: New Jersey Real Estate Commission Releases Memorandum on Buyer Rebates

New Jersey Real Estate Commission Releases Memorandum on Buyer Rebates

The New Jersey Real Estate Commission (REC) has released its promised memorandum regarding implementation of the new law, enacted by former Governor Corzine, allowing buyers brokers to offer a rebate to buyers.

The REC has not promulgated the rules to implement the law yet, but since it took effect immediately upon signing buyers rebates are legal in New Jersey. Up until January 5, 2010 the Commission prohibited rebates to buyers.

Until the rules are adopted, the REC is urging compliance with the language of the law on who may provide and receive a rebate, conditions concerning the providing of a rebate, limitations on the nature of the rebate that may be paid and requirements on the advertisement of rebates.

Those provisions are summarized below.

Who may provide/receive a rebate and conditions concerning the providing of a rebate.

+Only a real estate broker may provide the rebate. A broker-salesperson or salesperson may not provide a rebate.
 
+A rebate may only be provided to a purchaser of residential real property. A rebate may
not be provided to a seller or to a lessor or lessee.
 
+The broker and the purchaser must contract for a rebate at the onset of the brokerage
relationship in a written document, an electronic document or a buyer agency agreement.

+The document or agreement must specify the terms of any rebate to be credited or paid by
the broker to the purchaser. The broker must provide the document or agreement to the purchaser at the outset of the brokerage relationship.

+The broker must comply with any State or federal requirements regarding the disclosure
of the payment of the rebate.

+The broker must recommend to the purchaser that the purchaser contact a tax
professional concerning the tax implications of receiving the rebate.

+The broker must disclose the payment of the rebate to all parties involved in the
transaction, including any mortgage lender.

The nature of the rebate that may be paid.

+The rebate must be in the form of a credit to the purchaser and reducing the amount of the commission payable to the broker paying the rebate or a check paid by the closing agent made at the time of closing; and calculated after the purchaser negotiates the rebate commission rate with the broker paying the rebate.

+The rebate must not be paid to an unlicensed person for any act that requires licensure;  contingent upon the use of other services or products being offered by a broker or an affiliate of a broker; and based on the use of a lottery, contest or game.

Here is a  full copy of the  memorandum by the New Jersey Real Estate Commission on the Rebate of Real Estate Commissions.

 
 
 
  

     
Comment balloon 6 commentsLaura Giannotta • February 09 2010 02:59PM

Comments

ToulaRosebrock,com

Hi Laura:

Thanks for the link...I still can't believe that this law was passed.

It still needs to be ironed out through the RE commission. 

I can see this turning into a fiasco!

Posted by Toula Rosebrock, Broker/Sales Associate, Realtor, Lacey Township, (Diane Turton, Realtors, Forked River, NJ) over 9 years ago

I don't think my BROKER is going to offer it. How about yours?

Posted by Gregory Bain, For Homes on the Jersey Shore (Mezzina Real Estate & Insurance) over 9 years ago

I saw on Trulia blog an individual brokerage house in NJ advertizing their rebates to buyers.

Posted by Catherine Chaudemanche - Edison & Central NJ, Full Time, Informed and Involved- Results Driven (Metuchen Keller Williams Elite Realty / Middlesex County, NJ) over 9 years ago

Trulia and Zillow are the rocks lower life forms hide under.

Posted by Gregory Bain, For Homes on the Jersey Shore (Mezzina Real Estate & Insurance) over 9 years ago

Laura, I'm glad Gregory said what he did about Trulia and Zillow.  As for this NJ rebate...I understand doing what it takes to be competitive, but this sounds like it cheapens the industry.

Posted by Nick T Pappas, Madison & Huntsville Alabama Real Estate Resource (Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Huntsville AL) over 9 years ago

Thanks Laura. I will read over the memorandum just to be knowledgeable. My Broker does not want to offer rebates. We are not a discount broker. I do not want to offer a rebate either. I have read the disclaimers that the brokers offering the rebate use and it seems as though the buyer getting a rebate is working without buyer representation. Although the broker offering the rebate indicates a service including 'negotiating' the impression given by the lengthy disclaimer is that all that's done is prepare a contract and get the seller's signature. After that the buyer does all the work alone.

I see that there are still 10 states that outlaw such rebates. I think some lobby group sold the NJ legislature an 'empty sack' with this change. I do not see how the 'consumer' is a winner. It's just a way for unscrupulous brokers to lure unsuspecting buyers with the promise of a rebate into a relationship in which the buyer gets no guidance, assistance or advice and if they wind up in trouble as a result the broker has had the buyer sign an agreement which protects the broker and not the buyer (consumer) all for a small rebate. Consumer beware.

It remains to be seen what the impact will be. I agree with Nick Pappas #5 that it cheapens the industry. Now the responsible agents and brokers have to differentiate themselves from the broker in an alley whispering to potential buyers, "Psst. Psst. Over here! I have a rebate for you if you buy with me!" Sleazy!

 

Posted by George Walsh about 9 years ago

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