission and credit my buyer the same amount that they reduced my commission so their net proceeds remains the same. Clear as mud?annabanana said:Does this mean that if the agent chooses to share the commission, that those funds can only be applied towards closing costs? It cannot be applied towards the down payment portion?
Nope, it's more the exception than it is the rule. Remember that many agents work for large national brokerages (Coldwell, ReMax, etc) and they have to give up 20-40% of their commission to the broker (it should be back to the buyer, but that's another story) which makes it very difficult to give anything back to their buyers. I work for a smaller broker where I get to keep 100% of my commission so I cut out the middle man looking for their cut and pass the savings along to my buyers. So what I'm trying to say is that agents that are their own brokers or work for small brokers like mine are going to be the ones to provide commission rebates to their buyers.edhne said:are rebates by agents the norm in today's market place?