Using buy side comission to credit closing costs

[Matthew Mckinivan]

Hello, 

Real estate agent here from Buffalo, NY.

I wanted to know if any other agent here has ever tried to credit the buyer (whether someone else or yourself) your commission to go towards closing costs?

As I understand it my broker will allow me to knock down commission on the buy side to $0 if it is for myself but the only advantage would be the offer looking more appealing to the sellers because they would save 2%-3%. Is it possible to use the commission you would be earning to pay for some closing costs?

[Nicholas Covington]

Hello Matthew,

As I am not a real estate agent my answer would only be from my mortgage industry knowledge.

This all relies on permission from your broker FIRST and foremost as they are the one technically cutting you the check from commission earned. You are allowed to "rebate" or "credit" the buyer (based on lender and state laws) a certain amount towards their closing costs. Make sure that your state is one that allows this to be done (https://www.justice.gov/atr/rebates). Seems as though NY allows this to be done. The % of concessions allowed still applies based on loan program.

Next key thing would be to communicate communicate communicate with lender that you would like to do this. This will need to be placed on the HUD/CL and should ONLY be credited during time of closing. Even if stated on HUD to be POC there is a lot of grey area with RESPA and to be honest isn't worth the hassle. Just have title credit the $ amount that will be rebated by your agency and this will be taken from the commission split when the check is cut. I repeat, ONLY let closing handle this and make sure it is writing on the the CL/HUD. Do not pay your client outside of escrow. 

Best of Luck!

Nick