Cash back from realtor

[jeffsentra]

I just bought a new house and my realtor has a wicked program for providing cash back after the sale goes through providing he gets 2.5% commission. He's a pretty cool guy and does any real estate transactions in the GTA (From hamilton to oshawa/bowmanville to as far north as barrie). It is for purchases or sales.
We got $1500 back! So I'm pretty satisfied. PMMe and I can give you his info.

Purchase Price Cashback


$ 50,000 – 100,000 $ 300
$ 100,000 – 150,000 $ 500
$ 150,000 – 200,000 $ 750
$ 200,000 – 250,000 $ 1000
$ 250,000 – 300,000 $ 1250
$ 300,000 – 350,000 $ 1500
$ 350,000 – 400,000 $ 1750
$ 400,000 – and up $ 2000

[Laptop Surgeon]

while this is pretty cool for the buyer. It is illegal unless all parties to the transaction is aware of this. If not, this is a secret commission. To have this done correctly, your agent has to disclose in advance prior to the offer presentation that a cash incentive is going to the buyer from the buyer broker/agent, the seller has to acknowledge this.

[ashgotti]

while this is pretty cool for the buyer. It is illegal unless all parties to the transaction is aware of this. If not, this is a secret commission. To have this done correctly, your agent has to disclose in advance prior to the offer presentation that a cash incentive is going to the buyer from the buyer broker/agent, the seller has to acknowledge this.

Agreed, and I don't think it's very ethical and is bad for the business overall.

[Laptop Surgeon]

generally speaking in a cash back situation, there is no injured party.

only when, the buyer is a organization of some sort, the cash back instead of going back to the buyer, becomes a kick back to the rep. of the organization. Therefore, declaration is a must and must be stated on the agreement itself.

[mypassword]

I just bought a new house and my realtor has a wicked program for providing cash back after the sale goes through providing he gets 2.5% commission.

There are many pitfalls in cash back programs such as

- the bank may not be pleased that the mortgage ratio is higher than the offer suggests
- the agent deducts the cash back as an expense and Revenue Canada comes to the buyer looking for the tax payable

[astroboi]

My agent gave me cashback when I purchased my house as well. I think that it is a good incentive and could care less if it's "bad for business" (bad for realtors that don't offer cashback). With house values continuing to increase, I really don't agree with this idea of a fixed percentage commission fee.

Not sure what the above poster means, but the mortgage lender will have no issue because cashback is coming out of the sellers pocket (2.5% commission to the buying agent). The buyer gets the house at the negotiated price (as usual), but instead of the realtor pocketing 2.5%, they pass on a portion of the commission to the buyer as an incentive.

[liorsyncro]

Not sure what the above poster means, but the mortgage lender will have no issue because cashback is coming out of the sellers pocket (2.5% commission to the buying agent). The buyer gets the house at the negotiated price (as usual), but instead of the realtor pocketing 2.5%, they pass on a portion of the commission to the buyer as an incentive.
The issue here is disclosure.