Firstly, we're fully compliant with the FHA regulations. We sign the FHA Amendatory Clause [pdf] document, we attach our buyer's agency agreement which spells out how the rebate works, and we disclose the rebate on the HUD-1.
Secondly, our preference is to refer our client to a lender that we've worked with in the past who has experience with our rebate and FHA financing. To make things easier for clients we've put together a list of our preferred lenders.
If our clients have elected to work with a different lender and that lender has questions about the rebate we send them a link to the Department of Justice site, competition and real estate: antitrust division: Rebates Make Buying a Home Less Expensive. This clears up most of the questions surrounding our rebate since rebating is only illegal in a few states, and we don't operate in those states.
When the lender isn't satisfied, we will apply the rebate to the client's closing costs. As most of you are likely aware the buyer is allowed up to 6% in concessions with FHA financing (whereas concessions are capped at 3% for conventional financing). So if the total concessions go above 6% and there is a portion of Redfin's rebate left over then we're usually able to negotiate a lower purchase price. In some rare occasions, customers have had to forfeit some of their rebate.
If you have other questions about Redfin let me know, I'm happy to answer them.
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