The Commission Rebate Short Guide

What is a commission rebate or a cashback?

A commission rebate, also known as a home buyer's cashback, is a rebate from a buyer agent to a home buyer. The agents refund a portion of the commission they receive from the seller to the buyer. 

Who pays the real estate commission?

Commission to the buyer agent is most commonly paid by the seller. In most cases, the seller pays the buyer’s agent at 2.5% of the home purchase price in GTA in the current market. There are some exceptions, in rare occasions, the buyer still owes the commission obligation when the seller pays less than 2.5% commission or even doesn’t offer any commission to the home buyer agent. 

Does a commission rebate mean a discounted service?

Not necessarily, it varies with different agents/brokerages. 

Our service complies with the industry standard, codes, and rules. The actual home buyer's savings vary with the home buyer’s experience and knowledge of real estate. For example, you have a clear target, you are experienced in realty transactions, your home purchase is very productive and efficient, you are a contributor to this efficiency, and thus you are entitled to take a share of this enlarged profit pie. 

How can you get the best or highest commission rebate?

The more appropriate description would be the most appropriate or fairest cashback you could negotiate. There are a number of factors that need to be considered such as the knowledge and experience you have, the services and motivation of the agent you are dealing with, the market situation, the complexity of the process, the uncontrolled factors like luck, etc. 

Generally, the higher the efficiency of the whole process, the more you are entitled to get a better commission rebate. 

In realsav, we offer a new way to buy by rebating all the commission (paid from the seller) and charging for the services you require. 

Is cashback to a home buyer legal?

Yes, according to the Real Estate and Business Brokers Act (REBBA 2002), a rebate or similar compensation may be provided to a brokerage’s client or customer (i.e., buyer or seller) that is a party to the trade in question, but registrants cannot provide any form of compensation to an unregistered third-party for activities that would be considered to be in furtherance of a trade. 

In short, rebating money to a buyer is legal but making a referral payment to an individual for providing a lead or referral is illegal.

Keeping a cashback agreement in writing is an appropriate practice.

Is Commission Rebate Taxable

Here is a related topic from CRA for your reference: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re…

It is recommended that you consult with qualified professionals on this issue.

Does the commission refund affect the land transfer tax?

No, The land transfer tax is based on the home purchase price. Any cashback-related tax issue should be consulted with accredited professionals such as accountants.

How to choose an appropriate cash-back realtor?

The house purchase or sale is a large stake to most families, and the associate $ amount in GTA can easily surpass the revenue of most small enterprises. 

Therefore, it makes more sense, that you, as a seller or buyer, actually hire a partner or professional manager to run the project for you instead of hiring a mediocre customer representative to provide the service such as showing and making an offer. 

The whole process of either home buying or home selling is a system, complex and intertwining. Thus it requires your partner to possess the business acumen, and the similar capacity to run a business, besides the realty knowledge.

Your partner also needs to have the capability to provide a thorough analysis and reasonable predictability,  he needs to help you manage the uncertainties, the changes, and the risks, and he needs to provide advice on your current and future planning and help you set up priority among many considerations.

To maximize your investment, he needs to formulate strategies and tactics before the negotiation and create and catch the opportunity once it arises. 

Obviously, you need to consider the integrity and cost of hiring your potential partner as well. The effective balancing among the 3 components ( your partner’s capability, integrity, and cost) is the key to making a successful deal beneficial to both parties.

An easy call at 647-914-7337 to set up an appointment with me at my brokerage office in Markham. Let’s exchange your opinion, views, and my philosophy on how to run the project as your trusted partner and how I can maximize your interest and relieve your worries.