FAQ

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  1. How does it Work?
  2. How can you Offer Huge Rebates when 99% of Agents Offer no Rebate?
  3. What are the Terms & Conditions?
  4. Is REBATE TEXAS for Everyone?
  5. What makes REBATE TEXAS the best full-service discount real estate firm in Houston?
  6. Are you a Full-Service Buyer Broker?
  7. How Many Showings will you do?
  8. Are Rebates Legal?
  9. Why Bother with a Buyer’s Agent? Can’t I Just Deal with the Listing Agent (or Builder) Directly?
  10. What if My Rebate Exceeds my Closing Costs?
  11. What are Loan Program Caps?
  12. Where in Texas does REBATE TEXAS Operate?
  13. Can we Visit New Model Homes without you?
  14. What if I Already Visited the Builder’s Model?
  15. Where Should I Research Homes Online?
  16. Don’t I need a Full-price Buyer’s Agent to keep me Informed of New Listings?
  17. Do Buyers Need to Sign Anything to work with REBATE TEXAS?
  18. What does Option Pending mean? Pending? etc.?

1. How does your Home Buyer Rebate Work?

REBATE TEXAS pays our buyer clients a Rebate at closing as a credit against their buyer closing costs, including “prepaids” — property taxes and hazard insurance premiums paid at closing.  A credit at closing is as good as cash because it directly reduces your “cash to close”, the amount of cash you have to take out of your bank account and give to the title company on the day of closing.

We do not pay rebates outside closing.  Federal real estate settlement regulations require all realtor rebates to be disclosed on the closing statement. Real Estate settlements are subject to “TRID,” the TILA/RESPA Integrated Disclosure rule (TILA is the Truth in Lending Act and RESPA is the Real Estate Settlement Procedures Act). TRID rules state:

“1. Credits from any party other than the seller or creditor. Section 1026.38(j)(2)(vi)
requires disclosure of a description and the amount of items paid by or on behalf of the consumer and not disclosed elsewhere under § 1026.38(j)(2). For example, credits a consumer receives from a real estate agent or other third party, other than a seller or creditor, are disclosed pursuant to § 1026.38(j)(2)(vi)…. Similarly, if a real estate agent rebates a portion of the agent’s commission to the consumer, the rebate should be listed as a credit along with a description of the rebate, which must include the name of the party giving the credit” (see p.1858-1859 at http://files.consumerfinance.gov/f/201311_cfpb_final-rule_integrated-mortgage-disclosures.pdf).  

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2. How can you Offer Huge Rebates when 99% of Agents Offer no Rebate? 

To be frank, most clients are wasteful of real estate professionals’ time and resources.  The real estate industry, for its part, is similarly wasteful of clients’ resources.  

REBATE TEXAS and our clients partner together to eliminate the waste–and to share the rewards!  We eliminate waste from our side and our buyer clients eliminate waste from their side. The standard 3% commission consists of 3 basic parts:

  • 1% Fair commission for resale buyer brokerage for well-prepared clients
  • 1% Broker-generated waste (resources spent on an expensive business model that does not directly benefit clients, e.g. broker overrides, team leader overrides, franchise fees, office overhead, advertising, billboards, etc.)
  • 1% Client-generated waste (resources wasted on unprepared clients who waste agents’ time and effort)

Together with our well-prepared clients, we simply remove the 2/3 of the standard commission that is normally wasted.  That part we rebate back to you.  We work for the remaining 1/3 that represents our fair share when working with well-prepared clients.

To eliminate the first source of waste (expensive business model), we established REBATE TEXAS as a non-franchise, low-overhead, independent licensed brokerage with no extra brokers or team leaders our clients are forced to subsidize.

To eliminate the second source of waste (unprepared and marginal clients), we are very selective.  Only well-prepared, low-maintenance, and conscientious buyers qualify for our program–clients who earn the 1% waste they eliminate. Typical agents have to charge their serious clients much more than necessary to make up for all the fruitless efforts they expend on not-so-serious, high-maintenance prospects and clients. We believe smart, serious home buyers deserve a smart, serious broker (and vice versa).

Our deal is basically this: Respect our time and we’ll reward you handsomely. Make our job fun, efficient, and profitable – and we’ll return the favor in cash at closing! 

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3. What are the Terms & Conditions of your Home Rebates?

  1. Our full 2.5% New Home and 2% Resale Home Rebates are for homes purchased for $300k or more.  On resale homes <$300k, the rebate is simply the portion of the commission that exceeds our minimum $3000 portion. On new construction homes <$300k, the rebate is simply the portion of the commission that exceeds our minimum $1500 portion. 
  2. Payment of a rebate requires a Buyer Representation agreement signed by Buyer and Broker.  Rebates amounts and terms and conditions are subject to change without notice until Buyer Representation Agreement signed.
  3. Rebates must be paid at closing and must be disclosed on the closing disclosure/statement as a realtor contribution. No rebate will be paid after closing or outside of closing.
  4. For buyers financing their home purchase, a rebate is always subject to lender approval. Most lenders will limit allowable contributions to a borrower’s actual closing costs and prepaids and may cap out rebates based on a FHLMC/FNMA “IPC” cap.  If your lender disallows part of the rebate, my hands are tied – the rebate must be reduced.  Most of the time, however, you can avoid any reduction simply by planning ahead and discussing options with Rebate Texas and with your lender.
  5. New home 2.5% rebates apply when no showings or contract preparation are required from Broker, which is the case for most large builders that have models and salespeople on site.  However, the resale 2% rebate will apply on new homes where the buyer’s agent is required to do the work typical of a resale deal (e.g. prepare contracts, showings, negotiations, etc).  Some small builders with no model homes and no on-site salespeople fall into this category. 
  6. If we start out working on a resale deal including showings and/or preparing contracts, then the buyer subsequently decides to buy a new home instead, the resale rebate tiers will still apply. 
  7. Rebates are calculated as a % of the same price point used to calculate the commission. If Builder applies all or part of rebate toward reducing the price, this can also reduce the commissionable price.
  8. When Buyer Agent commission is <3%, the rebate will be reduced by the same percent.
  9. In cases when the seller is a corporate relocation company, the rebate will be reduced by 0.25%.  (There is typically 3-4x more paperwork required).
  10. Rebates apply to buyers who find and contact us (not referred through another company).
  11. Payment of a rebate is subject to the consent of the party the license holder represents in the transaction. (This TREC-required disclosure exists to protect consumers from listing agents who might be tempted to use a secret rebate to induce an unaccompanied buyer to allow them to grab most of the commission for both sides.)

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4. Is Rebate Texas for Everyone?

NO!  Not all buyers qualify for our program.  REBATE TEXAS works exclusively with well-prepared, low-maintenance buyers who are ready, willing, and able to buy now.

In a nutshell, REBATE TEXAS is NOT for clients who waste our time (and their own):

  • Unprepared buyers who aren’t prequalified for financing, haven’t saved up for a downpayment, or who don’t have the cash ready in a US bank/brokerage account in their name for an all-cash deal.
  • Unprepared buyers who haven’t done the preliminary research themselves to shortlist finalists and need to see 7+ properties before they decide what they want.
  • Indecisive buyers who need to see the same house multiple times before being ready to submit an offer.
  • Less-than-serious buyers who want an agent to waste time preparing and submitting lowball offers.
  • Noncommittal buyers who want an agent to invest time in them but are unwilling to sign an exclusive buyer’s agent agreement.
  • Unserious buyers who change their minds frequently and back out of contracts without sufficient cause.
  • Indecisive buyers who can’t commit to single home and want their agent to run multiple simultaneous negotiations while they decide.
  • Unfocused buyers that want to go see two new houses that just came on the market even while they are under contract for another home.
  • Buyers who value a fancy office experience, national brand name, and handholding, and are willing to pay thousands of dollars extra for these items.

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5. What Makes REBATE TEXAS the best full-service discount real estate firm in Houston?

We’re not the best for everybody (see #4).  But for smart, well-prepared buyers, four things set REBATE TEXAS way ahead of the competition: 1) Bigger Rebates on More Homes, 2) More service, 3) Better Results, 4) Higher Client Satisfaction, and 5) We’re an experienced Broker, not just a sales agent.

Our standard buyer rebate is 2-5x the rebate offered by many competitors.  Unlike many online competitors, our rebate is valid for both resale and new homes.  New-construction-only rebate realtors won’t help you with the 70%+ of homes on the market that are resale.  Some “no-show” rebate realtors offer extremely limited services, refusing to show you any homes, even though they’re supposedly your agent. They require you to be disingenuous with listing agents to induce them to show you homes, an unprofessional practice which often alienates listing agents.

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6. Are you a “Full-Service” Buyer Broker?

Yes, though it depends on your definition of “full service.” We provide all essential realtor services, including showings, contracts, negotiations, and guidance from start to finish through the contract period. However, we opt out of some of the hand-holding exercises that many agents do, like shuttling your check to the title company and sitting next to you at closing pointing out where to sign. Our clients are willing to forgo hand-holding and get thousands of dollars back at closing instead!

We’re like a discount airline that provides all the essential services (gets you safely to your destination) at a great price by not building into the price many unessential items (peanuts and pretzels, beverage services, extra luggage, etc).

Our price is 67%-83% less, but our service is 100%-100%! Our clients consistently rate our service fully at or above leading full-price agents, as seen in our high client satisfaction scores and testimonials.

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7. How Many Homes Will You Show?

For resale home buyers, we will conduct a maximum of 2 showing outings (each outing with up to 3 homes) and still pay the full rebate at closing.

We ask our prospective clients to approach us with a very short list of their 1-3 preferred homes in the same neighborhood.  Why a maximum of 3 homes? In our experience, asking buyers to refine their list to just 1-3 finalists helps buyers to really focus. It’s all too easy to get distracted by the thousands of beautiful homes available that aren’t really the best fit. 

We expect that you have already studied the listings and photos online and driven by these 1-3 home(s) first to make sure you like the street and neighborhood and aren’t turned off by obvious conditions like smells, power lines, proximity to railroads, highways, airports, etc.  Before we commit to a showing outing, we expect you to be prepared to make a serious offer on one of the homes within 24 hours of the showing.  If you aren’t sure what we think qualifies as a reasonable, serious offer on a particular home, contact us to run comps for you and we’ll tell you.  Then we’ll set up the appointment(s), show you the home(s), and prepare the contract for the home you like best.

Although very few of our resale buyer clients require a second outing, we understand you may not find the right home on the first outing of 1-3 houses.  So long as we sense you are truly serious and ready to buy, we will to show you a second outing of up to 3 other homes with no reduction in the rebate. (Please note we expect decisiveness and don’t show the same house twice.)

However, if you’re still not ready to make a serious offer after the second outing, we may ask if you would like to keep working with us at a reduced rebate for a third outing of up to 3 more homes.  The reduced rebate will generally be reduced by 0.5% (1.5% rather than 2% on resale homes 250k+)–which is still a very good deal.  But if that’s not agreeable, we’ll part with no hard feelings.

Once we get a home under contract, we expect buyers to make reasonable repair requests.  For example, it is not reasonable to request 20 repair items that will cost $10k+ on a 2-year-old house in good condition, which we got under contract below market value (with a rebate to boot).  Similarly, if the seller emphatically stated in the contract negotiation that they would not make further concessions during the option period, but you request further concessions anyway, this is also unreasonable.  If you terminate a contract because the seller does not acquiesce to unreasonable demands, we will probably ask you to look for another agent (whose high fees can justify wasting time and energy on unreasonable clients).  If you have any questions what we think are reasonable repair requests, contact us.

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8. Are Rebates Legal?

Yes!  You can confirm it here right on the Texas Real Estate Commission’s website.  Texas, like most states — and the US Department of Justice — permits and even encourages real estate rebates.

Rebates are helping introduce competition in an industry where true price competition is rare, despite the paradigm shift that has occurred in technology.  In 2005 the US Department of Justice successfully sued the Kentucky Real Estate Commission to allow rebates.  In 2007, the Federal Trade Commission (FTC) and DOJ issued a joint report “Competition in the Real Estate Brokerage Industry,” praising new business models like ours that are finally starting to make the real estate industry more competitive.

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9. Why Bother with a Buyer’s Agent? Can’t I Just Deal with the Listing Agent (or Builder) Directly?

Buyers who research homes online typically end up talking with listing agents.  Good luck getting a 2% rebate from a listing agent!  When you come to them without a buyer’s agent, they’re imagining how they’ll be able to capture the commission for both sides, not how they can give you a rebate! Many buyers have approached me after the stress and frustration of trying to persuade a listing agent to give them a rebate.  Typically these buyers thought they could get the listing agent to cut the listing commission since they “brought themselves” without a buyer’s agent. Why doesn’t this approach work? Let me count the ways…

  1. Listing Agents must ask for permission twice before they can give you a rebate: first from their broker, and then from their clients.  This means two unpleasant conversations for the listing agent. First, the agent’s broker won’t want to discount the commission. Second, the agent’s clients will want to know why they don’t get a better deal if there’s not another agent involved.  Even if agent gets both permissions, the typical broker will only allow the agent to cut the agent’s part of commission, without reducing the broker’s part. Since the typical agent has to pay 30-50% of their pre-rebate gross commissions to their sponsoring broker, the average agent with a national franchise company would work for free after paying their broker and giving you the 2%-2.5% rebate we offer. A listing agent may tell you what you want to hear (that they will renegotiate their commission with the seller), but unless they show you a listing agreement amendment, maintain a healthy dose of skepticism!
  2. It’s not worth taking the chance of alienating the listing agent who holds the Exclusive Right to sell your dream home.  Listing agents are often offended by buyers who ask for a rebate, believing their commission is none of your business. You may feel you “brought yourself,” while they feel it was their marketing that brought you (they paid for signs, photography, realtor fees, MLS fees, etc).  If you get on the listing agent’s bad side, they may even refuse to pay a buyer’s agent commission on the grounds they are the “procuring cause” of your offer, and if that happens, then you’ll lose the chance for a rebate on that home.
  3. An unrepresented buyer looking for a special deal will be the listing agent’s lowest priority. In a hot market like Houston, you need an agent who puts you at the top of their list.

In short, our program allows you to get a huge rebate, working completely within the system, without challenging and upsetting all the pre-existing arrangements between the listing agent, listing broker, and seller.  There’s no need to rock the boat.

Last but not least, when buyers work with the seller’s agent, they give up independent representation and receive dual or no representation. Conversely, buyers who work with Rebate Texas receive top-notch professional representation!  We are highly experienced (typically in the top 1% of Houston realtors by production), we know all the loopholes in the contracts, and we are savvy negotiators.  Please see our favorable client ratings and testimonials!

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10. What if My Rebate Exceeds my Closing Costs (including Prepaids)?

Short answer: If you don’t plan ahead, your lender could force you to forfeit part of your rebate, and neither I nor you want that.  Your lender can disallow excess credits — the portion of your rebate which exceeds your closing costs. Being aware of the possibility of excess credits will help you take the necessary steps to avoid this outcome. Doing so is your responsibility.

Longer answer: Buyer closing costs are high for typical PITI loans in Texas with property taxes and insurance escrowed. You will need to prepay property taxes and insurance, purchase a mortgagee title policy, pay loan origination fees, etc. Ask your lender for an estimate of your closing costs based on your projected closing date, but be aware exact closing costs will not be known until the title company calculates prorata debits and credits just before closing.

In our experience, buyer closing costs typically run about 2.7-3.1% in Houston, which is more than your 2% Resale Home Rebate or 2.5% New Home Rebate. However, excess credits can still happen, usually when buyers try to combine seller credits (a common builder incentive) in the same transaction with a buyer’s agent rebate.  What to do?  Plan ahead and structure the deal from the outset with a lower price or other incentives instead of closing cost credits from the builder (upgrades, lot premium, appliance packages, etc). That way the seller nets the same amount and you get to use your full rebate. REBATE TEXAS is glad to assist in these negotiations, but we can help you only if you are aware of the potential problem and bring it to our attention no later than the time the contract with the builder is negotiated.

If you find yourself approaching the closing date and your lender says you can’t use all your credits, there may still be some options to increase your closing costs to your advantage. For example, your lender may suggest applying the excess credit to “points,” buying down a lower interest rate. Another option may be to select a hazard insurance policy with more bells and whistles (and cost) than you really need; then after closing you can remove some of the bells and whistles from your insurance policy (it must still meet your lender’s minimum requirements) and the insurance company will refund the difference in premium. However, you would need to discuss these strategies well before closing, because they would probably require your loan to go back into underwriting, which could delay closing and potentially subject you to penalties for not closing on time.

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11. What are “IPC” Caps?

Buyers using a realtor rebate should also be aware of caps that lenders impose on “Interested Party Contributions” (or IPC’s).  Interested Parties include the seller/builder, lender, and realtors.  All can contribute to your closing costs, but loan rules from FHLMC (Federal Home Loan Mortgage Corporation, aka “Freddie Mac”) and FNMA (Federal National Mortgage Association, aka “Fannie Mae”) cap the amount of funds a borrower can receive from these interested parties.  Here are the most important caps:

  • IPC’s are capped at 2% on loans on rental properties
  • IPC’s are capped 3% on Owner-occupied conventional loans with <10% down (if you can boost your downpayment to at least 10%, this cap increases to 6%)
  • IPC’s are capped at 4% on Owner-occupied VA loans

On new homes when a builder offers closing cost credits in addition to our rebate, buyers can end up exceeding the lender’s IPC cap.  For example, suppose a builder offers you 1% and we offer 2.5% (total 3.5%), but the lender’s IPC limit for your loan is 3% — in this case, the 0.5% excess would be capped out. Read more from FNMA’s website: https://www.fanniemae.com/content/guide/selling/b3/4.1/02.html.

Fortunately, builders can usually restructure the deal to comply with the IPC caps while allowing you to use all the credits you’re expecting to receive.  However, if you don’t plan ahead, your lender could force you to forfeit part of your rebate, and neither I nor you want that.  Your lender and the builder need to know about your rebate from REBATE TEXAS so they can help you manage IPC cap exposure. 

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12. Where in Texas does REBATE TEXAS Operate?

You can take advantage of my 2.5% Rebate on new construction throughout Texas. It’s usually not necessary for me to accompany you to new home developments (but do provide the Notice of Buyer Representation to any builder representative you meet).

My 2% Rebate for Resale homes is available in the Houston area and sometimes outside Houston. For resale homes, I generally need to show you the home first, and I can do that only in my local Houston market.  For resale homes in other cities, please contact me to discuss your situation further.  We may get lucky and find a listing agent willing to show you the home and still pay the buyer agent commission, but you should explain to them from the beginning that you’re working with a buyer’s agent.

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13. Can we Visit New Model Homes without you?

Yes, but first download our Notice of Buyer Representation, fill in your name(s), and present a copy upon first contact with any builder representative you meet (print out enough to have at least one copy handy for each model home community you visit).

If a builder representative asks you to sign in, clearly indicate you are represented by a buyer’s agent on any paper where you write your name and contact information.  Find out what each builder’s requires in order to pay a buyer agent commission, for example they may require me to register at the model and/or to accompany you at the time of signing the contract. Let me know if anything special is required from me.

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14. What if I Already Visited the Builder’s Model without Mentioning a Buyer’s Agent?

You’re probably okay, so long as you haven’t signed the contract yet.  If you find yourself in this situation, just ask the builder if they’re open to you introducing a buyer’s agent now.  In our experience, most builders will allow you to do so as long as a contract has not been signed yet.  However, they don’t have to let you bring in an agent, so we highly recommend you follow best practice from FAQ #13 above if possible.

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15. What is the Best Place Online to Research Homes?

While there are many excellent websites now, for Houston buyers, I recommend HAR.com and the HAR app you can download on your phone.  Houston home buyers are very lucky to have public access to the same MLS database that agents use at HAR.com.  Other real estate websites, such as Zillow, Redfin, Trulia, Estately, Homes.com, etc.  have more stale and inaccurate data, but they are getting better quickly.  The search tools at HAR.com are quite robust as well.  You should also be aware that Texas is a non-disclosure state, meaning sold prices of real estate are not available to the public, so prices estimate like Zillow’s  “zestimates” should be considered educated guesses.

We can also now grant our clients “Premium content” access to the HAR app for your phone or tablet.  This will provide you an additional section of non-public data within each listing, including days on the market, sold prices of nearby properties, and listing history! Contact Us today to get these essential tools to aid in your home research!

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16. Don’t I need a Full-price Buyer’s Agent to keep me Informed of New Listings?

Keeping informed is essential, paying extra is optional!  You should keep tabs daily on new listings that meet your criteria—if not, other buyers will beat you to the best homes, every time, guaranteed.   Just fill out our Alert Request and we’ll set up the notifications for you.  Every day your search criteria will be automatically rerun and early each morning you’ll receive an update with all new listings from the previous 24 hours.  But you won’t get these alerts if you don’t contact us to set them up.

We can also now grant our clients “Premium content” access to the HAR app for your phone or tablet.  This will provide you an additional section of non-public data within each listing, including days on the market, sold prices of nearby properties, and listing history! Contact Us today to get these essential tools to aid in your home research!

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17. Do Buyers Need to Sign Anything to work with REBATE TEXAS?

Yes.  Contact us for a copy of our home buyer’s packet to review.  The packet consists of a standard buyer’s representation agreement with special provisions added regarding the rebate, plus some generic buyer disclosures like an advisory to get a home inspection.  The buyer representation agreement protects you by putting your rebate in writing. Your rebate is then guaranteed by a legally binding contract.

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18. What does Option Pending mean? Pending? etc.?

The Houston Realtor Association MLS uses several terms to show the status of a listing. Agent have 3 days to update status.  Buyers should focus on Active listings.

Active – no offer has yet been accepted. Seller may already be considering offers.

Option Pending – the seller has recently accepted a contract and the buyer is conducting inspections during a due diligence “option” period of approx 5-10 days during which the buyer has an unrestricted right (option) to terminate the contract. There is a roughly 10-20% chance the buyer may back out of the contract during the option period. From this status, the listing will either go backward to Active or forward to Pending (without showings) or Pending Continuing to Show.

Pending – the buyer’s due diligence option period is over, but the seller is not allowing continued showings for possible back-up offers. There is only a very small chance that pending deals will fall apart and the listing will go active again.

Pending Continuing to Show – same as pending, but the seller is allowing continued showings for a possible back-up offer.

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