New Jersey’s new law permitting rebates in residential real estate transactions is already drawing consumer questions.
On January 19, 2010, former Governor Jon Corzine signed A-373 into law, permitting rebates to consumers in real estate transactions. The bill’s intention is outlined in it’s explanatory statement:
“This bill amends R.S.45:15-17 to permit a real estate broker, broker-salesperson or salesperson to give a client a rebate from the commission that the real estate broker, broker-salesperson or sales person receives in a transaction.”
While the New Jersey Association of REALTORS®(NJAR) originally opposed this measure when it was first introduced, but as the bill moved forward NJAR® negotiated several amendments with the sponsors that increase consumer protection.
The NJAR®-secured amendments included in the final version of A-373:
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State that only brokers can offer rebates to those buying property, rather than allowing all real estate licensees to offer rebates to buyers and sellers.
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Mandate that rebates only be in the form of a credit or check.
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Require that rebates be documented in a contract at the beginning of a brokerage relationship in a written or electronic form or in a buyer agency agreement.
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Ensure that rebates can only be provided in connection with purchases of residential property.
Although this new law took effect immediately after being signed, the New Jersey Real Estate Commission (REC) must adopt new regulations necessary to implement the law.
Under current REC regulations offering rebates is prohibited. NJAR® expects the REC to send out an advisory in February clarifying the law.
Click here for the final version of the new law.
Little Egg Harbor REALTOR® Laura Giannotta
Your Jersey Shore real estate resource!
609.384.6121
www.JerseyShoreViews.com
Laura@JerseyShoreViews.com
Hi Laura, this is certainly going to be an interesting change for the industry in New Jersey. At the end I really wonder who is really going to pay for those rebates...
Hi Laura:
I'm opposed to the law and hope that our RE commission stands firm.
This law will be taken out of context and people will be asking for us to pay them...
As if we don't pay enough to our brokers and pay out referrals all the time.
I agree with you both...this could be a nightmare. I'm looking forward to the Commission's implementation guidelines.
This looks like it could be very challenging for Realtors and Brokers and even Buyers. The paperwork sounds like a nightmare.
Laura...I don't like this type of law "ON THE BOOKS" it will give consumers (in their mind) the right to negotiate away our fees, even when there is no justification...simply because it's implied to be acceptable behavior.
If the public actually knew how hard we work to earn our pay, and how much of it is actually retained after we pay our companies, taxes, health insurance, etc., perhaps the they would understand that this rebate proposal is a bad idea.
If the public actually knew how hard we work to earn our pay, and how much of it is actually retained after we pay our companies, taxes, health insurance, etc., perhaps then they would understand that this rebate proposal is a bad idea.
I just wonder how it works with other States? This is not something new and there are still brokers and agents in other States :)
I guess we have to wait for the NJ REC...
We have had many agents offer to give back 1/2 their commision. Most of them are gone now. I just tell my clients that you get what you pay for. I cut any commision, I give no advice and you can hire an atty. and let them muck up the deal. Besides they charge a lot more than I do.
Never had a problem with that answer.
Betina, we'll just have to wait and see. If understand the rule making process, the rules must be published and then are open for public comment before being adopted. We're in for an interesting ride!
Steve, I couldn't agree more. A law like this basically says we're making too much money in a transaction!
Craig, as always you're right! The public, for the most part just doesn't have a clue!
Cathy, interesting question! I feel another blog coming on!!
William, those agents went the way of the discount broker, who here in NJ claimed to give full service for 3%...they're bankrupt!
We used to be the Lending Tree Broker and had alot of COSTCO members receive a .75%(of 3%) rebate of the commission when purchasing.In this case it created great loyalty to the Costco Brand.
Michael, I've been thinking along those same lines with an Exclusive Buyers Agreement. We'll have to see how it all shakes out.
I am interested in this profession. I know realtors have to pay out of pocket showing homes/paying advertising expenses for potential buyers or sellers who often change their minds or cant complete financing. Is this going to change real estate into a volume-mass production industry where commissions are low and quality is non-existent? Realtors will become more like insurance agents where the insurance companies set fees/commissions rather than a merit-work based industry. Im evaluating entry to this profession for permanence, security and viability. How can market-trust be established when the neighboring broker group offers lower comission rates while encouraging sellers to ask for higher prices for their homes, or charge hidden fees (sorf of like points) to recoup some of these discounts? I think of many ads I see in the paper that have wording like "two for one specials" or "coupon valid until March 29" Maybe lower commissions on weekday closing specials and premium rates on a Saturday? The imagination runs wild.
You raise good points Marc. The profession is changing...but with all the short sales and the tight market, I think REALTORS that know their jobs will shine! Good luck!