In case you missed it, HUD definitively stated their position on the issue of real estate Brokers rebating a portion of their commission to clients. For the record: it’s legal,does NOT violate RESPA, and simply needs to be disclosed on the HUD-1 lines 204-209.
The reason I bring this up again is because we hear from various parties from time to time that rebating is somehow illegal, that it somehow violates RESPA, that it’s wrong, etc. Those comments normally come from uniformed brokers working in the “Traditional” side of the real estate world. It’s nice to finally have a place to point those folks. Here’s the link to HUD’s own website: Commission rebates are legal and belong on lines 204-209 of the HUD-1 form. (see Highlights “new RESPA rule FAQ”)
Lenders will be slow to recognize this clarification and will likely continue to ask that our rebate NOT be shown on the HUD as each and every lender has their own underwriting department who may or may not be aware of random HUD rule clarifications like this one. We’ll do our best to keep spreading the word.
The cornerstone of our business model here at Real-a-Save involves us rebating a portion of our earned commission back to our clients. Since 2007 we’ve given hundreds of thousands of dollars back to Denver and Boulder real estate consumers in the form of these rebates thus lowering overall real estate costs for consumers. Different? Yes, but there are many different types of buyers and sellers out there and options are always nice. It’s one of the oddities of the real estate world that choice is viewed as a negative when shopping for real estate services. Our industry has not been quick to embrace new business models and the vast majority of real estate transactions are still done by traditional firms.
It seems likely that rebaters, discounters, limited-service shops, and other non-traditional real estate brokerages will continue to operate as niche players only. I once believed that the Internet would be a “game changer” when it came to alternative business models for real estate. I no longer hold that opinion. I believe that brokerages like Real-a-Save will continue to thrive on the margins, catering to a very specific type of buyer and seller. And that’s ok. (the “why” of this conclusion is interesting and likely has more to do with psychology than anything else) As long as there continues to be choice for consumers and the regulating bodies who govern the real estate world offer clearly stated positions (like HUD’s statement herein) about the rules then we’ve got nothing to complain about.