Home Buyer Rebates: How to Get Money Back at Closing

Learn how buyer rebates work in Washington, how much you can expect (0.5–1% typical), and how to negotiate rebates to save thousands at closing.

Tags:buyer-rebates, closing-credits, commission-rebate, cost-savings, seattle-market
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Your agent earns $20,625 (2.5% of $825,000). You do most of the home search yourself on Zillow. Can you get some of that commission back?

Yes. In Washington state, buyer rebates are legal. Some agents will rebate 0.5–1% of the purchase price back to you at closing. On an $825,000 home, that's $4,125–8,250 back in your pocket.

In this article, you'll learn:

  • What buyer rebates are and how they work
  • Washington state legality and requirements
  • How much you can expect (0.5–1% typical)
  • How rebates affect your mortgage and taxes
  • When to negotiate and what to say
  • Which agents offer rebates

This article is for you if: You want to reduce your home buying costs, or you're interviewing agents and want to negotiate a rebate.

Table of Contents

What Are Buyer Rebates?

The Basics

What it is: Portion of buyer agent's commission paid back to you at closing

How it works:

  • Agent earns commission (typically 2.5–3%)
  • Agent rebates portion to you (typically 0.5–1%)
  • You receive check or credit at closing

Example:

  • Purchase price: $825,000
  • Agent commission: 2.5% = $20,625
  • Rebate: 0.5% = $4,125
  • Agent keeps: 2% = $16,500
  • You receive: $4,125

Legal in Washington: Yes, fully legal

Requirements:

  • Must be disclosed to all parties
  • Must be disclosed to lender
  • Must be shown on closing statement
  • Cannot be secret

Why Agents Offer Rebates

Competition:

  • Differentiate from other agents
  • Attract price-conscious buyers
  • Win your business

Volume strategy:

  • Lower margin per transaction
  • More transactions overall
  • Still profitable

Buyer doing work:

  • You find homes on Zillow
  • You attend open houses
  • Agent does less work
  • Fair to share savings

Market conditions:

  • Slow market = more rebates
  • Hot market = fewer rebates
  • Agents compete on price

How Much Can You Get?

Typical Rebate Amounts

Standard rebate: 0.5–1% of purchase price

Examples:

  • $600,000 home: $3,000–6,000
  • $825,000 home: $4,125–8,250
  • $1,200,000 home: $6,000–12,000

Factors affecting amount:

Home price:

  • Higher price = higher dollar rebate
  • But same percentage

Agent's commission:

  • If agent earns 3%, can rebate more
  • If agent earns 2%, can rebate less

Services provided:

  • Full service = smaller rebate
  • Limited service = larger rebate

Market conditions:

  • Slow market = larger rebates
  • Hot market = smaller rebates

Negotiation:

  • Some agents negotiate
  • Some have fixed rebate
  • Ask upfront

Rebate Structures

Flat percentage:

  • 0.5% of purchase price
  • 1% of purchase price
  • Simple and clear

Tiered by price:

  • Under $500K: 0.5%
  • $500K–$1M: 0.75%
  • Over $1M: 1%

Tiered by commission:

  • If agent earns 2.5%: rebate 0.5%
  • If agent earns 3%: rebate 1%

Flat dollar amount:

  • $5,000 rebate
  • $10,000 rebate
  • Regardless of price

Percentage of commission:

  • 20% of commission back to you
  • 25% of commission back to you

Example (percentage of commission):

  • Purchase price: $825,000
  • Agent commission: 2.5% = $20,625
  • Rebate: 25% of commission = $5,156

How Rebates Work at Closing

Rebate as Credit

Most common method:

  • Rebate shown as credit on closing statement
  • Reduces your cash needed at closing
  • Applied to closing costs or down payment

Example:

  • Purchase price: $825,000
  • Down payment: $82,500
  • Closing costs: $16,500
  • Rebate: $4,125
  • Cash needed: $94,875 (instead of $99,000)

Closing statement shows:

Credits to Buyer:
- Buyer agent rebate: $4,125

Rebate as Check

Less common:

  • Receive check after closing
  • Not shown on closing statement
  • May have tax implications

Why less common:

  • Lender may not allow
  • Complicates closing
  • Tax reporting unclear

Most agents prefer credit method

Timing

When rebate is determined:

  • Before you sign buyer brokerage agreement
  • Negotiate upfront
  • Put in writing

When rebate is received:

  • At closing
  • Same day you get keys
  • Applied to closing costs

Important: Rebate must be disclosed to lender before closing. Can't be surprise at closing.

Impact on Your Mortgage

Lender Requirements

Must be disclosed:

  • Tell lender about rebate
  • Lender includes in calculations
  • Shown on closing disclosure

How lenders treat rebates:

  • Reduces your cash needed
  • May affect loan-to-value (LTV)
  • May affect down payment source

Example:

  • Purchase price: $825,000
  • Down payment: 10% = $82,500
  • Rebate: $4,125
  • Lender may consider: $78,375 from you + $4,125 rebate = $82,500 total

Important: Some lenders have rules about rebates. Ask your lender before negotiating rebate.

Down Payment Considerations

Can rebate be used for down payment?

  • Depends on loan type
  • Depends on lender

Conventional loans:

  • Usually yes
  • Counts toward down payment
  • May affect LTV calculation

FHA loans:

  • Usually yes
  • Counts as interested party contribution
  • Subject to limits (6% of price)

VA loans:

  • Usually yes
  • No restrictions

Jumbo loans:

  • Varies by lender
  • Some allow, some don't
  • Ask lender

Pro Tip: Tell lender about rebate during pre-approval. Confirm it won't affect your loan.

Tax Implications

How IRS Treats Rebates

IRS position: Rebate reduces your cost basis

What this means:

  • Purchase price: $825,000
  • Rebate: $4,125
  • Cost basis: $820,875

Impact on capital gains:

  • When you sell, gain is calculated from cost basis
  • Lower cost basis = higher gain
  • Higher gain = more taxes (when you sell)

Example:

  • Buy for $825,000, rebate $4,125
  • Cost basis: $820,875
  • Sell for $1,000,000
  • Gain: $179,125 (not $175,000)
  • Extra tax: ~$825 (20% of $4,125)

But:

  • Primary residence exclusion: $250K single, $500K married
  • Most people won't pay capital gains anyway
  • Tax is years in the future

Bottom line: Take the rebate. Tax impact is minimal and far in future.

Reporting Requirements

1099 form:

  • Agent may send you 1099
  • Reports rebate as income
  • You report on tax return

How to report:

  • Reduces cost basis (not income)
  • Report on Schedule D when you sell
  • Consult tax advisor

Important: Rebate is not taxable income. It reduces your cost basis. Don't pay income tax on it.

When to Negotiate Rebates

Best Time to Negotiate

Before signing buyer brokerage agreement:

  • Negotiate upfront
  • Get in writing
  • Part of agreement terms

During agent interviews:

  • Ask all agents about rebates
  • Compare offers
  • Choose agent with best total package

Not after closing:

  • Too late
  • Agent won't agree
  • Must be in agreement

What to Say

Direct approach: "I'm interviewing several agents. Do you offer buyer rebates? If so, how much?"

Comparison approach: "Another agent offered me a 0.5% rebate. Can you match or beat that?"

Value approach: "I'll be doing a lot of the home search myself on Zillow. Can you offer a rebate since you'll be doing less work?"

Negotiation approach: "Your standard rate is 2.5%. Would you consider 2% with 0.5% rebated to me?"

What to Expect

Some agents:

  • Offer rebates proactively
  • Have standard rebate (0.5–1%)
  • Advertise rebates

Some agents:

  • Don't offer rebates
  • Will negotiate if asked
  • Depends on market

Some agents:

  • Refuse rebates
  • "I earn my full commission"
  • Won't negotiate

Seattle market:

  • Rebates are common
  • Especially for expensive homes
  • More common in slow market

Agents Who Offer Rebates

Types of Agents

Discount brokerages:

  • Redfin (0.5–1% rebate)
  • Other discount brokers
  • Standard business model

Independent agents:

  • Some offer rebates
  • Varies by agent
  • Ask during interview

Traditional brokerages:

  • Rarely offer rebates
  • May negotiate if asked
  • Depends on agent

Redfin Example

Redfin rebate:

  • 0.5% on homes under $500K
  • 0.75% on homes $500K–$1M
  • 1% on homes over $1M

Example:

  • $825,000 home
  • Rebate: 0.75% = $6,188
  • Significant savings

Trade-offs:

  • May have less experienced agents
  • May have higher agent turnover
  • May have less personalized service

But:

  • Legitimate licensed agents
  • Full MLS access
  • Same services as traditional agents

Finding Rebate Agents

Ask during interviews:

  • "Do you offer buyer rebates?"
  • "How much?"
  • "Is it negotiable?"

Search online:

  • "Seattle buyer rebate real estate"
  • "Washington buyer agent rebate"
  • Agent websites

Ask for referrals:

  • Friends who got rebates
  • Online forums
  • Real estate groups

Rebates vs Full Service

What You Might Give Up

Potential trade-offs:

  • Less experienced agent
  • Less personalized service
  • Less hand-holding
  • Fewer agent recommendations

What you shouldn't give up:

  • MLS access
  • Contract expertise
  • Negotiation skills
  • Attending showings

Questions to ask rebate agents:

  • "What services do you provide?"
  • "Will you attend all showings?"
  • "Will you help with negotiations?"
  • "What's your experience level?"

When Full Service Is Worth It

Complex situations:

  • First-time buyer
  • Complicated finances
  • Competitive market
  • Need lots of guidance

High-stakes purchases:

  • Expensive home
  • Fixer-upper
  • Investment property
  • New construction

Personal preference:

  • Want hand-holding
  • Want experienced agent
  • Want personal relationship
  • Don't care about rebate

When Rebate Makes Sense

Experienced buyers:

  • Bought before
  • Know the process
  • Comfortable with research

Self-directed buyers:

  • Find homes on Zillow
  • Attend open houses
  • Do own research

Price-conscious buyers:

  • Every dollar matters
  • Want to maximize savings
  • Willing to do more work

Expensive homes:

  • Rebate is substantial ($10K+)
  • Worth negotiating
  • Significant savings

Rebate Negotiation Strategies

Strategy 1: Shop Multiple Agents

How it works:

  • Interview 3–5 agents
  • Ask all about rebates
  • Compare total packages
  • Choose best combination of service + rebate

Example:

  • Agent A: No rebate, 20 years experience
  • Agent B: 0.5% rebate, 10 years experience
  • Agent C: 1% rebate, 2 years experience
  • Choose based on your priorities

Strategy 2: Negotiate Tiered Rebate

How it works:

  • Higher price = higher rebate
  • Incentivizes agent to help you buy more expensive home

Example:

  • Under $750K: 0.25% rebate
  • $750K–$1M: 0.5% rebate
  • Over $1M: 0.75% rebate

Strategy 3: Performance-Based Rebate

How it works:

  • Base rebate + bonus for performance
  • Incentivizes agent to perform well

Example:

  • Base: 0.5% rebate
  • Bonus: +0.25% if close within 60 days
  • Bonus: +0.25% if negotiate $10K+ off price

Strategy 4: Commission-Based Rebate

How it works:

  • Rebate percentage of whatever agent earns
  • If seller pays more, you get more back

Example:

  • Agent earns 2.5%: rebate 20% = 0.5% to you
  • Agent earns 3%: rebate 20% = 0.6% to you

Strategy 5: Flat Dollar Rebate

How it works:

  • Negotiate specific dollar amount
  • Regardless of final price

Example:

  • $5,000 rebate
  • Whether you buy $700K or $900K home
  • Simple and clear

Common Questions

Q: Will rebate affect my loan approval?

A: No, if disclosed properly. Tell lender during pre-approval. Lender will account for it.

Q: Can I use rebate for down payment?

A: Usually yes, but depends on loan type and lender. Ask lender before negotiating rebate.

Q: Do I pay taxes on rebate?

A: No. Rebate reduces your cost basis, not taxable income. Affects capital gains when you sell (years later).

Q: Will agent provide worse service if I get rebate?

A: Shouldn't. But ask about services provided. Make sure you're getting what you need.

Q: Can I negotiate rebate after signing agreement?

A: Unlikely. Negotiate before signing buyer brokerage agreement.

Q: Are rebates common in Seattle?

A: Yes, especially for expensive homes. Many agents offer 0.5–1% rebates.

Q: Will seller know about rebate?

A: Yes, shown on closing statement. But doesn't affect seller.

Q: Can I get rebate if seller pays agent?

A: Yes. Rebate comes from agent's commission, regardless of who pays agent.

Summary: Key Takeaways

  • Rebates are legal in Washington - fully legal
  • Typical rebate: 0.5–1% of purchase price ($4,000–8,000 on $825,000 home)
  • Negotiate before signing agreement - too late after
  • Must be disclosed to lender - tell lender during pre-approval
  • Reduces cost basis - affects capital gains when you sell (minimal impact)
  • Redfin offers standard rebates - 0.5–1% depending on price
  • Ask all agents - "Do you offer buyer rebates?"
  • Don't sacrifice service - make sure agent provides what you need

Next Steps

  1. Decide if rebate is priority - savings vs full service
  2. Ask during agent interviews - "Do you offer buyer rebates?"
  3. Compare total packages - service + experience + rebate
  4. Negotiate before signing - get rebate in buyer brokerage agreement
  5. Tell lender - disclose rebate during pre-approval
  6. Get it in writing - rebate terms in agreement
  7. Verify at closing - check closing disclosure shows rebate

Related articles:

Additional Resources

Rebate information:

Tax implications:

  • Consult tax advisor about cost basis
  • IRS Publication 523 (Selling Your Home)

Lender requirements:

  • Ask lender about rebate policies
  • Confirm rebate won't affect loan approval

Disclaimer: This article provides general information about buyer rebates and should not be considered legal or tax advice. Rebate availability and amounts vary by agent and market conditions. Consult with your lender and tax advisor about specific implications for your situation.

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