In the US, for better or worse, real estate commissions are negotiated between the listing agent and the seller. You, the buyer, have no say in the commission paid.
As a result, some brokers that are will to work for lower commissions, offer ‘commission rebates’.
Commissions in the US have hovered around 6% in total, with 3% going to the listing agent and 3% going to the buyer’s agent.
For sure, commissions have come down a bit and in some cases, the commission can be 5.5%, 5%, or on the high-end of real estate deals even lower.
When a buyer’s agent rebates their commission to you, they are giving you a portion of what the listing agent is sharing with them. This is a ‘work-around’ to the way commissions are established in the USA.
How Commission Rebates Work
Simply put, a commission rebate is cash to you at the closing table.
The chart below shows how a commission rebate pencils out on a $1,000,000 deal.
If a commissions rebate is on your must-have list, you can interview agents at any firm, large or small, well-known or not, and see if you can negotiate a commission rebate. If you are on the higher end of the market, your chances of finding an agent willing to play ball, are pretty high.
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Top photo courtesy of Madison House.