One of the most common misunderstandings in real estate, mortgage, and the settlement business is the topic of incentives, gifts, discounts, and freebies. Can you use incentives, gifts, discounts, or freebies to induce or improve the chance of a sale?
In recent years the Federal Government has been cracking down on one-stop shop incentives and kickbacks for real estate, mortgage, and settlement services providers. A typical violation involves a scenario where company A offers company B a gift, cash, discount, or other non-bonofide deal to refer business to company B but charges a higher price to Company C, D, E, F, etc.. Clearly this is a restraint on competition and takes away the integrity of a fair market competition.
Non-bona-fide means the discounts, freebies, incentives, or other financial benefits come with strings attached. A typical example includes a company A pays company B to receive a client lead whereby company B passes down a higher fee to said client. The Real Estate Settlement and Protection Act ( RESPA ) was passed in the 1970s to protect consumers from unscrupulous real estate, mortgage, and settlement service providers from colluding or creating schemes that overcharge consumers. Thus appears to be a lot of fragmented responses on the web regarding this issue both correct and incorrect. The obfuscation created by many half-experts can position what is a fantastic, permissible, and engenuis promotion into one ripe with uncertainty and suspicion.
So let’s hear it straight from the regulator’s mouth:
In summation: Unless an individual is paying or receiving discounts or financial benefits for a referral there doesn’t appear to be a violation of Federal law. State laws; however, can place special limitations on gifts, discounts, freebies, cash and other inducements to parties in a transaction. A few states allow only licensed individuals to receive or give cash, benefits, or freebies.
A well informed real estate agent can help to set the expectation and turn what appears to be non-permissable into a great marketing idea.
At Homeselling AI it takes only a minute to submit an offer summary. After submission you will receive immediate confirmation via email. To submit an offer summary simply fill out the form as follows:
Property Address: If you arrived via an MLS link or from one of the large real estate portals the property address may have been pre-filled for you. Otherwise type the house #, street name, city, state, and zip code.
Listing #: If you arrived via an MLS link or from one of the large real estate portals the Listing# may have been pre-filled. Otherwise type in the listing #.
Listing Price: If the listing price isn’t already pre-filled simply type in the listing price of the property.
Offer Price: Type the offer price using only numbers without commas, decimals, or $ signs. For example, to enter $500,000 type 500000
Earnest Money: Type the earnest money amount. Enter only numbers without characters, ie, no commas, $$, /, -, etc.. For example, to enter $5000 type 5000
Closing Date: Use the calendar to select the month, day, and year of the closing date. If there is a condition or explanation regarding the closing date select SEE COMMENT.
Buyer Taking Possession: If the buyer will be taking possession of the property immediately after closing select YES. If NO, explain.
Discount Amount: The discount amount should have been pre-filled for you. The offer form will automatically calculate and display the difference between the offer price and the listing price.
Seller paying additional buyer agent commission: Select NO if the seller will not be paying any money towards the buyer agent commission. Select YES and enter the additional commission amount that the seller will be paying. Be sure to enter only numbers without $ signs, comma, or decimal. If paying the buyer’s agent commission is the responsibility of the listing agent select NO since the seller will not be paying. For example listing agents customarily offer a commission to the buyer’s agent for bringing buyers. If this is the case select NO.
Closing Cost: Will seller be paying any part of the buyer’s closing cost? Select NO or Select YES and enter the amount needed.
Down payment Assistance: Will seller be helping buyer to meet down payment requirement? Select NO or YES and enter the amount needed.
Additional Assistance: Select NO or Select YES and explain how much is needed. An example of additional assistance could be a rental truck for moving, new paint job, paint holes, windows, carpets, doors, or even a second mortgage. Be sure to explain in detail.
Repairs If the seller will be paying for any repairs whether before or after the inspection select YES and explain in detail and amount needed.
Replacing item or material as a sale contingency: Select NO or Select YES and explain the amount needed.
Anything Else? If there will be other expenses not already included above enter YES and explain the amount needed.
Buyer Requiring Inspection? If buyer will be waiving the inspection select NO. Select YES if buyer will be requiring inspection and enter the total number of days needed to complete the inspection. Enter numbers only. For example if buyers will require 4 days to complete inspection type the number 4.
Paying All CASH: If buyer will be paying all cash to purchase the property, select YES. If NO you may UPLOAD a bank/lender pre-approval letter. Uploading a bank or buyer letter with your offer summary will strengthen your chance of winning.
Loan Amount: Enter the total amount of the purchase that will be in loan. For example if the buyer will be paying 20% down on a $100,000 property the loan amount will be $20,000. Enter 20000. Do not enter $, comma, percentage sign ( % ), or decimals. ENTER ONLY NUMBERS and DO NOT SPELL OUT THE LOAN AMOUNT.
Down payment: Type down payment amount that will be required by the bank. If there is no down payment required leave blank or type the number 0 ( zero ). Remember do not type characters, commas, decimals, $$, %, /, -, etc.. For example, to enter $500,000 type 500000
Other financing: If you will be requesting or offering other types of financing select one of the options. Select NONE if no additional financing is needed. Otherwise select Contract For Deed, Lease To Own, Trust, Option To Purchase, or See Comment Below to make a special request or provide detail explanation.
Sale contingent on sale of property: Select Yes or NO. If a bank will be requiring you to sell your existing property before you can purchase this property you must select YES.
Current Year Property Tax: Select Seller Pay All, Buyer Pay All, Buyer/Seller Pro Rate, or See Comment Below to provide explanation.
Additional Info/Comment: This is where you will explain any uncommon, extraordinary, or special consideration in detail, ie.,
Financing: Buyer is seeking owner financing at 10% interest, 30 year amortization, balloon payment in 5 years. Buyer will pay 50% in Bitcoin and 50$ in bank loan. Buyer is looking to rent for 12 months then pay off.
Inspection: Buyer request 5 day inspection but will delay due to Holiday.
OTHER: Buyer requests the painted trash can, window protection, and lawnmower to be included in the purchase offer.
OTHER: Buyer is flexible on closing date but need decision before midnight.
OTHER: Buyer requests that all personal property be removed by the closing date.
OTHER: Buyer requests that all personal property be left after the closing.
Notify me of higher offers: Check this box to be notified by text or email in the event of a multiple offer AND when there is a higher competing offer. If you do not check this box, you will not be notified.
Review/Submit Be sure to select Review and confirm that the price and terms of your offer are correct. Make sure the numbers and comments are as intended. Your offer summary is not final. If your offer is selected the terms and conditions are subject to further negotiation. If you have questions please contact the listing agent.
