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Todd Beardsley, of MenloAtherton Realty's Real Estate Tips
HOW TO TAKE A COMMISSION REBATE
There are a few different ways you can choose to receive your commission rebate from Menlo Atherton Realty. Below is a brief overview of each method.
Pay for closing costs and reduce down payment - commission rebates are always greater than the total non-recurring closing costs associated with each transaction.
Reduce the purchase price of the home – another option is to request the seller to reduce the sale price of the home by the amount of the commission rebate. This is a financially attractive option in that it lowers your annual property tax bill by the amount of the commission rebate divided by 1,000. So if you purchase a home for $1,000,000 and the commission offered to the buyer’s agent is 3.0% then you would expect to receive a commission rebate of $1,000,000 x .02 = $20,000. When this rebate is used to lower the purchase price your tax basis is lowered by $20,000. Without a commission rebate your base annual property taxes would be $1,000,000 x .012 = $12,000. WITH a 2.0% commission rebate your base annual property taxes would be $980,000 x .012 = $11,760 for an annual savings of $240. Sellers are under no obligation to work with you in this manner. Even though the net financial impact to the seller is a small plus due to lowered escrow fees, once in a while I will encounter a seller who is unwilling to reduce the price of the home – often for pride-related reasons.
by Todd Beardsley