Author Topic: Realtor rebate for new house  (Read 1815 times)

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Online Dr. CA Real Estate

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Re: Realtor rebate for new house
« Reply #30 on: February 16, 2021, 08:13:06 PM »
Its a simple if they won't budge and give you a 1099. Your tax person will tell you.
Kris Mendoza
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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #31 on: February 17, 2021, 12:28:22 PM »
So I talked to the agent today and she is giving 10% of the 3% commission she will receive. Its a little above 2k. Her argument is she doesn't get the full 3% as coldwell banker takes a cut of it. She also mentioned that she can only do it via 1099 after consulting with her CPA. So I asked if I can get something in writing to describe what the purpose of the 1099 is and how much will be rebated. Should I bother to negotiate more than the 2k? I feel like this is quite low as its not even 1% of the sale price. I'm doing new construction FYI.

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Re: Realtor rebate for new house
« Reply #32 on: February 17, 2021, 01:45:10 PM »
So I talked to the agent today and she is giving 10% of the 3% commission she will receive. Its a little above 2k. Her argument is she doesn't get the full 3% as coldwell banker takes a cut of it. She also mentioned that she can only do it via 1099 after consulting with her CPA. So I asked if I can get something in writing to describe what the purpose of the 1099 is and how much will be rebated. Should I bother to negotiate more than the 2k? I feel like this is quite low as its not even 1% of the sale price. I'm doing new construction FYI.

Are you kidding me, 10% of a 3% commission?  I give way more than that for my resale buyers.  What a complete joke.  Her split with Coldwell banker is probably 10-20% (depending on her production level).  This is why I work for a broker where I keep all my commission, that's what allows me to do my rebates because my broker isn't in my pocket and I'm giving the money to my clients and not my broker.
Martin Mania, CPA
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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #33 on: February 17, 2021, 01:49:59 PM »
So I talked to the agent today and she is giving 10% of the 3% commission she will receive. Its a little above 2k. Her argument is she doesn't get the full 3% as coldwell banker takes a cut of it. She also mentioned that she can only do it via 1099 after consulting with her CPA. So I asked if I can get something in writing to describe what the purpose of the 1099 is and how much will be rebated. Should I bother to negotiate more than the 2k? I feel like this is quite low as its not even 1% of the sale price. I'm doing new construction FYI.

Are you kidding me, 10% of a 3% commission?  I give way more than that for my resale buyers.  What a complete joke.  Her split with Coldwell banker is probably 10-20% (depending on her production level).  This is why I work for a broker where I keep all my commission, that's what allows me to do my rebates because my broker isn't in my pocket and I'm giving the money to my clients and not my broker.
I was thinking I could at least get 1.5% out of the 3% since I found the property and did most of the legwork. That would total up to ~11k. And since she is going to do 1099, I do not want to go through all that trouble for only 2k of income. My plan is to push her to give 10k. I'm fine with not getting anything if worse comes to worse since I don't want to go through all that trouble for 2021 tax for the sake of 2k. What do you guys think would be reasonable? Is asking for 10k a bit too much?

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Re: Realtor rebate for new house
« Reply #34 on: February 17, 2021, 02:03:11 PM »
So I talked to the agent today and she is giving 10% of the 3% commission she will receive. Its a little above 2k. Her argument is she doesn't get the full 3% as coldwell banker takes a cut of it. She also mentioned that she can only do it via 1099 after consulting with her CPA. So I asked if I can get something in writing to describe what the purpose of the 1099 is and how much will be rebated. Should I bother to negotiate more than the 2k? I feel like this is quite low as its not even 1% of the sale price. I'm doing new construction FYI.

Are you kidding me, 10% of a 3% commission?  I give way more than that for my resale buyers.  What a complete joke.  Her split with Coldwell banker is probably 10-20% (depending on her production level).  This is why I work for a broker where I keep all my commission, that's what allows me to do my rebates because my broker isn't in my pocket and I'm giving the money to my clients and not my broker.
I was thinking I could at least get 1.5% out of the 3% since I found the property and did most of the legwork. That would total up to ~11k. And since she is going to do 1099, I do not want to go through all that trouble for only 2k of income. My plan is to push her to give 10k. I'm fine with not getting anything if worse comes to worse since I don't want to go through all that trouble for 2021 tax for the sake of 2k. What do you guys think would be reasonable? Is asking for 10k a bit too much?

Start with 40-50% of the commission amount and go from there.
Martin Mania, CPA
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CA CPA License # 107675
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Offline Cares

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Re: Realtor rebate for new house
« Reply #35 on: February 17, 2021, 02:27:00 PM »
Sorry that you found a bad egg. Maybe threaten that you will be cancelling the transaction. Either way your agent is being way beyond greedy. The amount of work they have to do is less than 2 hours including showings.

Full transparency, if the buyer did most of the leg work I would give 50% back. I have an out of state buyer that I'm visiting all these properties and video touring them I'll give less.

Offline JadedOne

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Re: Realtor rebate for new house
« Reply #36 on: February 17, 2021, 04:12:04 PM »
So I talked to the agent today and she is giving 10% of the 3% commission she will receive. Its a little above 2k. Her argument is she doesn't get the full 3% as coldwell banker takes a cut of it. She also mentioned that she can only do it via 1099 after consulting with her CPA. So I asked if I can get something in writing to describe what the purpose of the 1099 is and how much will be rebated. Should I bother to negotiate more than the 2k? I feel like this is quite low as its not even 1% of the sale price. I'm doing new construction FYI.

Are you kidding me, 10% of a 3% commission?  I give way more than that for my resale buyers.  What a complete joke.  Her split with Coldwell banker is probably 10-20% (depending on her production level).  This is why I work for a broker where I keep all my commission, that's what allows me to do my rebates because my broker isn't in my pocket and I'm giving the money to my clients and not my broker.
I was thinking I could at least get 1.5% out of the 3% since I found the property and did most of the legwork. That would total up to ~11k. And since she is going to do 1099, I do not want to go through all that trouble for only 2k of income. My plan is to push her to give 10k. I'm fine with not getting anything if worse comes to worse since I don't want to go through all that trouble for 2021 tax for the sake of 2k. What do you guys think would be reasonable? Is asking for 10k a bit too much?

I'm not familiar with how the rebate structures work but it seems like other brokers have covered that above. What I will say is that if they insist on a 1099, I would avoid. Rebates should not be taxable, and you don't want the headache of having to explain it to the IRS, which will take months. (note, I'm not a CPA).

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Re: Realtor rebate for new house
« Reply #37 on: February 17, 2021, 05:49:46 PM »
#minrebate+maxtaxes

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Offline irvine buyer

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Re: Realtor rebate for new house
« Reply #38 on: February 17, 2021, 07:00:33 PM »
As far as the IRS is concerned, a commission rebate paid to you is income you received.  Even if you are able to net the rebate against your closing costs the amount of your rebate is still taxable income.  The agent giving you a 1099 for the rebate amount is handling the rebate correctly as far as tax reporting goes.


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Re: Realtor rebate for new house
« Reply #39 on: February 17, 2021, 07:08:55 PM »
As far as the IRS is concerned, a commission rebate paid to you is income you received.  Even if you are able to net the rebate against your closing costs the amount of your rebate is still taxable income.  The agent giving you a 1099 for the rebate amount is handling the rebate correctly as far as tax reporting goes.

No, this is incorrect. Home purchase rebate to the principal is NOT taxable and should not be issued a 1099. Previous cases argued to the IRS states this.

Online Dr. CA Real Estate

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Re: Realtor rebate for new house
« Reply #40 on: February 17, 2021, 07:56:56 PM »
As far as the IRS is concerned, a commission rebate paid to you is income you received.  Even if you are able to net the rebate against your closing costs the amount of your rebate is still taxable income.  The agent giving you a 1099 for the rebate amount is handling the rebate correctly as far as tax reporting goes.

Wrong. Read thread and the citations. Easy to independently verify as well.
Kris Mendoza
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ariesmail1@yahoo.com
310-227-1434 cell

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Re: Realtor rebate for new house
« Reply #41 on: February 17, 2021, 08:58:10 PM »
As far as the IRS is concerned, a commission rebate paid to you is income you received.  Even if you are able to net the rebate against your closing costs the amount of your rebate is still taxable income.  The agent giving you a 1099 for the rebate amount is handling the rebate correctly as far as tax reporting goes.



So how should commission rebates from agents made to the buyer's escrow be handled, also as income?  The definition of earned is that a service or product is provided in exchange for consideration.  What kind of service did the buyer perform for the agent?  The answer is none, the agent did service for the buyer.  ALL REBATES, whether they are done in or outside of escrow, are NOT TAXABLE...they are a reduction of the cost basis in the home.  I've been audited by the IRS for 3 straight years related to my commission rebates and what I just mentioned was the final conclusion after I provided them a copy of the canceled checks with the closing statements.
Martin Mania, CPA
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Offline AW

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Re: Realtor rebate for new house
« Reply #42 on: February 18, 2021, 08:28:46 AM »
yeah, this sucks that you got a bummer agent that won't rebate back.  It's tough when this wasn't discussed prior and you found TI too late, sounds like the agent have a difficult time letting go of $2k, imagine the shock if the amount is more like $50k. 

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Re: Realtor rebate for new house
« Reply #43 on: February 18, 2021, 09:31:46 AM »
yeah, this sucks that you got a bummer agent that won't rebate back.  It's tough when this wasn't discussed prior and you found TI too late, sounds like the agent have a difficult time letting go of $2k, imagine the shock if the amount is more like $50k. 

Nothing worse than dumb, greedy realtors.
Martin Mania, CPA
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Offline sleepy5136

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Re: Realtor rebate for new house
« Reply #44 on: February 18, 2021, 09:58:49 AM »
yeah, this sucks that you got a bummer agent that won't rebate back.  It's tough when this wasn't discussed prior and you found TI too late, sounds like the agent have a difficult time letting go of $2k, imagine the shock if the amount is more like $50k.
I take that money I left on the table a lesson learned as a first time home buyer. can't do anything to reverse things so I am going to take it as a learning point instead of fretting about it.
« Last Edit: February 18, 2021, 10:28:44 AM by sleepy5136 »

 

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