Are Commission Rebates Legal in Virginia, Maryland or Washington DC?

Many home buyers are not only unfamiliar with the concept of real estate commission rebates, but remain unsure whether commission rebates (sometimes called “credits” or “refund” or “cash back”) are even legal in Virginia, Maryland and Washington DC. I’ve run across the same questions time and time again from home buyers on this topic…Where does the money come from? How does a rebate work? Will a rebate effect the price I pay for the home? Now for the answers YES-commission rebates are legal in Virginia, Maryland and Washington DC. The money comes from the seller’s agent who offers the buyer’s agent a predetermined commission amount (typically 3%), agreed upon with the seller at the time the property is listed. The buyer’s agent rebates a portion of their commission to their client (buyer). Rebates DO NOT effect the price of the home- since the amount of the commission offered to the buyer’s agent is predetermined, it doesn’t effect the home price if you buy without an agent, the seller’s agent keeps the entire commission (many times 6%) and you don’t have anyone looking out for your best interests!

Still don’t believe me?? Well, check it out for yourself, realtor commission rebates ARE legal in VA, MD & DC according to the DOJ. The U.S. Department of Justice (DOJ) recently launched a new website on competition in the real estate industry. The Antitrust Division of the DOJ promotes and protects the competitive process through the enforcement of antitrust laws. Simply put–they prohibit price-fixing. The site was created to educate consumers about the benefits that commission competition brings to the consumer of real estate services. The chart below from the DOJ website shows the median commission paid by consumers per home between 1998-2007.

Rebates make buying a home less expensive… period. Most people generally think of a rebate as a cheap, small amount or barely even worth the effort of mailing out. However, when you talk about rebates in real estate, we’re talking thousands of dollars back to you, the consumer. I ran across an interesting piece on Cash Back Rebates to Home Buyers, posted by a real estate agent in Illinois. Btw, Illinois is among the nation’s 37 rebate friendly states.