Friday, December 17, 2010

How to Get a Home Buyer’s Discount

A NY Times article about how to get a discount on your new home, even though the tax credit has expired:

With the home buyer’s tax credit now expired, here’s one way to still get an equivalent discount of sorts: ask your real estate agent to take it out of his or her commission.

That’s what Colm Glass, founder of Glass Real Estate in San Francisco, is offering clients. At a recent open house, Mr. Glass handed out cards advertising the $5,000 commission rebate he is offering for homes sold for less than $1 million and higher discounts (often around $8,000 to $10,000) for homes priced higher. “Home buyer tax credit gone,” the card declares. “We’re giving you another chance.”

“I did see things drying up a lot after the tax credit went away, which is kind of curious since it wasn’t a great deal of money,” Mr. Glass said. But “it did seem to drive a lot of purchasing earlier this year.”

As a result, Mr. Glass decided to reframe a commission discount he had been offering clients since 2008 as a rebate more comparable with the expired credit. Here’s how it works.

When he’s the seller’s broker, the rebate comes out of his commission (which is 2.5 percent when there are two agents involve in the transaction). And when he’s the buyer’s broker, the seller pays him his commission and then he gives the buyer the rebate out of that amount. Mr. Glass said the rebate has helped him sign on clients and close more deals annually than when he wasn’t his own boss.

So if asking for such a commission discount seems to be a good plan, bear in mind that independent brokers may be more likely to offer it than those that work for a large firm. Mr. Glass, for instance, said that when he wasn’t his own boss, he was able to offer such discounts only in rare circumstances. But if you plan to work with an independent broker, you should be sure to check references to lessen some of the risk.

In addition, your agent may be more likely to say yes to a discount if you’re buying in a city with expensive home prices (like San Francisco, New York, Los Angeles and Chicago), where commissions tend to be higher as a result. “It really does work best in cities where the price tags are high,” Mr. Glass said.

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