Does anyone know in the state of Texas if you can ask for a portion of realtor commissions to come back to you? The scenario would be that you alone do the dirty work and find a house, you then want a realtor for help representing you on the deal but you ask for some of the 3% commission on the deal in return. Realtor is happy because he/she didn't do the leg work and just the hand-holding up to close, and you get some (1% or 2%) in return. To make a long story short, this just happened to me. A friend of mine offered to be the realtor if we found a home, but now is saying it is "highly illegal" to return any commission "to any person who does not have an active real estate license". It sounds wrong to me, and I could not find anything on the Texas Real Estate Commision to support this. http://www.trec.state.tx.us/ I wouldn't do it if it's illegal, but to me this strikes me now as someone who is just wanting the full 3%. Anyone know?
I am in no way an expert on this matter.... or know anything to put it bluntly.... but I am gonna have to call BS on this. Common sense says that there is no reason the government should or would regulate this.
Clutch...my realtor kicked backed 1% to me (my company was paying the realty commission)...it certainly isnt illegal. The realtor may not want to because, unless they own the company, their commission gets whacked up as it is and then they end up having to give you pre tax dollars back. There's nothing illegal about your friend writing you a check and saying it was for some other type of work.
Hmm...If he gets the commission check in his name and pays you the % that you are asking, I don't see a problem. I have a license to market legal services, and while one of my recruits was waiting for his license, I signed one of his customers. I just gave my recruit the commision minus about 10% to cover the taxes. It sounds like he's getting greedy on you.
Lending Tree (Im not advocating using them but rather to provide an example) offers a "gift card" and USAA actually gives money back. Im not sure how they structure it to make it "legal" but here are the terms and conditions from Lending Tree (you don't have to use them for the mortgage): Offer Terms and Conditions Program Description -- Incentives for LendingTree's Real Estate Services are available to LendingTree customers who use the LendingTree Network Agent assigned by LendingTree to buy or sell their home, to the extent permitted by applicable law (see below for details). An additional $100 bonus is available to LendingTree customers who also use a LendingTree lender for a mortgage. Incentives will be paid in the form of a Gift Card from The Home Depot or American Express delivered after closing to the extent permitted by applicable law. Qualification -- Customers must have been initially connected with the Real Estate Professional (and lender for the additional $100 bonus) through LendingTree or one of its websites. These offers may not be combined with any other offer made by LendingTree of any of its partners or affiliates. However, if you both buy and sell a home through the program, you will receive the appropriate incentive for each transaction. Estimated Incentives -- For a qualifying $75,000 purchase or sale, the estimated incentive is $100. For every $50,000 the price of the purchase or sale increases above $175,000, the incentive will increase an additional $250. There is no incentive offered for home purchases or sales less than $75,000. These estimated incentives are based on a 6% real estate commission, evenly split between the listing and buying broker. If the actual commission split differs, the incentive will reflect a similar adjustment. Incentives will be paid in the form of a Gift Card from The Home Depot or American Express to the extent permitted by applicable law. The estimated incentives for a range of transaction values are shown below. Purchase or Sale Price: Incentive: $75,000-$124,999 $100 $125,000-$174,999 $250 $175,000-$224,999 $500 $225,000-$274,999 $750 $275,000-$324,999 $1,000 $325,000-$374,999 $1,250 $375,000-$424,999 $1,500 $425,000-$474,999 $1,750 $475,000-$524,999 $2,000 $525,000-$574,999 $2,250 Limitations due to State and Federal Law -- The incentive offer is available on modified terms in some states and not available at all in others. In addition, the incentive may not be available to some buyers, as follows: AK, KS, KY, LA, MO, MS, NJ, OK, RI, SC, and WV do not allow us to provide you with the customary incentive associated with this offer. However, we welcome you still to participate in the program, and receive all the other benefits the LendingTree Realty Services network provides. In these states, you MUST ensure that you receive the benefit of the incentive at or prior to closing as LendingTree will be unable to provide the incentive after you close. AL, OR, SD and TN do not allow us to provide you the customary incentive associated with this offer. However, you are eligible to receive the same amount as a credit at closing! Your assigned Network Agent will provide you with this process. Requesting Incentive -- For states which do not permit the customary incentive, you must ensure that you receive the benefit of the incentive at or prior to closing -- please make sure it appears on the HUD-1 at closing or on other appropriate documentation. For states which permit the Gift Card incentive, please follow the following procedure: After you close a real estate transaction with your LendingTree Network Agent, please send us within 30 days of your close date a copy of your HUD-1 document (you will receive this at closing), your signed incentive voucher, your correct mailing address, and your Agent's name to: LendingTree, LLC., Attn: Real Estate Bonus, PMB 008, 15105 - D. John J. Delaney Drive, Charlotte, NC 28277. (Please include your LendingTree password if you also closed a loan with a LendingTree lender). LendingTree will process your request upon receipt of the HUD-1 evidencing the closing of a qualifying transaction. LendingTree should send a Gift Card from The Home Depot or American Express (as applicable) to qualifying customers within approximately 6 - 8 weeks. Please contact LendingTree at 800 555-TREE (8733) with questions. Redeeming Gift Cards -- Gift Cards to The Home Depot are redeemable at The Home Depot. American Express Gift Cards are redeemable at a selected number of merchants nationwide. Please click here for a complete list. The Home Depot® is not affiliated with LendingTree, LLC The Home Depot® is a registered trademark of Homer TLC, Inc.
Clutch, Would you be interested in having a portion of her comm taken off the price of the house instead of being rebated back to you?
Actually...if you are the buyer, just tell the realtor to cut the price of the house by the amt you want back.
When I bought my new house from a Developer - the developer gave my realator the full 6%- 3% went to the realator and 3% off the price of the house. Not exactly the same situation but similar.
An agent cannot pay another person out of the commission. Only a broker can pay the agent their comission. Basically if your friend is listed as the buyers agent he is entitled to half of the comission less what goes to his broker. Technically though there is nothing stopping him from cashing his commission check, withdrawing cash from his account and handing it over to you. Of course, technically it is not legal but practically untraceable. Legally though, if he is your buyers agent, he is entitled to his commission, all of it.
Here is the lovely document all real estate sales agents must learn to get their license in Texas. Enjoy. Texas Real Estate Act
You might wanna check out the US Dept of Housing & Urban Development (HUD) if you haven't already done so. I dunno if this kinda stuff applies, BUT, I know my company (who does title & mortgage information) has to be careful not to offer gifts and stuff to real estate professionals. We can't even really give away promotional items for tradeshows because of something called RESPA (real estate settlement proceedures act). Of course, our stuff is all sortsa gov't regulated and gift-giving would be seen as violating pricing structures (or something like that, I don't really pretend to even understand that stuff; it's why we have lawyers!). I would think giving away commission is kinda like negotiating a better price on the house, right? I dunno. On the other hand it could be very illegal and I wouldn't be all that surprised. Yeah, lots of help I am!
This is more of less what I've been told, so I'm trying to figure out my options. Let me tell you my situation broken down: I touched base with an old friend (very good friend) in the area to tell him I was thinking of moving there. We talked and in the end he mentioned that his father was a realtor and that he too had his real estate license, and that he would be willing to return the entire 3% commission to me as a favor if we found a house we wanted. Now he's a very good friend, so he offered this as a favor, so I told him thanks but I couldn't accept that. He insisted, but we left it at that. I was planning on getting a realtor, but with that potential, I looked for a month or two on my own. Then we did seem to find potentially "the" house on our own. So I called him up to see if we could come up with something. He insisted full 3% back to me, but I insisted he get something for sure (1%, whatever). So, he took pics of the house, checked it out, contacted the selling realtor, found out lots of info .... and we actually weighed putting in an offer today, but he dropped a bomb, saying, "The good news is the seller pays all the realtor commissions/fees". I knew I was in trouble then because that bit of info was obvious, so I asked him about what we had worked out and that's when he said upon checking, he found out it's illegal to return commissions. That he could get me a nice gift, but couldn't exchange money. This is a great guy, great family that I would vouch for .... but I took a major step back. Instead of actually putting in an offer (which could have happened today), we took a major pause. That money back was a lot of money and it turned in to nothing basically. At the same time, how could I complain. Don't get me wrong -- I don't expect a realtor to work for free. I absolutely wanted him compensated, but the full 3% in that situation isn't acceptable to me. I would have gotten a realtor to find me a house rather than done the research and worked with a friend. Not sure how to proceed (I've decided to cool the jets on the house instead of making this a huge issue), but I wanted to make sure it wasn't "illegal". I also would hate to ruin a lifelong friendship over this. The house is nice, priced right and could sell very soon. Kind of sucks.
I know the seller's realtor (when we bought our house) lowered his commission to 1.5% to help her get out of the house, and our realtor refunded us .5% as a referral fee (mother-in-law refferred us to her).
Clutch, Essentially, it is illegal, thats why there have been suggestions to just have them take it off the price of the house. Anything you receive back from your realtor would be considered a "gift" (consistent with what RIET posted) and would essentially be considered income for you. If you already know what you want to pay for the house, you can always chance going without representation and dealing with the selling agent direct, but asking him/her to take the 3% to the buyer's agent directly off the price of the house. If not, your can use a realtor and they can rebate a portion back to you, but it has to be reported on the HUD 1 and will be limited as far as how much.
I don't see why not. http://www.trec.state.tx.us/questions/faq-enf-recent.asp Q. Do TREC statutes and rules allow a licensee (broker or salesperson) to give part of his commission to his client, either a buyer or seller? A. Yes. Under TREC Rule 535.147(c) a licensee may share or pay a portion of the licensee's fee or commission with a party to the transaction. If it is the licensee's own client, no disclosure to other parties is required. However, if the licensee intends to pay a fee or portion of his commission to another party to the transaction who is not his client, he must obtain the consent of his client before making the payment. RULE §535.147 Splitting Fee with Unlicensed Person
I'm really not sure what a real estate broker does that justifies their high fees. I'd much rather have the cash than the hand-holding. Why use the friend at all, why not just negotiate yourself?
Excellent, Excellent job SoSoDef. My wife and I had a similar situation, and we were told the same thing that Clutch was told. From a differing realtor though we were told that it was legal. As it turned out, we bought another property and the subject wasn't revisited. I have a sneaky suspicion that brokers spread this rumor to keep freebies to a minimum. My biggest reason for believing this to be legal is that I can't think of an instance where it allows any impropriety. When a seller lists his house with a typical realtor, he agrees to pay a six percent commission (typically) with half of that reserved for the buyer’s agent. The buyer’s agent should be free to do with that money what he wishes—especially remit some of that back to the buyer. He IS his agent, after all. Clutch, I recommend that you show this to your friend and tell him that he has been mislead by someone, give him a bottle of wine (or something) for his troubles, and let him know that you are going to use a flat fee real estate agent for the closing. He may, of course, change his mind at this point. If not, just search the web for a flat fee realtor. Here’s one who—on the first page of her website—tells you flat out that you can get cash back at closing.
An attorney has specialized legal knowledge needed to win a case. I don't know that you need specialized knowledge to sit down and agree to a price. In fact I know you don't, because people have done just that before. People sell houses "by owner" without employing an agent, and save the 3%. I also don't think the training period required for certification is as lengthy.
I'm pretty sure you have to have a licensed real estate professional or an attorney with you at the closing. My wife is an attorney, so we just used her.
