Author Topic: Realtor rebate for new house  (Read 1806 times)

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Offline ri

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Realtor rebate for new house
« on: February 15, 2021, 11:51:41 AM »
What's the difference between resale and new house when it comes to realtor rebate?

If the same relator represents the buyer for a resale there won't be a rebate, however for a new house the expectation is to have one?

What's the reasoning for that?

Offline Dr. CA Real Estate

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Re: Realtor rebate for new house
« Reply #1 on: February 15, 2021, 12:00:53 PM »
Some realtors won't do rebates on a resale because its more they can be more time consuming. Others, such as myself and Ive seen Martin say he does, will do rebates on resale. Often realtors will do bigger rebates for new builds since its less work.
Kris Mendoza
Platinum Realty
CA BRE License # 02085321
ariesmail1@yahoo.com
310-227-1434 cell

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Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #2 on: February 15, 2021, 12:02:42 PM »
What's the difference between resale and new house when it comes to realtor rebate?

If the same relator represents the buyer for a resale there won't be a rebate, however for a new house the expectation is to have one?

What's the reasoning for that?

Not sure what realtor/s you are talking to you, but I provide rebates for both resale and new home purchases so there's no reason for a realtor that is willing to provide you a rebate for a new home transaction to not provide you one for a resale home transaction.  My new home purchase rate is a higher % which there is less work involved compared to a resale purchase transaction.  The rebate structure that I have is sort of a work/effect model...the less work that I do the higher your rebate.  The rebates that I provide for resale transactions are a credit towards closing through escrow while my rebates for new home transactions are made via a check right after the close of escrow as the builders don't allow me to credit the buyers any of the commission through escrow for the buyer closing costs.  This rebate outside of escrow IS NOT TAXABLE to the buyer and I don't issue any 1099 to the buyer because it is not considered earned income to the buyer, it's a reduction of the cost basis to the home. Let me know if you have any other questions.
Martin Mania, CPA
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CA CPA License # 107675
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Offline irvinehomeowner

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Re: Realtor rebate for new house
« Reply #3 on: February 15, 2021, 12:26:28 PM »
#maxrebate
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
member: Soylent Green Is People (loans/refis)

Offline Dr. CA Real Estate

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Re: Realtor rebate for new house
« Reply #4 on: February 15, 2021, 12:42:36 PM »
#maxrebate

Beyond maxrebate, they pay you to be your realtor for 'exposure'.
Kris Mendoza
Platinum Realty
CA BRE License # 02085321
ariesmail1@yahoo.com
310-227-1434 cell

Offline Cares

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Re: Realtor rebate for new house
« Reply #5 on: February 15, 2021, 04:43:13 PM »
Yep for new homes, the realtor basically just has to walk in the door with you on the first visit to get the commission. So for my clients on new homes I will gift a much larger rebate. Similarly to USC, I will rebate a little bit but much less on resale homes since there is much more time invested and paperwork required for these sales.

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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #6 on: February 15, 2021, 06:52:45 PM »
I'm assuming all these "rebates" will be discussed beforehand and not during contract right? Reason I'm asking is because I bought a new home instead of resale and I feel I did more work on it than the RE. I feel like its already too late and will be a slap across the face if I bring it up now.

Offline Dr. CA Real Estate

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Re: Realtor rebate for new house
« Reply #7 on: February 15, 2021, 07:28:54 PM »
I'm assuming all these "rebates" will be discussed beforehand and not during contract right? Reason I'm asking is because I bought a new home instead of resale and I feel I did more work on it than the RE. I feel like its already too late and will be a slap across the face if I bring it up now.

Generally yes. I always bring it up before a client does. Some clients just a verbal agreement is enough others like me to write a little formal email.

We are talking thousands of dollars here so it is well worth it for you to bring it up with whoever you used. If they are smart and looking long term they will take care of you for return business. Better late than never.
Kris Mendoza
Platinum Realty
CA BRE License # 02085321
ariesmail1@yahoo.com
310-227-1434 cell

Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #8 on: February 15, 2021, 07:45:54 PM »
I'm assuming all these "rebates" will be discussed beforehand and not during contract right? Reason I'm asking is because I bought a new home instead of resale and I feel I did more work on it than the RE. I feel like its already too late and will be a slap across the face if I bring it up now.

Generally yes. I always bring it up before a client does. Some clients just a verbal agreement is enough others like me to write a little formal email.

We are talking thousands of dollars here so it is well worth it for you to bring it up with whoever you used. If they are smart and looking long term they will take care of you for return business. Better late than never.

Buyers should definitely agree upon the new home rebate before signing a contract to purchase and even before going out with your agent to register.  Probably best to get something in writing so there‚Äôs no misunderstanding at the 11th hour. 
Martin Mania, CPA
AgencyOne
CA BRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

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Offline eyephone

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Re: Realtor rebate for new house
« Reply #9 on: February 15, 2021, 08:59:57 PM »
Yep for new homes, the realtor basically just has to walk in the door with you on the first visit to get the commission. So for my clients on new homes I will gift a much larger rebate. Similarly to USC, I will rebate a little bit but much less on resale homes since there is much more time invested and paperwork required for these sales.

Give Cares a try. He is very active on TI and seems very knowledgeable about RE, stocks, crypto.

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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #10 on: February 15, 2021, 09:01:20 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

Offline Dr. CA Real Estate

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Re: Realtor rebate for new house
« Reply #11 on: February 15, 2021, 10:29:50 PM »
Its not taxable income and there are as you mentioned different forms it can take. Depending on if its a resale or new build some options are not available. A lot of the builder reps are incompetent and depending on the builder, the management has different orders on the topic, with typically the only option being a after close check.
Kris Mendoza
Platinum Realty
CA BRE License # 02085321
ariesmail1@yahoo.com
310-227-1434 cell

Offline USCTrojanCPA

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Re: Realtor rebate for new house
« Reply #12 on: February 15, 2021, 10:50:59 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

There was a tax letter ruling stating that rebates to buyers, whether they are through escrow or outside of escrow, are not taxble to the buyer.  It's a reduction of cost basis in the home (aka when you sell the home the gain on sale is larger by the rebate amount).  I don't understand why so many agents and/or brokers try to 1099 buyers for the rebate amount so the tax letter ruling was very clear that no 1099 should be issued to the buyer.
Martin Mania, CPA
AgencyOne
CA BRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!

Offline Dr. CA Real Estate

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Re: Realtor rebate for new house
« Reply #13 on: February 15, 2021, 11:41:44 PM »
SMH If there's one thing I dislike its unnecessary paperwork. If anyone reading receives a 1099 from a realtor on their commission rebate you'll have to have the realtor send you a corrected 1099-MISC, failing that you'll have to file by paper not including the amount along with a statement why. Ive read of this happening, luckily I don't know of any actual cases of this.
Kris Mendoza
Platinum Realty
CA BRE License # 02085321
ariesmail1@yahoo.com
310-227-1434 cell

Offline Cares

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Re: Realtor rebate for new house
« Reply #14 on: February 16, 2021, 12:07:35 PM »
is buyer rebates taxable income? If so, is there a way for us to request it to be not taxable (i.e deduct amount from price of home, cover closing costs, etc)?

I have tried multiple times but no new home builder is willing to do a purchase price reduction via broker credit so it all has to be done outside of escrow. With that said this amount is not taxable, especially if your agent does not issue you a 1099-NEC. If your agent does happen to issue you one though, it is a full write off.

 

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