Richie Alan Naggar, agent & author  (people first...then business Ran Right Realty )

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Grace Hanamoto
Intero Real Estate - Sunnyvale, CA
Quality, Knowledge, Professionalism, Experience

Hey Richie!

In a word...NO.

The commission rebate, when properly done (meaning both buyer and SELLER, yes, Seller, need to approve the rebate, and the lender has to be aware of the rebate and approve it as well...trust me, I used to do this all the time and I know of what I am writing), cannot be used as a down payment.

The rebate CAN be used to pay for loan related costs--points, fees, buy down interest, and for escrow fees, but not a single penny can be used for downpayment.  The buyer must prove proof of funds for the downpayment withOUT the help of additional, contingent funds.

Hope this helps!

May 15, 2016 04:14 AM
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Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

NO. The commission has not yet been earned. 

May 15, 2016 05:28 AM
Rainmaker
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Jennifer Mackay
Counts Real Estate Group, Inc. - Panama City, FL
Your Bay County Florida Realtor 850.774.6582

Wow, where do you live that allows that and what agent has lost their mind!

May 15, 2016 10:10 PM
Rainmaker
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Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Yes, it can be used towards closing costs. I've done it, but always need a letter from the broker-in-charge authorizing it. I've also had a seller reduce the purchase price for the amount of the credit back and pay a lower commission.

May 15, 2016 09:12 PM
Rainmaker
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Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Richie,

I think you have your answer. Wishing you a great week. A

May 15, 2016 01:35 PM
Rainmaker
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Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

No, that won't pass Underwriting guidelines...

May 15, 2016 12:08 PM
Rainmaker
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William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

If I remember right I did this with a builder some years back

May 15, 2016 11:21 AM
Rainmaker
3,988,007
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

The way we would do that is to discount the commission paid at closing to the selling agent and that same amount to be given as a credit to buyer from the seller to be used toward closing costs, prepaids. It takes two separate agreements. This amount cannot go toward down payment.

May 15, 2016 10:13 AM
Rainmaker
1,771,867
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

I say no. I do not think it is legal to give people who are not licensed money.

May 15, 2016 07:44 AM
Rainmaker
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Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
CEO of Vision Drive Realty - Coastal San Diego

Closing costs and rebates, not the loan.

May 15, 2016 05:46 AM
Rainmaker
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Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

In most cases no. It has to be disclosed to the lender and approved by them. Here in NH it is illegal as only $50 can be given back to the buyer

May 15, 2016 05:10 AM
Rainmaker
5,850,101
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Unless the buyer is the agent, no.

May 18, 2016 11:46 PM
Rainmaker
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Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

Grace has the best answer!

My answer would be: down payment needs to be in as part of the loan process.  Agents don't get their commission until after the loan docs are signed and the escrow closes.  If the monies are needed for the down, but don't exists until the close, you cannot borrow from the future for something in the present.

May 16, 2016 04:23 AM
Rainmaker
4,852,560
Richard Weeks
Dallas, TX
REALTOR®, Broker

I would say with full disclosure and lenders apprvoal.

May 16, 2016 12:25 AM
Rainmaker
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Sandy Padula & Norm Padula, JD, GRI
HomeSmart Realty West & Florida Realty Investments - , CA
Presence, Persistence & Perseverance

Lots of excellent answers here; great question but it has been answered already!

May 15, 2016 11:15 PM
Rainmaker
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Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Depends on the lender.

Depends on the buyer.

Depends on the broker. 

Depends on the law.

May 15, 2016 10:51 PM
Rainmaker
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Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty

no

May 15, 2016 10:47 PM
Rainmaker
823,379
Susan Laxson CRS
Palm Properties - La Quinta, CA
Realtor in San Diego, CA & Naples, FL

Already some of the best answers I have read about the subject!

May 15, 2016 10:23 PM
Rainmaker
7,792,559
Roy Kelley
Retired - Gaithersburg, MD

Only if this will be allowed by the lender. Then, follow their instructions.

May 15, 2016 09:40 PM
Rainmaker
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Richie Alan Naggar now that is interesting! Something that is not yet earned will not be a down payment...

May 15, 2016 04:29 PM
Rainmaker
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Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Reduce home price? NCRR is a common one.

May 15, 2016 01:27 PM
Rainmaker
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Tony Lewis
Summit Real Estate Group - Valencia, CA
Summit Real Estate Group Valencia & Aliso Viejo

Yes if they advance it up front and the lender approves it.

May 15, 2016 08:36 AM
Rainmaker
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Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

in  my region it can only be done with full disclosure and if the individuals are related parties.  It is legally precarious and lenders dont like it here.

May 15, 2016 08:07 AM
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Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Ya gotta love the vast array of knowledge here on AR!  Grace Morioka is the star of this thread!  

May 15, 2016 05:29 AM
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Bob Crane
Woodland Management Service / Woodland Real Estate, KW Diversified - Stevens Point, WI
Forestland Experts! 715-204-9671

I would defer to Grace Morioka for a very good answer.

May 15, 2016 04:59 AM
Rainmaker
108,016
Scott Lawson
America's Home loans - Santa Rosa, Petaluma Mortgage Broker - Santa Rosa, CA
Mortgage Broker FHA, VA, refinance or purchase

Two answers:

 

  • Towards the down payment--never!
  • Towards closing costs--Yes--up to all of the closing costs.

 

Minimum cash from buyer has to be = or  > the minimum down payment required for the loan product...

May 15, 2016 04:55 AM
Rainmaker
4,800,082
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

I think that Grace has given you an excellent answer.

May 15, 2016 04:33 AM
Rainmaker
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Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Richie - We haven't had a problem doing rebates (although we don't do them often) but we've never been able to get a lender to agree to use a rebate as a down payment.

May 15, 2016 04:25 AM
Rainmaker
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Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

I know there is a trick to this. Grace is also correct here BUT what about the buyers agent rebates from Redfin?

May 15, 2016 04:19 AM
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Patricia Kennedy
RLAH@Properties - Washington, DC
Home in the Capital

There's no reason why, with agreement from the lender, the agent cannot issue a credit to the buyer at settlement.  Many companies are now rebating portions of the commission to their buyers, and I'm guessing that the title companies have figured out how to make it legal.

May 15, 2016 04:07 AM