How my Real Estate Rebates Work

When you Purchase or Sell your home, there are costs that you incur that are in addition to the purchase price or selling price of your home. We use my commissions to help cover these costs at closing.  This reduces your cash out-of-pocket at closing, or for sellers, increases your net proceeds (that big check you get when the your home is sold).

Standard costs include

Title Insurance  Buyers and Seller must purchase Title Insurance
Escrow Fees    Buyers and Sellers must pay Escrow Fees
Excise Tax        Sellers of Real Estate in WA pay 1.78% excise tax
Lender Fees  Typically buyers incur fees from the lender.  Loan processing fees, buy-down points for lower interest rate, appraisal Fees and others.  Programs vary from lender to lender depending upon the type of loan. You always should receive a HUD-1 Estimate from your lender and review the schedule of fees before agreeing to the terms of the loan. You should compare fees from various lenders to determine reasonableness and total borrowing costs.  I can help you with this.

Prepaid Items  Buyers pay in advance for Home Insurance and Real Estate Taxes for future disbursement.

All these fees are in addition to the purchase price of the home and add up to thousands of dollars for home purchasers and cost home sellers thousands of dollars. 

My credits go to help cover some of these costs reducing the amount of cash that you need to purchase a home or for sellers, increasing the amount of cash they receive at closing. These credits come from the commission that I receive from representing the buyer or the seller on a real estate transaction.  The price of the home, lender restrictions, and the sales commission amount determine how much I can contribute to those costs.  On a typical Seattle home selling for between $450,000 and $700,000  your savings would be $4,500 - $7,000.

How can I do it?

The illustration below shows the typical structure used to allocate Real Estate Commissions.  Using a 6% total commission paid by the seller, a 50/50 agent office split, each agent involved with the transaction is left with about 1.5% gross commission. **

In my model, I pay fees that allow a larger share of the commission to be paid to me.  The savings are passed on to my clients.

**It is important to note, the gross commission does not include deductions for expenses incurred in the marketing or sale of a home.  Advertising, fuel, printing, postage, signs and other marketing costs are typical expenses. Self employment tax (15%) is another expense on top of regular income taxes.