Rebate on New home purchases - Discuss

Cut his broker a check and 1099 them.  It should be taxable income to him so then you can negotiate with him to pay him a lower amount net of tax and his broker split without a 1099.  That should put the him in his place a bit. 
 
@SoCal- No, the "full commission" is a stipulation of my agent's Broker Exclusive agreement with me. If he were to require a "full" commission, he could validly ask for 2.5% to 3% of the sales price, but no, he is collecting the same amount that the builder would have paid him (as a referral fee), which is $12,000.

That's a very good consideration about overpaying on the purchase price in order to cut him the check. If after upgrades we are still within a qualifying loan amount, I'll definitely keep that option in mind. Thanks!

@USCTrojanCPA- It would be 1099-able income even if he took it from the builder, wouldn't it? My guess is he wants it reported anyway for the sake of reporting greater annual income on his Schedule C.
 
I had no idea the "referral fees" were so high! That idea I had was to circumvent having to pay the $12k by paying a much lesser amount, which is typically what the referral fees are with other builders -- at least, I always thought so. Iho can correct me on this.  I'm sure it depends on how well they're selling. I suppose it wouldn't help if the fee really is that high other than being able to roll it into your financing for ease of payment.

Lucky, I am so sorry you are going through this. I truly feel bad for you. It gutted me to read your post. I can only imagine what you must be going through. I wish there was some way we could all put our heads together and help figure out a better way.  :( I'm so sorry.
 
Thanks, SoCal. That's really kind of you to be so empathetic to my family's situation. We've come to terms that there's just no way around it. It really is awful especially because it jeopardizes our ability to even afford to buy the house, but c'est la vie!
 
So i'm looking at picking up another property when Orchard Hill is released.  How does this rebate program work exactly when bringing an agent on the first visit.  If the builder is offering $15,000 to the agent, how much of this rebate is the agent refunding to me?  What is their take and will I end up with a 1099 at the end of this transaction?  Any assistance would be greatly appreciated.
Thanks.
 
Park said:
So i'm looking at picking up another property when Orchard Hill is released.  How does this rebate program work exactly when bringing an agent on the first visit.  If the builder is offering $15,000 to the agent, how much of this rebate is the agent refunding to me?  What is their take and will I end up with a 1099 at the end of this transaction?  Any assistance would be greatly appreciated.
Thanks.
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Depending upon the rest of the terms, I'm open to getting the full amount that I receive back to you, as I've done in the past. (For clarification, if the builder is offering $15000 to the broker, my broker takes their 26% cut before it comes to me.) Net back to you would be up to $11,100.

No 1099. Several references available.

-IrvineRealtor
 
Park said:
So i'm looking at picking up another property when Orchard Hill is released.  How does this rebate program work exactly when bringing an agent on the first visit.  If the builder is offering $15,000 to the agent, how much of this rebate is the agent refunding to me?  What is their take and will I end up with a 1099 at the end of this transaction?  Any assistance would be greatly appreciated.
Thanks.
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The amount rebated will vary agent by agent so I'd advise asking around.  Some agents have to pay a broker transaction fee or a % of the total gross commission to their broker.  The rebate would be refunded to you via a check after the closing outside of escrow since the builders do not allow the agent to credit the buyers any part of the commission.  No 1099 will be used to you for the rebate because it has been ruled by the IRS that is a return of cost so you would just reduce the tax cost basis in your home when calculating the depreciable basis and the cost basis to calculate the gain/loss on sale.
 
In regards to commission rebates I had a client lose out on $20,000 rebate in San Juan Capistrano. I advised them not to go in or register, but they still went in but did not register. They did speak to the sales staff a lot and so they remembered them. When I went in with them to register, it was all fine until we had chose a home then they would not allow them to have representation. They stated they have video of the buyers visiting the sales center with out me. So if you are serious about getting a rebate I would suggest not to enter with out your agent. It was a huge loss for them and me.
 
What happen if you register online prior to grand opening or get pre-qualify before your first visit with your agent.  Are you still eligible for broken rebate?
 
lnc said:
What happen if you register online prior to grand opening or get pre-qualify before your first visit with your agent.  Are you still eligible for broken rebate?
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Yes, you are still eligible. The requirement is that your agent accompany you on your first visit to the site, for most all of the builders.

-IR2
 
As long as you state you have a Realtor when you register online you will be fine. Just make sure you bring your Realtor to the 1st visit to the sales office.
 
OCBROKER said:
In regards to commission rebates I had a client lose out on $20,000 rebate in San Juan Capistrano. I advised them not to go in or register, but they still went in but did not register. They did speak to the sales staff a lot and so they remembered them. When I went in with them to register, it was all fine until we had chose a home then they would not allow them to have representation. They stated they have video of the buyers visiting the sales center with out me. So if you are serious about getting a rebate I would suggest not to enter with out your agent. It was a huge loss for them and me.
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Yeah, happened with a few buyers that I went in to register at Irvine Pacific sales offices.  The problem is that the builders don't advertise the broker co-op so buyers are not aware that you need to bring in the agent on your 1st physical visit to the sales office.  I ask all the folks that want me to go register them if they have been in the sales office before (a few have lied to me and the sales people called out the buyers for already having been there without me). 
 
USCTrojanCPA said:
OCBROKER said:
In regards to commission rebates I had a client lose out on $20,000 rebate in San Juan Capistrano. I advised them not to go in or register, but they still went in but did not register. They did speak to the sales staff a lot and so they remembered them. When I went in with them to register, it was all fine until we had chose a home then they would not allow them to have representation. They stated they have video of the buyers visiting the sales center with out me. So if you are serious about getting a rebate I would suggest not to enter with out your agent. It was a huge loss for them and me.
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Yeah, happened with a few buyers that I went in to register at Irvine Pacific sales offices.  The problem is that the builders don't advertise the broker co-op so buyers are not aware that you need to bring in the agent on your 1st physical visit to the sales office.  I ask all the folks that want me to go register them if they have been in the sales office before (a few have lied to me and the sales people called out the buyers for already having been there without me). 
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That must be an awkward moment....wanna get away?
 
I've seen some advertisements that state they will rebate anything over 2% from their fee paid to them by the builder to the home buyer.  I'm not sure if there are any additional catches to this or what this means exactly.  I'll guess when the time comes I'll have to ask and see whats down in writing. 
 
Park said:
I've seen some advertisements that state they will rebate anything over 2% from their fee paid to them by the builder to the home buyer.  I'm not sure if there are any additional catches to this or what this means exactly.  I'll guess when the time comes I'll have to ask and see whats down in writing. 
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The problem is that most builders in OC are now only offering 1-1.5% of a broker co-op commission (mostly a flat fee of $5k, $10k, or $15k).  You won't see a broker co-op commission over 2% until the market slows down considerably.
 
Park said:
I've seen some advertisements that state they will rebate anything over 2% from their fee paid to them by the builder to the home buyer.  I'm not sure if there are any additional catches to this or what this means exactly.  I'll guess when the time comes I'll have to ask and see whats down in writing.
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No one in Irvine pays 2% any more on the new construction. The Average is 10k commissions for homes under 800k and anything over is between 12k and 20k tops. I offer my clients a 50/50 deal on all new construction that's the easiest way for me to keep it fair.
 
OCBROKER said:
I offer my clients a 50/50 deal on all new construction that's the easiest way for me to keep it fair.
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Is 50/50 really fair for new construction? After the initial forms signing, doesn't the builder's sales team take over? Or is there other work that the buyer's broker does?

Maybe some other brokers/realtors can chime in here.
 
Fair is a relative term...

I've indicated above how I have worked with clients in the past.
I have a contact that can credit 100% (if $15K is offered by the builder, $15K is credited to buyer at close, with no broker deductions). The downside is that she doesn't have the 800lb gorilla brokerage (CB, FirstTeam, Re/Max, etc.) behind her if the poop hits the fan. That matters to some, but not to everyone.

Fair is also relative to what ELSE is involved... If I've been showing properties with a client for 6 months and working every angle to get them their best deal for half a year, or helped them reduce their property taxes for the past 5 years, or in some other way added value for them, then I'd hope that the efforts have been worth something to them. Likewise, if the only "work" that has taken place is that I've met someone by appointment at a location that they already know and like, how much is a couple of your hours worth? Certainly not $20K.*

*unless you're Mike Trout, in which case you're worth every penny.

And the good mojo goes a long way...

-IR2


irvinehomeowner said:
OCBROKER said:
I offer my clients a 50/50 deal on all new construction that's the easiest way for me to keep it fair.
Click to expand...
Is 50/50 really fair for new construction? After the initial forms signing, doesn't the builder's sales team take over? Or is there other work that the buyer's broker does?

Maybe some other brokers/realtors can chime in here.
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Thanks IR2.

I understand if there was "other" work involved (like 6 *years* of lookylooing).

I have probably asked this before, but is there any notable broker work during escrow for new homes that is similar to resale work such as working with escrow, inspectors, request for repairs etc etc?
 
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