Home Buyer Rebates: How to Get Cash Back at Closing

Home buyer rebates can save you thousands of dollars at closing. And with U.S. home prices at all-time highs, every bit of money home buyers can save counts.

A home buyer rebate is when a buyer's agent shares a portion of their commission with their client. We’re talking about a nice chunk of cash: “Rebates typically amount to several thousand dollars, so it is worthwhile for buyers to make the request,” says Stephen Brobeck, a real estate brokerage expert and a senior fellow at the Consumer Federation of America, a nonprofit consumer advocacy and research organization.

» SAVE: Buy with a top local agent, get thousands back after closing! (Learn more)

But not everyone is eligible for home buyer rebates. Many real estate agents and brokers refuse to offer buyers rebates because it cuts into their commission, and eight states have banned them altogether. That said, getting a home buyer rebate is easier than you might think.

Jump to: How to get a rebate | Potential savings | Rebate calculator |Legal restrictions | Quick summary | FAQ | Why trust me

How to get a home buyer rebate

• Go through a company that offers home buyer rebates as a built-in service
• Try to negotiate a home buyer rebate on your own

Work with a brand that offers built-in home buyer rebates or cash rebates

Many brokerages and real estate services offer built-in rebates and cash back for home buyers. But not all programs are created equal: some brands offer higher buyer savings, but with service tradeoffs. Others don't guarantee the full amount, or are available only in a handful of markets.

Our pick: Clever Real Estate

Clever Real Estate is an agent-matching service that connects you with the best local agents for free. If you buy a home with a Clever agent, you’ll get Clever Cash Back after closing on eligible homes over $150,000. We like cash back rebates better than commission rebates because it frees you to spend the money on whatever you want. To give you an idea of how much money that can be, you’d get cash back after purchasing a $500,000 house.

» MORE: Match with a top local Clever agent, get Clever Cash Back

UpNest

Like Clever, UpNest matches you with local real estate agents for free. But UpNest agents aren’t required to offer buyer rebates, meaning you may have to talk to multiple agents before finding one willing to offer you a portion of their commission in the form of a rebate. Learn more about how UpNest and Clever savings compare.

Redfin

Redfin’s rebate program, called Redfin Refund, changes depending on where you live. Although Redfin says its average Redfin Refund is $1,500, our research found that the average Redfin home buyer rebate is only 0.22% of a home’s sale price. Another caveat: unlike with Clever, you'll work with a Redfin agent instead of a traditional real estate agent. Redfin agents often juggle a lot of clients at the same time, so you may not receive the same level of attention that you would from a traditional realtor. Working with Clever gives you a full-service, local, and personalized agent.

Prevu

Home buyers searching for a luxury home in California, Connecticut, Massachusetts, New York, Pennsylvania, or Washington state may find a Prevu agent to be a good fit. The company offers a 2% commission rebate on homes that sell for close to $1 million or more. Buyers shopping for a less-expensive home typically get a significantly smaller rebate—if they qualify for one.

Trelora

If your budget is under $350,000, you could earn up to half your agent’s commission by working with a Trelora agent. However, the company caps buyer rebates at $6,000, which means you can likely get more from other companies if you have a higher-priced home.

SimpleShowing

SimpleShowing offers up to 50% of an agent’s commission fee, but buyers can only qualify for a full rebate if they tour five or fewer homes before purchasing one. Once a buyer has toured six homes, the rebate begins to shrink, and it gets smaller the more homes you tour. (Note: A recent NAR survey found the typical buyer tours nine homes.)^[1]

Homie

Homie might be a good fit if you’re buying in a market where cash offers are common. Homie is a flat fee discount brokerage that lets you borrow the funds to place all-cash offers on homes, and you can also earn a commission rebate worth up to half the buyer’s agent fee. The drawbacks? Homie agents handle about ten times as many transactions as typical realtors. With your agent juggling so many other customers at once, you should expect less personalized customer service than you’d expect from a traditional agent. In addition, Homie requires buyers who want a rebate to use the company’s in-house mortgage and title services, which are often more expensive than options you could find elsewhere.

Realtor.com

Like Clever, Realtor.com offers a cash back program. It’s not as appetizing—buyers receive only 0.3% of their home’s purchase price as a reward (compared to Clever’s cash back). There are also some notable restrictions: buyers must purchase a home that costs at least $150,000, and the cash back program is available only in certain markets.

» LEARN: Homie vs. Realtor

How to negotiate a home buyer rebate with an agent

According to Kevin Schatz, a loan officer at Santa Ana-based Caliber Home Loans, rebates are 100% negotiable. “We typically see rebates that are given to the buyer with a signed addendum or broker credit letter signed by the agent’s broker,” he says. This negotiated figure can cover all or part of the total closing costs being charged by the lender, title company, and third parties.”

Negotiating a home buyer rebate will be easier if any of the following apply to your situation:

• You’re buying a higher-priced home, so your agent will get a bigger commission
• You’re using a newer agent who is trying to get their business off the ground
• You’re selling your current home with the same agent, so they’ll be receiving commissions on two transactions
• You’re shopping for a home in an area where demand is low and buyer clients are hard to come by

You also have better odds of negotiating with your agent to give you a home buyer rebate if you’ve done some legwork for them, like if you’ve already found the home you want to purchase.

Remember, “whether a real estate agent is willing to provide a rebate is [only] one factor that home buyers should consider in selecting an agent,” Stephen Brobeck says. You should also assess prospective agents based on their experience, how well they know the area where you’re looking to buy a home, and their online reviews from previous clients.

How much can I save with a home buyer rebate?

How much you can save with a home buyer rebate depends on what your agent is willing to offer you and the final sale price of the home that you buy. But let’s look at an example to get a ballpark idea of how much money you can save.

If your agent gave you a 1% home buyer rebate on a $391,000 home purchase—the current U.S. median home sale price—you’d get a $3,910 credit at closing, no strings attached.^[2]That may seem like a small amount when you’re plunking down six figures on a home, but it still knocks nearly $4,000 off your closing costs.

In practice, your actual rebate amount will vary based on several factors:

• What rebate your real estate broker or agent is willing to offer
• The home’s final sale price
• Your lender’s approval (and any rules or restrictions it imposes)

What are the legal restrictions on home buyer rebates?

Home buyer rebates are legal in 42 out of 50 states and Washington, D.C. Home buyer rebates are banned in the following states:

• Alabama
• Alaska
• Kansas
• Mississippi
• Missouri
• Oklahoma
• Oregon
• Tennessee

Why are they banned in these states? Because some view rebates as giving an unfair advantage to certain agents; others perceive rebates as a threat to the real estate industry.

Even in states that allow buyer rebates, rebates are governed by certain rules and regulations. For instance, “Rebates can never be used toward the buyer’s down payment,” Schatz explains. “The down payment must come directly from the buyer’s own funds, a gift from relatives, or down payment assistance programs.”

Your lender also determines whether you’re eligible for a buyer rebate. A rebate affects the cost basis of your home—the total amount you pay for the property, including the sale price, closing costs, and any other financial investments you make in the home.

The cost basis affects your mortgage’s loan-to-value (LTV) ratio, a fancy term for the amount you borrowed compared to the value of your home. Because most lenders like to keep a borrower’s LTV ratio at 80% or lower, your lender may need to adjust your loan if a rebate would drive your mortgage’s LTV above 80%. Failing to disclose a rebate to your lender can be considered mortgage fraud, resulting in a large fine or even prison time.

Nonetheless, the U.S. Department of Justice maintains that blocking rebates inflates the cost of real estate services and harms consumers.^[3]That’s why it supports legalizing rebates across the country.

Cash back programs, like the one from Clever Real Estate, aren’t as tightly regulated, making them a better choice for many buyers. Since the money comes from a third party outside after the transaction, cash back isn't subject to lender approval and won't impact your financing.

Are home buyer rebates taxable?

No, home buyer rebates aren't taxable. The IRS doesn’t consider them income.^[4] The rebate is just money that you’re getting back (not earning) when you purchase a home.

That said, taking a rebate lowers your loan’s cost basis, which could affect your capital gains taxes. Capital gains are taxes you pay on the increase in your property’s value when you sell the home. If you have a lower cost basis upfront, your home can seem like it gained more value than it actually did, which means your future capital gains taxes will be higher.

Quick summary: Home buyer rebates

• A buyer rebate is when a real estate agent or business shares a portion of the fee they collect on a transaction with the home purchaser.
• Buyer rebates can knock thousands of dollars off your closing costs.
• Some brokerages and businesses offer home buyer rebates.
• Clever Cash Back is an alternative to buyer rebates. It matches buyers with agents who offer eligible buyers a cash back program for a portion of their new home’s purchase price.
• Home buyer rebates are legal in 42 states and Washington, DC.
• Buyer rebates are negotiable when they come from an agent.
• Your lender has the ultimate say on whether you can have a home buyer rebate.

FAQ about home buyer rebates

Why trust me

Daniel Bortz is a real estate agent in Northern Virginia, where he’s been selling homes for almost a decade. He’s also covered the housing market as a reporter for The New York Times, The Washington Post, Money Magazine, Consumer Reports, Realtor.com, and other publications.

To research home buyer rebates for this piece, Bortz spoke to Kevin Schatz, a loan officer at Santa Ana, California-based Caliber Home Loans. Schatz has 21 years of experience in the mortgage industry.

Bortz also interviewed Stephen Brobeck, a senior fellow at the Consumer Federation of America who served as CFA’s executive director from 1980 to 2018. Brobeck researches residential real estate brokerage for the nonprofit organization.