How to Negotiate a Buyer Rebate with a Realtor

What is a Realtor Rebate?

A realtor rebate is known by a few different names that all basically mean the same thing: Realtor Rebate, Buyer Rebate, or Buyer Agent Commission Rebate.

According to the United States Department of Justice, “commission rebates are usually calculated as some fraction of the broker’s commission and can result in thousands of dollars being returned to the consumer”.

Therefore, when a buyer purchases a home, a large part of the purchase price goes to pay off commissions to the agents involved.  The buyer agent typically receives a commission equal to 3% of the home purchase price. A buyer agent commission rebate is a portion of the 3% commission that the buyer agent will rebate to the buyer at closing.

Basically, this all breaks down to – money that your buyer agent will refund to you at closing.

Since buyers are not licensed, agents can’t pay them a commission. However, they can rebate part of their commission to the buyer as an incentive.

Looking for a Realtor Rebate?

You have two options: first, negotiate yourself, or second, use a free service who’s already done the work for you.

1 – Negotiate Yourself

The strength/background of your negotiation skills will ultimately decide the amount of the rebate you receive. If you’re a risk taker and would like to go this route, here are some tips to get you started from a combination of negotiation consultants & neuroscientists: Ed Brodow, Jeff Haden, Tara Swart, & Lisa Barrett.

• Be willing to walk away. In any situation, the person who cares the least has the most power. It’s vital to not appear desperate for a deal. If you buy a car/house the first time you see it, it’s a guarantee that you’ve paid too much.
• Shop around. If someone doesn’t offer you what you want, keep looking. Are you seeking a great deal on a loan? If your local bank, or credit union, is giving you a hard time try a competitive nationwide mortgage company.
• Talk to your friends, family, neighbors. What has their experience been like? Have they been in similar situations? Have they ever negotiated anything like closing costs?
• Ask for what you want. Nearly everything in life is negotiable. Try using “I statements” vs “You statements”. Being assertive and being aggressive are very different. Think critically and challenge assumptions based on what you are taught and told. If they say they have the best title company, how do you know that’s true?
• Listen. Ask probing questions. Then, listen to understand the other person not to get your message out. Ask open ended questions and then apply the 70/30 rule. Listen 70% of the time and avoid asking questions where they can provide a yes/no answer.
• Aim high and expect the best outcome.  Have you ever seen the show Pawn Stars? If owner of the pawn shop wants to pay $4,000 for an item, they’ll start by offering $3,000 knowing the other person will counter higher with something like $5,000. At this point, then the owner could re-counter back down to $4,000 his original, ideal price. 
• Do your homework.  Seeking out any, and all, especially free information is the safest bet.  The higher the purchase price of the home, the higher percent of the rebate you should be getting back at closing.
• Let silence speak.  Don’t use too many words and be aware that over-explaining yourself puts the other person in a powerful position over you.  When someone makes an offer, or asks you a question you don’t like, simply don’t reply. Your inaction will cause others to seek confirmation. Treat disinterest with amplified disinterest. You’ll be amazed at the result.