The U.S. Department of Justice, The Attorney General of New York, and the IRS all agree that brokerages can refund a portion of their commission to their clients. Moreso, the IRS has stated in similar situations that home buyer rebates are not considered income, but a reduction on the purchase price.
See for yourself how the Attorney General, The U.S. Department of Justice and the IRS all encourage the rebating of commissions to consumers in a real estate transaction:
It was only a few years ago, December 2014, that the State amended the law to make it very clear rebates are possible in the State of New York. In April 2015, the Attorney General released a statement on this issue and even encouraged brokerages to offer such a refund.
There are two key components to how the cash rebate program works.
First, the cash rebate program relies on Modern Domain receiving a commission that is pre-arranged between the seller and the seller’s agent. This is generally a percentage of the purchase price and is a part of the listing agreement the seller signed to put their home on the market.
The second part in calculating the cash rebate is the level of service you require of us. For buyers who love the independence and autonomy of the buying process we offer a rebate of 2/3rd the commission we receive when the transaction is complete. With a common sales commission for a buyer’s agent being 3% of the purchase price, this equals a cash rebate of 2% of the purchase price.
For buyers who prefer to have a dedicated agent from Modern Domain work with them throughout the entire buying process, we offer a rebate of 1/3rd the commission we receive when the transaction is complete. This is the best option for those buying in NYC for the first time (even if you have bought a home somewhere else before) and those who need more input into the location or type of property, or whose search needs more attention.
There are two reasons a purchase may not be eligible for a commission rebate. The first is how a commission is offered in the first place. This entirely depends on how you first interact with a seller, the seller’s agent, or a sales team at a new development project.
While we can represent you at any time during the process, there are some situations where, as the buyer’s representative, we can be denied collecting commission at all. This just one of several situations that makes buying in New York City so complicated.
With a decade of direct experience buying properties for buyers like yourself, we have the expertise to navigate through most situations and give insight/advice when needed. The positive side is, if this situation occurs, it will not be a ‘gotcha’ moment. We will know before you put in an offer if a commission is possible.
Well, that’s really up to you! Moving costs, redecorating, an amazing vacation… potentially you can even buy points on your mortgage. That can amplify your rebate throughout your ownership of the property. We suggest you speak with your mortgage specialist for the best advice. And if you really want our advice, there are a lot of great charities that could use some love and support. What an incredible way to give back!
First, a caveat – for all things tax-related, you must speak with a tax advisor. We have no business advising on your – or anyone’s – tax situation and set up.
That said, the IRS has ruled a long time ago that a rebate by a buyer’s agent is NOT considered income but a reduction in the purchase price of the property. (IRS Index Number: 61.00-00, 6041.00-00). They specifically state:
“…a payment or credit at closing from [the brokerage] represents an adjustment to the purchase price of the home and generally is not includible in a purchaser’s gross income.”
There are several other services that are promoting rebates which simply pass your inquiry off as a ‘lead’ to several brokerage firms. That’s great for them but not great for you.
Modern Domain’s experienced agents work with you directly. Our agents have had over a decade of experience, were top, award-winning agents in their previous firms, and have handled a wide range of sales transactions. And we offer our expertise for your benefit, and our unique business model allows us to pass on thousands of dollars in savings to you in the process. If you would like to know more about the people behind the brokerage, head over to our Meet the Team section.
New York City is expensive. As long time New Yorkers, we live that struggle every day. As agents, we see first hand how much hard working people have to stretch their budgets just to find a decent place to live. We have worked hard to give every client of ours a slight edge, and having some extra spending money that can be invested into your new home seems like the perfect way to do so.
We have long recognized that with the access to listings and the thrill of the search, more buyers want to be in control when buying real estate. And the more buyers take on the responsibility, the more it makes sense to reward you for your service. It just seems fair. We love to help people find their personal New York. We’re a small business that wants to advocate for you because it makes us happy to get up every morning. Let us help you!
Short answer – yes!
Townhouses, detached and semi-detached homes, co-ops, condos, HDFC co-ops (restricted sales)… we can even work with foreclosure and short-sale situations.