Real estate agents PAY buyers who buy through them
Real estate agents PAY buyers who buy through them
Most buyers don’t know that some real estate agents offer cash incentives to clients who buy through them. These incentives come in different packages and include the following:
- The agent pays the buyers closing costs (escrow fee, title insurance fee, document and recording fees, etc.)
- The agent buys the buyer a new washer/dryer for the new home
- The agent allows the buyers to use a moving van for FREE
- The agent pays a rebate fee through escrow that is credited to the buyer
- The agent actually writes a check after the close of escrow and hands it to the buyer
All of the above are perfectly legal and ethical. These practices have been going on for as long as I have been in the real estate business.
These payments all come out of the real estate commission the agent earns when he/she help the buyer buy a property.
The commission that goes to the agent for the buyer is often called the sales office commission or SOC. In the vast majority of cases it is one-half the total listing commission. In the western Washington area the total commission is usually 6% (sometimes 5%) and the SOC is usually 3% (sometimes 2.5%).
Some real estate investors have been demanding real estate commission sharing for large purchases, for decades. Many of these investments run into the high six figures and even into the millions of dollars. Their justification is they often found the property they are trying to buy, know more about real estate investments than their agent and they often do more analysis, so why not sure on the commission.
These buyer incentives can be very helpful to buyers. I have started offering these incentives to my buyers and my cash incentives are paid from my commission through escrow. Check out my services for buyers for more details.
Buyers have the right to ask for these incentives and to shop for an agent willing to provide these incentives before they select an agent. Cash incentives are just one measure for selecting an agent and may not be the most important. Watch for my blog post on how to select a real estate agent.
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