Author Topic: Rebate on New home purchases - Discuss  (Read 83181 times)

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Offline Borg5000

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Re: Rebate on New home purchases - Discuss
« Reply #150 on: May 12, 2017, 01:19:27 PM »
We worked with Redfin.  They said they can't do rebate when builder prohibits it.  I don' think they provide their rebate after closing as they disclose the rebate to lender and clearly state that it is subject to lender approval.

I like to know my risks going into anything.  I am not mad at my agent for paying my company and me having to deal with the taxes.  If an agent says no problem and doesn't explain the risks, that is more concerning. 

You and your buyer might not tell anyone but IRS can audit you and see the rebates as expenses.  Isn't it possible they say its not an allowed expense as it was done outside of escrow and then will you go back to buyer and ask for some money back or just realize you are paying taxes on money you no longer have? 

I don't think 1099 to buyer is right either but entire thing is broken and I dont blame agents for not wanting to take that risk. 

Offline USCTrojanCPA

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Re: Rebate on New home purchases - Discuss
« Reply #151 on: May 12, 2017, 01:41:16 PM »
We worked with Redfin.  They said they can't do rebate when builder prohibits it.  I don' think they provide their rebate after closing as they disclose the rebate to lender and clearly state that it is subject to lender approval.

I like to know my risks going into anything.  I am not mad at my agent for paying my company and me having to deal with the taxes.  If an agent says no problem and doesn't explain the risks, that is more concerning. 

You and your buyer might not tell anyone but IRS can audit you and see the rebates as expenses.  Isn't it possible they say its not an allowed expense as it was done outside of escrow and then will you go back to buyer and ask for some money back or just realize you are paying taxes on money you no longer have? 

I don't think 1099 to buyer is right either but entire thing is broken and I dont blame agents for not wanting to take that risk. 

I don't understand what the difference is giving you the money on a pre-tax basis after closing and post-tax after closing in terms of your position, in both circumstances they violate RESPA rules about money going from an agent to the buyer outside of escrow without the knowledge of the lender.  The IRS has audited me and has reaffirmed that my rebates do in fact reduce my gross commission from my 1099 (the check has to have the same name as the closing statement)...I basically provide the IRS agent this inf...

http://www.nsbar.org/content/compensation-to-buyerseller

https://ttlc.intuit.com/questions/2910212-as-a-real-estate-agent-i-rebated-part-of-my-commission-to-the-buyer-after-the-close-of-escrow-by-writing-him-a-check-am-i-required-to-issue-a-1099-form-to-the-buyer

http://www.prnewswire.com/news-releases/irs-rules-that-redfin-does-not-have-to-report-commission-refunds-as-taxable-income-51646237.html

Your agent was lazy and didn't take a little time to do some research on the matter, simple as that.  There are no risks to the buyer as the tax position is fairly clear that agents can rebate their clients commission without having to issue them a 1099.
Martin Mania, CPA
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Offline Borg5000

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Re: Rebate on New home purchases - Discuss
« Reply #152 on: May 12, 2017, 02:25:27 PM »
Ordering services from my company is not a violation of RESPA.  My company provided the services he requested and was paid accordingly.  I happened to use him to buy my house.  I did not receive a rebate from him.  ;)

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Offline USCTrojanCPA

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Re: Rebate on New home purchases - Discuss
« Reply #153 on: May 12, 2017, 02:42:23 PM »
Ordering services from my company is not a violation of RESPA.  My company provided the services he requested and was paid accordingly.  I happened to use him to buy my house.  I did not receive a rebate from him.  ;)

I see what you did there.  haha  I hope that I've provided you and the rest of the folks on the forum with the knowledge that their agents should not 1099 them for rebates made outside of escrow. 
Martin Mania, CPA
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CA CPA License # 107675
mmania001@yahoo.com
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Offline Borg5000

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Re: Rebate on New home purchases - Discuss
« Reply #154 on: May 12, 2017, 02:49:20 PM »
You are very knowledgable and I can see why clients like working with you.  I also can see how confusing this issue is and why other agents are nervous.

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Offline USCTrojanCPA

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Re: Rebate on New home purchases - Discuss
« Reply #155 on: May 12, 2017, 03:13:49 PM »
You are very knowledgable and I can see why clients like working with you.  I also can see how confusing this issue is and why other agents are nervous.


Thank you for the compliment, I represent my clients the same way that I would represent myself on a transaction and that seems to work very well.  :)   The matter is definitely not straight forward and does take some effort to try to understand and unfortunately most realtors will not do the legwork needed to understand and make an informed decision and then try to 1099 either client due to their lack of knowledge and willingness to do some research.  Realtors should become more of consultants to their clients than just used car salesmen looking to book some commission dollars.   
Martin Mania, CPA
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CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!

Offline upon9k

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Re: Rebate on New home purchases - Discuss
« Reply #156 on: May 12, 2017, 03:48:01 PM »
Thank you for the compliment, I represent my clients the same way that I would represent myself on a transaction and that seems to work very well.  :)   The matter is definitely not straight forward and does take some effort to try to understand and unfortunately most realtors will not do the legwork needed to understand and make an informed decision and then try to 1099 either client due to their lack of knowledge and willingness to do some research.  Realtors should become more of consultants to their clients than just used car salesmen looking to book some commission dollars.

That last sentence is the real life truth about Martin.  When we were looking at new constructions and one sales office was pushing us to take a less desirable lot without the conservatory option, he actually said to stand firm and wait for the better lot.  Keep in mind he was pushing his commission payout almost another 6 months out, but he said couldn't advise us being hasty and paying a higher $/sq ft just to close earlier. 

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Offline best_potsticker_in_town

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Re: Rebate on New home purchases - Discuss
« Reply #157 on: May 12, 2017, 06:32:41 PM »
I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

Offline USCTrojanCPA

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Re: Rebate on New home purchases - Discuss
« Reply #158 on: May 12, 2017, 06:40:37 PM »
I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

Yeah it's crazy, some agents make you feel like they are doing you a favor and asking for a rebate is insulting to them because they consider themselves as "full-service" agents.  The majority are uneducated, pompous, arrogant, huge attitudes, pushy, and/or know-it all's.  You don't understand how refreshing it is to work with a good agent (speaking for myself on the other side of a transaction), makes the transaction so pleasant and easy.  If they only made it as difficult to get a real estate license as they do a CPA license (college education requirement/s, work under a broker/experience agent for 1-2 years, make the exam lengthier and more difficult with a lower passing rate), that would weed out a lot of the dead weight out quickly but alas the NAR and state realtor associations love collecting their realtor dues.  *SIGH*
Martin Mania, CPA
AgencyOne
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CA CPA License # 107675
mmania001@yahoo.com
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Re: Rebate on New home purchases - Discuss
« Reply #159 on: May 15, 2017, 04:23:08 PM »
I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

So do you offer a max rebate?  :D ;D ;)

Offline best_potsticker_in_town

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Re: Rebate on New home purchases - Discuss
« Reply #160 on: May 15, 2017, 05:04:19 PM »
I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

So do you offer a max rebate?  :D ;D ;)

You better believe it. MAX!

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Re: Rebate on New home purchases - Discuss
« Reply #161 on: May 15, 2017, 05:05:29 PM »
I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

So do you offer a max rebate?  :D ;D ;)

You better believe it. MAX!

Do you give a 1099 after you give the rebate?

Offline best_potsticker_in_town

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Re: Rebate on New home purchases - Discuss
« Reply #162 on: May 15, 2017, 10:11:18 PM »
I have my real estate license, mainly for my own purposes (buy/sell for me or close family). I save some $$$ and I don't have to argue with agents about the rules.

This year, I've heard some 2 very close, out of area, friends a flavor of: "my agent ignores me, is not responsive, laughs me off when I ask for a rebate. I do all the work, send the listings I want to see, and most are open houses."

I feel bad for these friends so I offer to help. I tell them if you see a place you want to write an offer on to let me know. I rebate them a large part of my commission because they do most of the work. They love this model and it's very obvious that I make their best interest top priority. I've also honestly said, "I can't make it to [city] anytime soon, it's best if you use a different agent for a showing" and they're bummed.

It's crazy to hear so many people treated subpar by their agents.

So do you offer a max rebate?  :D ;D ;)

You better believe it. MAX!

Do you give a 1099 after you give the rebate?

No way, it's against my religion.  ;) Plus, my deals are primarily with family or close friends and its just not right to 1099 them.

Offline IntheVine

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Re: Rebate on New home purchases - Discuss
« Reply #163 on: May 22, 2017, 09:04:14 AM »
Wish I had taken the time to read this thread sooner! Feeling like I did not do my due diligence and research enough even though I've been reading TI more consistently :( Anyway, I have an agent that I brought to every first visit to the sales office, but I just did not know that some agents offer some of the rebate back. We did a lot of our first visits back in Feb this year and although I was looking at resales and new builds, I am pretty sure that I will purchase a new build soon (California Pacific). Currently on a priority list and just waiting for the next phase release. My agent never mentioned offering some of their rebate back and I had no idea this was a thing. Not sure if it is too late for me to even bring this up to our agent? I would appreciate any thoughts or feedback! What would you recommend I say or do in this situation? I like my agent and they have been helpful throughout my whole home search process, but I can't help but feel I'm missing out on this rebate thing!

Offline AW

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Re: Rebate on New home purchases - Discuss
« Reply #164 on: May 22, 2017, 09:19:31 AM »
Ask him.
There are a lot of realtors on TI that give a lot back, and not 1099 either.

 

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