The Nest

NestApple's Real Estate Blog

Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.

Are NYC Broker Commission Rebates Legal?

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Broker commission rebates are legal in NYC real estate. New business models are making it work. The New York state attorney general has encouraged buyer agent commission rebates. His goal is to foster more price competition between real estate brokerages. If getting approximately 2% of the home purchase price back at closing sounds good, here’s everything you need to know about the legality of real estate commission rebates in NYC. Commission rebates are not taxable.cash back check to Aurelien in New York Real Estate

Is Getting a NYC Buyer Commission Rebate Legal?

Laws on buyer rebates vary from state to state. However, they are 100% legal in New York state.

That means you can get a commission rebate in NYC without worrying about legal ramifications. On the federal level, buyer commission rebates are also considered fair for real estate agents to attract clients.

This way, they can offer better pricing to consumers. However, there are a few states where rebates are banned. But none are in the NYC metro area or Westchester.

The ten states where you cannot legally get a home buyer rebate are Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon, and Tennessee.

How Do NYC Broker Commission Rebates Work?

NYC commission rebates work because the buyer’s agent will give you a portion of their commission paid by the seller at closing. AtAre NYC Broker Commission Rebates Legal? NestApple, we offer two-thirds of our commission as a rebate if we collect a standard 3% fee.

You will get a check for 2% of the purchase price.

So if you’re purchasing a NYC apartment for $1,000,000, you’d get a $20,000 rebate. And best of all, it’s completely legal, and there are no strings attached. Of course, we certainly appreciate a good review and word-of-mouth referrals).

 

How do I Find an NYC Agent That Offers a Home Buyer Rebate?

If you’re in the market for a home in NYC, you might be wondering how you should find a real estate agent to help offer you a buyer commission rebate. This rebate saves a little bit of money on purchasing your new home.

After all, the option to offer a commission rebate to a homebuyer is solely on the real estate agent or the real estate agency they work for. Most NYC buyer’s brokers won’t provide any form of a commission rebate. So you’ll have to find an agency that offers rebates.

Largest commission rebate NYC

Finding a buyer agent that offers a buyer’s rebate starts with a simple online search.

In no time, you can find real estate brokerages that specialize in providing buyer rebates. NestApple has been offering commission rebates in NYC for years since 2017.

And we’ve proudly rebated over $4 million to buyers.

How Can New York City Agents Afford to Give Rebates?

Some buyers might think a rebate sounds too good to be true. Initially, they might not be sure of the legality, or maybe a traditional brokerGeorges Benoliel BFM TV about NestApple led them to believe they’re not legal when they are. Or they might think that rebate brokers are skimping on services.

Most rebate brokers are more experienced than traditional agents and will help you negotiate a better deal while giving you the same attention to detail as a conventional firm. And this is all possible due to how commission rebates make the transaction more efficient.

After all, offering an NYC buyer a rebate is a great way to gain that person as a client. This can be invaluable to them moving forward.

Traditional firms spend most of their time and commissions buying leads, cold-calling, and prospecting for new clients. However, rebate brokers like NestApple pass on our clients’ savings.

This frees up more time to better serve buyers and negotiate more deals. By offering a 2% rebate, brokers can gain significantly more clients, making it a win-win for everyone.

Are Commission Rebates Taxable?

If you’re thinking about the legal implications of getting an NYC buyer commission rebate, you’re likely also thinking about the tax implications. So thatReal Estate agents Make in NYC - Commission Rebates then begs the question, are commission rebates taxable?

After floating around in the grey area of the unknown for a while, the IRS ruled and came out with a definitive response to the question.

And the short answer is no.

Commission rebates are not taxable.

The long answer will also be no, but it takes more understanding of the IRS code and tax laws.

“An adjustment to the purchase price of the home”.

The IRS defines a home buyer rebate because it’s an adjustment to the home’s purchase price.

This means that the buyer is effectively paying less for the home than they would without the rebate being in play. The IRS does not consider the rebate as taxable gross income. Therefore, the home buyer rebate is not taxed.

This is why the financial institution loaning you the money can tell you what you can and can’t do with it. This somewhat foggy definition from the IRS affects the bank’s numbers more than your own. This is because they lend you the money for the total purchase. But then you are getting the rebate.

The IRS’s definition only works in totality if you pay for the home cash rather than taking out a loan. But without getting more and more into the tax code, understand that the money you get from a real estate rebate program is not taxable. And you don’t have to report it to the IRS.

The buyer won’t have received any 1099 after a purchase.

Conclusion: NYC Commission Rebates are a Legal Way to Save Big Money When Buying a Home

In conclusion, NYC commission rebates are not only legal but also a fantastic way for buyers to save a lot of money when purchasing a property.jeremy goldman real estate cash back - commission rebate taxable

Commission rebates are relatively new. However, they’re here to stay, thanks to forward-thinking brokerages like NestApple.

If you’re ready to purchase a new home in NYC and want to save money with a commission rebate, give us a call today.



Written By: Georges Benoliel

Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.

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