Commission Rebates in New Jersey - Buyer Savings Guide
By Sean Creamer on May 13, 2024
After saving up for a down payment, checking your credit score, and researching what parts of New Jersey interest you most, it is time to start exploring properties for sale.
But with high home prices across the housing market, and expensive closing costs, you will want to save as much as possible when buying a home. Luckily, modern brokerages offer tools like commission rebates to help put money back in your pocket.
To educate buyers on how they can save, we've compiled a quick guide to explain how commission rebates can unlock significant savings when buying a home or condo in New Jersey.
What is a commission rebate in New Jersey?
If you are buying a Fort Lee, NJ home, you will want a commission rebate. Sometimes called a buyer rebate, this tool allows buyer’s brokers to provide new homeowners with a portion of their broker fee after closing the deal.
Yet this tool is not widely available. Traditional brokerages don’t usually offer buyers a rebate due to antiquated real estate practices.
For instance, when pricing the home, sellers factor in the broker fees to net the most profit from the sale proceeds. So even though commissions are not a line item on the closing statement for buyers, broker fees are embedded into the home's purchase price.
Yet through commission rebates, you can turn tradition on its head.
Save money by avoiding the traditional brokerage experience
When homeowners sell their property, they hire a listing agent to represent their interests.
Buyers can go it alone and deal directly with the listing agent, but it is better to have a buyer's agent at your side to help you craft offers and advocate for your interests.
In a traditional real estate transaction, sellers typically pay a 6% commission to the listing broker, who then gives a portion of that money to the buyer's agent.
But there are other options, which is why you want to meet with multiple buyer’s agents and ask if they offer commission rebates. Modern advances in real estate technology combined with salaried real estate agents enable forward-thinking brokerages to provide a portion of their commission to homebuyers they represent.
Secure the largest commission rebate in New Jersey
Once aspiring homebuyers are aware commission rebates exist, the next most common question they ask is - how much are commission rebates in New Jersey?
Prevu Real Estate offers the largest commission rebate in New Jersey - giving their clients back up to 1% of the home’s purchase price. For instance, if you bought a condo in Hoboken for $1,500,000, you could receive up to $15,000 back after closing.
Commission Rebate in New Jersey - Example
- Purchase Price: $1,500,000
- Seller's Agent Commission (3% of sale price): $45,000
- Buyer's Agent Commission (3% of sale price): $45,000
- Buyer Commission Rebate (1% of sale price): $15,000
Are buyer commission rebates legal in New Jersey?
Yes, it is 100% legal to receive a buyer rebate when you get the keys to your New Jersey home.
In 40 states, including New Jersey, commission rebates are permissible. Brokerages can provide their clients with a portion of their real estate commission to new homeowners. While an agent may say they can't pay an unlicensed person, this rule does not apply to buyers who are party to a transaction.
Do you pay income tax on a commission rebate?
Prevu can help you secure the home of your dreams, but you should consult a tax professional to provide tax advice as each person’s financial situation may vary.
That said, the IRS ruled that commission rebates can be treated as a reduction in a homebuyer’s cost basis, not income. Also, brokerages are not required to issue a 1099 related to the rebate.
Interested in buying a home in New Jersey? Browse listings and learn how much you can save with Prevu's Smart Buyer Rebate.
