These days, the housing market is filled with people who are looking for options to save; hence, the existence of bargains. Rebates are what potential home buyers use in order to stretch their money further. These rebates make purchasing a home more affordable. Since home buyers pay the bigger share in closing costs aside from the down payment, many of them are interested in receiving and taking advantage of rebates in order to at least, lessen the financial burden involved in buying a new home.
What is a rebate program?
The term ‘rebate’ can sometimes be confusing. This is because, by nature, the home buyers are not really getting a part of the outlay cash back. As a matter of fact, the representative of the buyer (broker, agent, or both), is actually ‘rebating’ a portion of his or her own commission to the buyer.
Another reason for the confusion is that the Rebate Program generally runs in contrast to what is commonly believed that home buyers do not have to pay real estate commissions. As a matter of fact, the costs of commission that are passed to the buyers are considered as included of the sales price of a home. Generally, the agents are paid 5-6% commission.
How do these home rebates work in a real estate sale?
In regular transactions, the representatives on both the buyer and seller sides share the commission. The selling representatives typically offer about half of the commission to a broker who recommends a buyer. As incentive, these real estate agents can now offer to provide a rebate out of their commission to the home buyers. The rebates generally depend on the sales price of a home, the commission split, and the total amount of commission. Some rebates are not offered in figures, but in percentage.
What you should know about rebates
As explained by the professionals at Markham real estate, there are some points that needs to be kept in mind, especially if you are a potential home buyer who is searching to take advantage of rebates:
- Compare listings – this can be done by shopping around. One of the most reliable listings available in the market these days is Zoocasa. A good listing site generally offers rebate programs that include services such as contract review and preparation, and escrow services. Once you have determined the amount of the rebate, you may ask what else are included in the package, in order to control costs involved in the transaction.
- Look at the bigger tax picture – when you take advantage of a rebate program in the form of funds which are used in closing, you have the chance to enjoy its double win advantage because the amount may be untaxed, as it is generally applied to closing costs.
- Availability – certain rebates may not be available on many homes, as well as sale done by the owners themselves. Also, homes sold at a discounted price may also be void of rebates.
As a reminder, before taking advantage of a rebate program, check whether this provision is legal in your area.