Home Buyer Rebates in Seattle - What You Need to Know

Seattle is one of the most rapidly growing cities in the nation. The unparalleled views of the Cascade Ranges and Olympian Mountains are only the icing on the cake for a city as culturally diverse as it is appealing. Homebuyers looking to buy a home in Seattle have a long list of top neighborhoods to choose from, with each offering a distinct lifestyle. 

Choosing to buy a home in Seattle is a big step. You’ll be at the center of one of the tech capitals of the world, with Amazon and Facebook maintaining offices in Downtown Seattle. You’ll have access to countless hiking trails and waterfront activities. Plus, you’ll enjoy some of the best coffee in the country. 

Deciding on the perfect neighborhood is fun, but purchasing a new home is a costly transaction. Luckily, you can take advantage of a home buyer rebate to unlock significant savings.

What is a home buyer rebate?

Commission rebates, also known as home buyer rebates or commission refunds, allow homebuyers to receive money back after purchasing a home. Modern brokerages enable these consumer friendly rebates by investing in a tech-forward approach to real estate. 

For example at Prevu, the combination of a digital home buying platform with salaried local agents creates the efficiency for the brokerage to pass along significant savings to buyers.

So, where exactly does the buyer rebate come in?

In a traditional real estate transaction, the seller has a listing broker that represents them. When a buyer purchases a home, that agent receives a hefty 6% commission on the purchase price of that home. If an agent represents the buyer, they receive half of that commission or 3%.  

Prevu’s Smart Buyer Rebate gives homebuyers a commission rebate that is a portion of the buyer’s agent commission they receive for representing buyers.

The modern approach of a buyer rebate

The vast majority of homebuyers still use traditional real estate agents. The classic model means the broker is working for a commission. And a lot of these agents will tell homebuyers that it is "free" to be represented.

For the longest time, traditional brokerages have consistently repeated this "half-truth" to homebuyers. But in reality, working with a traditional brokerage as a buyer isn’t free. While you’re not precisely paying your agent directly to represent you when buying a new home, buyers are synthetically paying the fees since they are showing up with all of the money at closing. 

That’s because sellers always consider the commission rates they will have to pay to the agents and thus set their listing price accordingly with the goal of achieving a desired amount of proceeds.

Modern brokerages like Prevu are helping buyers save. In addition, the company hires agents who are experts in their local area. If you’re interested in finding a home in West Seattle, you can rely on curated expertise to help you find a home that’s near the best hiking spots and with a convenient commute to Downtown Seattle.

Prevu agents are also salaried, which means there is no pressure to close a deal. Instead, they will be with you every step of the home buying process, from selecting the perfect neighborhood to handling the complicated paperwork. You can also take advantage of their market knowledge to compare prices of other local homes, so you know the price you’re getting is fair.

Homebuyers can see the potential commission rebate they will receive for every listing on the Prevu platform. Once the purchase is complete, buyers receive their rebate - the largest commission rebate in Seattle. The extra savings can help you offset closing costs, renovate your new home, or buy the perfect outdoor gear for those stunning Seattle area hiking trails.

Commission Rebate in Seattle ($1,700,000 home example)

• Sale Price: $1,700,000
• Seller’s Agent Commission (3% of sale price): $51,000
• Buyer’s Agent Commission (3% of sale price): $51,000
• Home Buyer Rebate: $17,000

Are buyer rebates legal in Seattle, Washington?

Commission rebates are legal in 40 out of 50 states, including Washington. Not only are rebates permitted, but the Department of Justice released an article about buyer rebates and their benefit to home buying. 

Some agents may tell you that giving a buyer a commission rebate to an unlicensed person is a form of payment, making it illegal. However, this is not the case in a real estate transaction where the buyer is purchasing the property and is the one receiving the rebate.

Is a commission rebate taxable income?

Since real estate brokerages cannot offer tax advice, buyers should consult with their accountant regarding the proper treatment of commission rebates given their financial situation.  That said, the IRS shed some light in a 2007 article on whether a home buyer rebate is considered taxable income. 

In short, a commission rebate can be treated as a reduction in a purchaser’s cost basis. This eliminates the requirement for a real estate brokerage to issue a 1099 form to the buyer. 

Interested in buying a home in Seattle? Browse listings and see how much you can save with Prevu.