Don’t be blinded by an agent’s commission rebate
Reading time: 2 minutes
tags: commission rebate, buyer representation, buyer agent, real estate
Sometimes people asked me about commission rebate. I understand commission rebates are a legitimate marketing tool and some buyer agents offer it to differentiate themselves in the market. I get it. It’s people hard earn money, and they would like to some commission rebate. However, don’t be blinded by an agent’s commission rebate amount. Here is why.
- The commission rebate should not be your top criteria when you interview a real estate agent. The agent’s experience, property knowledge, negotiation skills and marketing plans should be on top of your interview question list since an experienced agent can bring you more in terms of finding a better home or negotiate for a better price. The amount will be more than the commission rebate you get.
- If the buyer agent cannot fight for his/her own interest, how can he/she fight for your best of interest.
- Check out the agent’s testimonial by his/her own clients before you negotiate for a commission rebate.
- It is a good idea to interview three or more real estate agents before you choose who to work with.
- Once the agent agrees to a commission rebate, it should be clearly written the amount of the commission rebate and when the commission rebate will be issued. This can be included in a buyer representation agreement or a separate written agreement. Please read the agreement thoroughly and make sure you understand everything before you sign. You may ask a lawyer to review it with you. The same rule applies when you sign other binding contracts.
- When the commission rebate is issued, the agent should not issue you a T4A as is not a taxable income for you. Yes, there is other tax implication as it will reduce the cost of the subject property. Since I am not a tax professional here, please consult this with a tax professional.