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Agents Who Credit Commissions to the Buyer

By
Real Estate Agent with Elizabeth Anne Weintraub, Broker DRE #00697006

commission credits to buyerBuyer rebates are a complex and easily misunderstood aspect of some real estate transactions. Some buyers believe that agents routinely kickback part of their commission to the buyer, but the bulk of agents do not.

There are situations that arise in a transaction, however, that make a credit necessary, if simply to keep the peace. For example, say, during the final home inspection walk-through, the buyer notices that the refrigerator, which was supposed to remain with the home, has been removed by the seller. This happens more often than you would think. So, the buyer demands a new refrigerator. The seller, in turn, often blames the listing agent and refuses to return the old refrigerator and / or buy a new appliance for the buyer.

The buyer has options. The buyer can refuse to close. But few choose that course of action because the house matters more than the refrigerator. The buyer can close and sue the seller for refusing to abide by the contract. Few want to file suit, though. So, to make everybody happy, sometimes the listing and buying agents will split the cost of a new refrigerator through a partial commission credit to the buyer. 

In a transaction I closed a few months ago, the buyers refused the credit. I was astonished. The listing agent had made a promise to the buyers and then broke it. The buyers were distraught. So, I offered to throw a credit to the buyers to make up for the listing agent's misrepresentation. I didn't have to offer it, but I'll move heaven and earth if need be to keep clients happy. The buyers said no, it wasn't my fault and they didn't feel I should pay for it. But that doesn't happen very often, either!

Read more about commission credits to buyers.

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

Comments (10)

Courtney Cooper
Cooper Jacobs - Seattle, WA
206-850-8841
No that doesn't happen very often, but I recently had a seller refuse a credit as well:)  I also like keeping the peace.
Mar 17, 2008 04:54 AM
Mesa, Arizona Real Estate Mesa Arizona Realtor
Homes Arizona Real Estate LLC - Mesa, AZ
AzLadyInRed

Elizabeth, I'll do the same thing, and every now and again it does happen. Just a slight misunderstanding somewhere, but in order to make "my" client happy, I do what needs to be done.

Pepper

Mar 17, 2008 06:04 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Courtney and Teri: Well, I know agents who say absolutely NOT, not under any circumstances -- even if the buyer or seller wanted to cancel the transaction -- they would not give away any of their commission to keep the deal together. I suspect these are the same guys who would cut off their nose to spit their face. Unhappy clients don't refer other clients. And it's just not right not to help them out when they really deserve the help.


Mar 17, 2008 06:08 AM
Carolyn Gjerde-Tu-Davis
Lyon Real Estate - Davis, CA
Ca Real Estate

There are certain buyers who just expect the agent to kick in commission.  I have wished these people well and let them work with someone who is willing to do the job for less.  It does make sense to kick in when the deal is falling apart though.

Mar 18, 2008 01:22 AM
Jesse Clifton
Jesse Clifton & Associates - Fairbanks, AK
I'm not always crazy about doing it but I would rather have a happy client than lose untold referral business over a few bucks.  That just doesn't make sense.
Mar 18, 2008 09:29 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

I know what you mean, Carolyn and Jesse & Kathy. I don't throw money into the deal very often, but I will do it, especially if the clients are unhappy due to circumstances beyond my control.


Mar 19, 2008 02:42 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

When agents put money into a transaction, it's not always a case of the agent doing something wrong. An escrow gets extended by a few days, the loan lock expires, the buyer gets a flat tire on the way to closing, the husband decides the lawn needs fertilizer, the teenage son wants his room painted black -- black everything before he moves in, I swear. You just can't make this stuff up.

Mar 20, 2008 02:35 AM
Tony Fantis
Fantis Group Real Estate - Salt Lake City, UT
Realtor,Principal Broker - Salt Lake City
Hmmm...keeping people happy is good, as long as it is legal.  Just a few thoughts, and it may be different from state to state.  First, buyer credits from the buyer's agent have to be fully disclosed in the contract, since the seller is paying the commission.  Second, many agents will use buyer credits as a way to market their business.  Again, this can be different in every state, but at least in Utah the gifts have to come from the broker and the broker must offer those gifts for ALL of their agents.  So things like offering an HD television may be nice and may keep your clients happy, but just might get one in a heap of trouble.  Of course, that's all different than buying someone a fridge!  =)
Mar 20, 2008 03:05 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

How do you handle it in Utah when the credit is negotiated after the contract is signed? Do you make all parties sign an addendum that states they realize the selling agent is buying the buyer a refrigerator with part of the agent's commission?


Mar 21, 2008 11:52 AM
Julie Burks
Riverpoint Realty - Sacramento, CA
Sacramento CA, e-Pro, SFR
The other thing to always remember, of course, is that when we as agents do this type of thing, it is considered a tax deductible expense (I am not a tax professional, consult yours to be certain).  Usually mine will lump all these things together under the lovely umbrella term "concessions to close".
Apr 02, 2008 04:13 AM