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Buyer Rebate FAQ
How do I ensure that the seller pays the full 3% commission?
If the offered commission is less than 3%, then prior to making an offer you need to present the buyer with two options.
Option one is accept the lesser commission amount as the refund amount.
Option two is adjust the commission up to 3%.
If option two is chosen, then your agency agreement should set your commission at 3% and and obligate the buyer to pay the shortfall between the offered commission and 3%. For example, if the offered commission is 2.5%, then the shortfall is 0.5%. Most buyer agency contracts are designed to accomplish this by simply filling in the desired minimum commission.
The buyer does not want to pay for his own refund, therefore include a provision in the purchase contract requiring the seller to pay the shortfall. For example: "Seller agrees to credit 0.5% of the purchase price to the Buyer at closing toward closing costs." It is important the understand that the shortfall amount is a buyer closing cost paid by the seller.
How do I formalize the rebate agreement with the buyer?
Include a refund provision in your buyer agency contract. For example: "Agent agrees to credit her commission to the buyer at closing." It is not necessary reference the refund on the purchase contract.
How do I facilitate the 3% refund?
At closing simply credit your commission to the buyer on the closing disclosure.
All refunds are subject to lender approval. It is mission critical that the buyer choose a "refund friendly" lender early in the process, so as soon as the buyer makes an offer you must recommend GoldenKey's preferred lender. Typically the buyer may use the refund to receive cash back at closing, pay closing costs, pay down loan principal, pay down the interest rate, or pay prepaid expenses.
To avoid any surprises at closing, immediately obtain agreement from the buyer's lender to allow the refund in the form that the buyer prefers.
What if the offered commission is more than 3%?
What if there is no commission offered by the listing brokerage or seller?
Simply follow the procedure outlined above to adjust the commission up to 3%. In this case, the shortall is 3%.