How to Get a Commission Rebate in Dallas

When buying a home in the Dallas-Fort Worth area, you want the best deal possible. That usually means trying to save money by getting a favorable purchase price. 

Yet there is another way buyers can save money. If you work with the right real estate agents, you can potentially secure a commission rebate and put cash back in your pocket. 

The issue is that many folks do not know about commission rebate programs, much less how to get one. To give aspiring homebuyers some insight, our team put together a quick guide detailing how folks can get money back via a home buyer rebate when they close on a Dallas home. 

What is a commission rebate? 

A commission rebate, or a buyer rebate, is a portion of your buyer agent’s commission given back to you after successfully closing a real estate transaction. 

Traditionally, the seller and a listing agent agree on a commission structure. Once a transaction closes, the owner pays commissions to their listing agent and to the buyer’s agent based on the agreed upon commission structure. Luckily, when you work with a buyer’s agent that provides a commission rebate, they will return a portion of the commission to you after closing. 

Whether you are buying a condo in Uptown or a new construction home, you want to try and lock in a commission rebate. The rebate is dependent on the purchase price of the house and the buyer’s agent commission rate offered by the owner. Typically, the higher the price, the more money you get back at closing. 

These funds can sometimes total thousands of dollars, which can go a long way towards rebuilding your savings, furnishing your new abode, or remodeling a portion of the property. 

What you need to get a commission rebate in Dallas 

Commission rebates are a powerful tool for homebuyers, but only some agents offer them. That is why you must interview multiple buyer's agents to see which ones can provide this service. 

When it comes to providing a commission refund, you want to ensure you are getting full service in addition to your rebate. 

Even if a broker offers a commission rebate, ask them about the services they deliver; you’ll want to ensure your agent will be at your side from the beginning to the end of your homebuying journey. 

Working with an agent means professional expertise at every step of your home search, from narrowing down neighborhoods to exploring suburbs that fit your needs. They will also help you find other listings and areas that match your search.

Do commission rebates comply with Dallas laws?

In Texas and 40 other states in the US, you are legally allowed to collect a commission rebate from your real estate agent. However, because some states do not permit rebates, many folks do not know about the legality of the process. 

That is why the Department of Justice issued guidance on the matter, stating that rebates are a pro-consumer practice, helping to make homebuying more affordable. 

Some real estate companies may tell you that rebates are illegal because the process entails giving money to an unlicensed home buyer. But this is not the case, as buyers are exempt from this regulation since they are a party in the transaction.

Are commission rebates subject to taxation?

When buying a home, you should always connect with an accountant to ensure your tax planning is covered. A real estate broker should never provide you with tax or legal guidance. 

In the eyes of the IRS, a commission rebate decreases the cost basis of a home purchase. This means a commission rebate is not seen as income, so you will not receive a 1099 form when receiving a rebate. The IRS helped clear up confusion regarding this topic in a 2007 letter on rebates.