Understanding Buyer Rebates in Illinois: Transform Your Home Buying Experience

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Written By Owner

An experienced marketing consultant with a decade of hands-on experience in real estate.

Homeownership, the quintessential American dream, is often one of the biggest financial commitments of anyone’s life, especially when you thinking about calling the Land of Lincoln your home sweet home.

The last year has seen the average home value in this state skyrocket to $247,384 – a staggering 14% surge! And if you think that’s a tad heavy on the wallet, wait until you hear about the extra expenses waiting to pounce.

Take the average real estate commission in the Prairie State, for instance. At 5.2% of the home selling price, you’re looking at an average outlay of about $13,312. Now that’s a number that would make even Honest Abe blink twice! But wait to start reaching for your wallet because there’s more. Enter: closing costs. These seemingly hidden expenses could add 1.8% to the home price. Oh, and did we mention moving costs?

With these mounting expenses turning your homeownership dream into a financial workout, you might feel the burn. But fear not, homebuyers. Real estate brokerages, in their ceaseless endeavor to lighten your load, have devised some clever strategies. One such silver lining in the sea of expenses is the concept of buyer rebates, a tempting prospect for any budget-conscious homebuyer.
Let’s explore how this innovative marketing strategy might be your saving grace in the formidable home-buying arena.

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1. Buyer Rebate: The Silver Lining in Your Real Estate Transaction

In the high-stakes, competitive world of real estate, savvy agents have come up with a compelling way to sweeten the deal for homebuyers . Buyer rebate is just one of those ways.

Simply put, a buyer rebate is when real estate agents offer to return a portion of their commission to homebuyers at closing. Consider it an enticing incentive, a metaphorical cherry on top of the home buying cake, to make them stand out in a crowded marketplace.

As of Jan 2023, there are about 3.2 million licensed real estate agents in the United States. And in Chicago alone there are over fourteen thousand licensed agents. With competition this fierce, real estate agents need a unique strategy to gain a competitive edge. That’s where buyer rebates step in. These rebates not only give agents the competitive advantage they need to attract more buyers but also act as a financial boon to buyers looking for ways to save money.

The structure of these rebates varies: some companies offer a fixed portion of their received commission as a rebate, while others offer a percentage of the home purchase price. Either way, buyer rebates serve as a welcome lifeline in the often turbulent waters of home buying, easing the financial strain and adding a touch of sweetness to the deal.


2. what are the different types of Buyer Rebates?

Agents often employ buyer rebates as a powerful magnet to attract homebuyers. These rebates typically take one of two forms: closing credits and cashback. Both offer unique benefits and limitations. Let’s take a closer look at each.

2.1.1 Closing Credits

  • Often served as a non-cash incentive from the seller to the buyer, closing credits exist to entice buyers to seal the deal.
  • But beware, closing credits come with their own set of rules. They are never fully guaranteed, with the lender deciding on the amount you can receive and where to apply for these credits. Typically, closing credits can be used to offset certain closing costs such as appraisal, escrow, loan origination, and transfer fees. You could even use them to buy points on your mortgage.

2.1.2 Cashback

  • While cashback might not promise the most substantial savings upfront, its key selling point lies in the certainty of receiving a total rebate on your home purchase – a feature that sets it apart from closing credits.
  • A cashback rebate is received at closing, which means this isn’t a pool of money you can tap into for your down payment.
  • However, the appeal of cashback is the freedom it offers. You can spend this money however you wish, without any restrictions. You could use it to cover closing costs, foot the bill for any repairs, spruce up your new home with furniture, manage moving expenses, or even stash it away for a rainy day.

3. How does buyer rebate work?

How does buyer rebate work

Let’s see how buyer rebate works. If the seller pays a standard 6%  commission to his agents at closing, this is usually equally split between both agents. After each agent gets a 3% commission, the buyer agent shares a portion of commission with the buyer as a rebate.

Let’s see how this works for a home value of $300,000 and a standard 6% commission.

In this case the  total commission works out to:

Total Commission  = Home Value X 6% = $300,000 X 6% = $18,000. 

The commission is often split equally between the listing agent and the buyer agent, so each agent gets:

Total Commission ➗2 = $18,000 ➗2 = $9,000 

So each agent gets $9,000 at closing. The buyer agent then shares, say, 1% as a rebate with the  buyer from the commission received. This amount works out to:

working-of-buyer-rebate

Rebate = Home Value X 1% = $300,000 X 1% = $3,000, which is a significant saving for the buyer when purchasing a home.

After offering a 1% rebate to the buyer, the agent is left with $6,000. See the working below.

Buyer agent’s commission – Buyer rebate = $9,000 – $3,000 = $6,000

Here’s a diagram depicting how rebate is derived for a home priced at $300,000 (assuming a 1% buyer rebate on the home price).

3.1 Decoding Commission Splits

Most sellers prefer the trusted expertise of real estate agents over braving the market solo. However, these agents do not work alone. For an agent to conduct any real estate business, they are required to operate under the umbrella of a brokerage firm. This relationship introduces an intriguing twist into the realtor commission narrative: commission splits.

Picture this: If an agent sells a home for $350,000 and gets a commission of 6% – a sum that totals $21,000. This bounty doesn’t go straight into your agent’s pocket. Instead, it first lands with the brokerage, like a pie waiting to be sliced. Now, if the commission is divided equally between the buyer’s and seller’s brokers, each get 3% or $10,500. But wait, the slicing isn’t over. Each broker then carves out a share for their respective agents.

The ratio of this inner split can dance to various tunes – 50/50, 60/40, 70/30, or even 80/20 – often skewed in the agent’s favor. These numbers ebb and flow with the agent’s experience and their individual agreement with the broker. For instance, with a 60/40 split, an agent could pocket $6,300, while the broker stashes away $4,200.

By understanding commission splits, you can understand financial tug-of-war of real estate transactions. It sheds light on how every player – from the agent to the broker – earns their keep and underscores the intricacies of the home-selling process.

Here is the breakdown of the commission split between agents and brokers for your better understanding:

Home Value Total Commission as 6% of home price Commission Split Both Agents’ Commission Both Brokers’ Commission
$350,000 $21,000 50/50 $10,500 ($5,250 each) $10,500 ($5,250 each)
$350,000 $21,000 60/40 $12,600 ($6,300 each) $8,400 ($4,200 each)
$350,000 $21,000 70/30 $14,700 ($7,350 each) $6,300 ($3,150 each)
$350,000 $21,000 80/20 $16,800 ($8,400 each) $4,200 ($ 2,100 each)

Rebates are legal in 41 US States, including Illinois, allowing agents to offer refunds to their home buyers.  The Department of Justice also encourages rebates as it increases the competition and helps buyers save a lot of money on home purchases.

There are 9 states where buyer rebates are illegal: Alabama, Alaska, Oklahoma, Missouri, Mississippi, Louisiana, Oregon, Kansas, and Tennessee. These states have banned rebates entirely and won’t even allow gifts as inducements to home buyers. In addition, another state, Iowa, where rebate is legal, only allows rebates in the case of Dual Agency. Dual Agency is when only one agent represents both the buyer and the seller in the same transaction.


5. How much is the buyer rebate in Illinois?

The typical home value in Illinois is $247,384. And the average realtor commission in the state is 5.20%. 

Some agents offer a percentage of the home purchase price as rebate, while others offer rebate as a percentage of their commission.

Let’s look at both these cases here,

Case 1: You get rebate as a percentage of the final purchase price (say 1%)

Since the average commission in Illinois is 5.20%, if the buyer and seller agents share the commission equally, each gets 2.60%, then this amount works out to:

Total Commission = Commission Percentage X Median Home Price 

= 5.20% X $247,384 = $12,864

So each agent will get half the total commission amount, which is, 

Total Commission ➗ 2 = $12,864 ➗ 2 = $6,431

If the buyer rebate is 1% of the home price, then this works out to:

Buyer Rebate Percentage X Median Home Price = 1% X $247,384 = $2,474

So at the time of closing, the buyer agent will receive $6,431 as his commission out of which he will give $2,474 to the buyer as rebate, and keep the remaining $3,957.

Case 2: You get rebate as a percentage of your agent’s commission

If the buyer rebate is 40% of the agent’s commission in the above case, this would be calculated as,

Buyer Agent’s commission X 40% = $6431 x 40% = $2,572

So at the time of closing, the buyer agent will receive $6,431 as his commission out of which he will give $2,572 to the buyer as rebate, and keep the remaining $3,859.

So in the above case, 40% of the agent’s commission works out to be more than 1% of the home price as rebate. Work this out before you finalize an agent.

5.1 Buyer rebate as a percentage of the home price

Let’s look at the buyer rebate for a range of home prices.

See the sample table below:

Home Price range Buyer Rebate as % of home price
0.5% 1% 1.5% 2%
$150,000 to $200,000 $750 to $1,000 $1,500 to $2,000 $2,250 to $3,000 $3,000 to $4,000
$225,000 to $275,000 $1,125 to $1,375 $2,250 to $2,750 $3,375 to $4,125 $4,500 to $5,500
$300,000 to $350,000 $1,500 to $1,750 $3,000 to $3,500 $4,500 to $5,250 $6,000 to $7,000

5.2 Buyer rebate as a percentage of agent’s commission

Let’s take a look at buyer rebate as a percentage of the agent’s commission. Here are the 20 best places to stay in Illinois, and how much the rebate works out to in each of them. 

Best Places to live in Illinois Median Home price* Total Commission as 5.2% of home price Buyer Agent’s 50% share  Buyer rebate as 50% of buyer agent’s commission Buyer rebate as 2/3rd of buyer agent’s commission
Clarendon Hills $551,741 $28,690.53 $14,345.27 $7,172.63 $9,563.51 
Long Grove $731,451 $38,035.45 $19,017.73 $9,508.86 $12,678.48
Naperville $487,421 $25,345.89 $12,672.95 $6,336.47 $8,448.63
Buffalo Grove $379,199 $19,718.35 $9,859.17 $4,929.59 $6,572.78
Western Springs $661,143 $34,379.44 $17,189.72 $8,594.86 $11,459.81
Hinsdale $991,235 $51,544.22 $25,772.11 $12,886.06 $17,181.41
Evanston $502,872 $26,149.34 $13,074.67 $6,537.34 $8,716.45
Bannockburn $944,986 $49,139.27 $24,569.64 $12,284.82 $16,379.76
Vernon Hills $358,550 $18,644.60 $9,322.30 $4,661.15 $6,214.87
Printers Row $315,196 $16,390.19 $8,195.10 $4,097.55 $5,463.40
Oak Park $467,584 $24,314.37 $12,157.18 $6,078.59 $8,104.79
Wilmette $840,150 $43,687.80 $21,843.90 $10,921.95 $14,562.60
Inverness $665,018 $34,580.94 $17,290.47 $8,645.23 $11,526.98
Riverwoods $764,196 $39,738.19 $19,869.10 $9,934.55 $13,246.06
Kenilworth $1,543,695 $80,272.14 $40,136.07 $20,068.04 $26,757.38
Northbrook $611,966 $31,822.23 $15,911.12 $7,955.56 $10,607.41
Winnetka $1,418,184 $73,745.57 $36,872.78 $18,436.39 $24,581.86
Lisle $340,837 $17,723.52 $8,861.76 $4,430.88 $5,907.84
Leland Grove $270,002 $14,040.10 $7,020.05 $3,510.03 $4,680.03
Glencoe $1,313,400 $68,296.80 $34,148.40 $17,074.20 $22,765.60

6.Why do agents offer buyer rebates?

Agents offering rebate stand out in the market and attract more buyers for their services.

Here are a few reasons why agents offer buyer rebates: 

6.1 To tide over buyer’s negative sentiment

There is a growing negative sentiment among buyers (and sellers) because they consider a 6% real estate commission too high. To tide over this sentiment, agents have developed a marketing strategy through which they offer rebates to home buyers. The buyer agent refunds the buyer a part of the commission, thus lowering buyer’s overall home purchase price.

6.2 To get more clients

Buyer rebate helps agents to stand out in the market where competition between agents is high. An agent offering a rebate will always attract more buyers to use their services than an agent who does not provide a rebate.

6.3 To encourage buyers to do some of the legwork of agents

Due to advancements in technology and growing internet usage, buyers can easily do a home search on their own. Websites like Zillow and Realtor help buyers find the best home that fits their needs. They can reject homes immediately by taking a virtual tour and shortlist homes that suit their budget, choice of location, etc. In addition, agents are more willing to offer a rebate to buyers who have narrowed down their home search. This reduces the agent’s work considerably and saves time which can be utilized to work with more buyers. 

6.4 For customer loyalty

Buyer rebates help agents to retain customer loyalty, especially when a home buyer is contemplating walking away from the deal. In addition, rebates may encourage buyers to overlook minor glitches in the agreement and to keep working with the agent in such circumstances. 

6.5 As an incentive to buyer to hire an agent

Typically, the seller pays the real estate commission to both the listing agent and the buyer agent. However, if the buyer does not hire an agent, the commission goes into the listing agent’s pocket. So, agents offer the buyer a rebate incentive to hire their services.


7. Does taking a buyer rebate affect the price of the property or mortgage?

Buyer rebate doesn’t affect the property’s price but the cost basis of your home. The cost basis helps calculate the Loan-to-Value ratio, which the lender uses to gauge the buyer’s loan eligibility/mortgage amount. Rebate cancels out some of the closing costs, lowering the cost basis of your home.

7.1 What is cost basis?

Cost Basis is the total amount you spend on your home purchase including inspections costs, moving costs or any major home improvements, minus any credit. Since a rebate is a credit to the buyer, this would reduce the cost basis.

For a median home value of $247,384 in Illinois, suppose you receive a rebate of $2,474 (1% of home price) at closing. In this case, the final purchase price or cost-basis of your home will be:

Cost Basis = Home price – rebate = $247,384 – $2,474 = $2,44,910

7.2 What is LTV ratio?

The lender uses the cost basis to calculate the loan-to-value (LTV) ratio. The LTV ratio is an assessment of lending risks that financial institutions examine before approving your loan amount. If the LTV ratio is high, the loan is considered risky. Additionally, for a high LTV ratio the lender might ask the borrower to purchase mortgage insurance. This is to offset the risk to the lender.

If you want to calculate the LTV ratio on your own, then this is the formula,

LTV ratio = MA/Cost Basis

Where MA = Mortgage Amount 

The LTV ratio is the Mortgage or Loan Amount divided by the Cost Basis. For example, if you buy a home for $100,000 and make a down payment of $20,000, you need to borrow $80,000. In this case, the cost basis will be $100,000. This means the LTV ratio will be:

LTV = Loan Amount ➗ Cost Basis = 80,000➗100,000 = 0.8

If your LTV changes, your lender must adjust the financing to keep the ratio low. Usually, the lender tries to keep the ratio at 0.8 or lower. 

A rebate will bring down the cost basis and consequently increase the LTV ratio.

In the above example, if you get a rebate of $3,000, the cost basis of the home will come down to: 

Cost Basis = Home price – Rebate = $100,000 – $3,000 = $97,000

So the LTV ratio will work out to:

LTV = Loan Amount ➗ Cost Basis = $80,000 ➗ $97,000 = 0.82

In this case, the Lender will have to reduce your loan amount to reduce the LTV ratio to 0.8. Therefore, it is essential to disclose the rebate to your lender to adjust the finances of your home.


8. Instead of taking a buyer rebate, should I contact the listing agent directly?

If you contact the listing agent directly, he becomes your agent in that case. This agent will act as both seller and buyer agents – this is termed dual agency. You would also lose the chance to earn a rebate. If you hire a buyer agent, your interest will be better served, and it costs you nothing to hire them as their commission is already baked into the price of the home. The buyer agent will offer you a rebate which can save you thousands of dollars.


9. Is the buyer rebate taxable?

No, the rebate is not taxable in Illinois. According to IRS, buyer rebate is not a taxable income because it is considered an adjustment in the home’s price rather than an income. It merely brings down the cost basis for your home. In addition, the broker should not send the 1099 form to the Buyer. Form 1099 is usually filled in by the agent to show any payment to his broker or client. If they do, you can ask them to withdraw it or check with your accountant in case of any issues.

9.1 How will rebate affect the capital gain tax?

Rebates affect your capital gain tax through the cost basis of your home. A rebate lowers the cost basis, thus affecting the capital gain taxes when you sell the home in future. Capital gain taxes are applicable on the increase in your property’s value since you purchased it.

A lower cost basis at the beginning can make it seem like your property gained more value than it did, increasing future taxes. You can contact a tax professional to get advice on your situation. 


10. Where can I find agents who offer buyer rebates in Illinois?

For the reader’s benefit, we researched and came up with some of the top companies that offer buyer rebates or put you in touch with agents who provide rebates. Here is the list of websites/agents th t offer rebates to buyers in Illinois:

10.1 Clever Real Estate

Clever Real Estate, a free service, matches you with a full-service real estate agent from top brokerages in your area. It is the #1 recommendation by editors if you’re looking for an agent to help you buy a home. Clever claims to offer the best savings, quality agents, and customer support for agent-matching services. It also pre-negotiates a rebate with agents, so you don’t have to negotiate on your own. 

In addition to the agent-matching service, it offers 0.5% cashback to home buyers. If you purchase a home for $400,000, you directly save $2,000 as rebate. Its service is free with no obligation to use their services if you do not buy a home through them.

Clever Real Estate has an excellent rating on Trustpilot (a consumer review website) with a 4.9 rating out of 5 stars. 95% of 1,630 reviews rate it as an excellent service.

10.2 Redfin

Redfin is a well-known discount real estate brokerage that matches you with the top full-service real estate agents in your area who offer a rebate. The average Redfin rebate is 0.22% of the home purchase price, which is less than other brokerages like Clever Real Estate. 

Unfortunately, they don’t advertise a set rebate amount since it varies for different markets. If you want to know how much you can save as a rebate, you can go to Redfin.com and look at the listings in your area. 

Redfin agents work on a salary unlike other traditional agents who are paid commissions per home sale. They also work with many buyer clients at the same time hence don’t provide much hands-on support. Redfin’s agents are generally good to work with as it has a vetting process and provide in-house training to its agents. They offer all the services that a traditional agent provides but for  a lower fee. Though you might have to compromise on service quality with most of the discount brokerages, the risk seems to be less with Redfin.

Redfin’s service is more suitable for experienced buyers and not for first-time buyers who need more handholding. Redfin’s average online review is a 3.2 rating out of 5 stars. The common challenges faced by customers of Redfin are that they get less personalized support and get less savings.

10.3 UpNest

UpNest is a free agent-matching service that connects buyers with the local real estate agents. It has a unique business model where agents compete for your business, and this competition helps buyers get the best rebate deal. Typically, UpNest agents offer a cashback rebate worth 0.3-0.75% of the home purchase price. And the savings are guaranteed no matter which agent you choose. UpNest also offers a $150 Amazon gift card as an additional incentive to use their service. 

UpNest offers a user-friendly dashboard to search for your desired home. But, according to reviews, it isn’t easy to reach UpNest representatives (we’re talking about customer support here, and not the agents), and sometimes they can’t answer some basic questions. 

Upnext can provide you with a good agent. But if you need good savings and seek customer support, UpNest might not be the right choice. 

10.4 Realtor.com

Realtor.com is the National Association of Realtors’ official home search platform. In addition to that, it also offers agent-matching services to home buyers. When buyers submit their information to Realtor.com, it is sent to agents who are willing to pay 30-40% of their commission as rebate at closing. 

The website has a user-friendly dashboard and has the most updated information. You can take virtual tours of the home remotely, which helps you reject homes you don’t like instantly. It also shares other details like schools and other neighborhood benefits, to name a few. 

When you want to schedule a showing or make an offer to an agent, you need to fill out many forms to contact an agent. You are likely to get slammed by phone, text, and email with offers, including sales pitches. 

Realtor.com has a review rating of 2.7 out of 5 on Trustpilot with 46% of customers claiming it to be excellent while 15% considered it to be bad.  

10.5 HomeLight

HomeLight, an online real estate company, offers agent-matching services to home buyers. It pairs you with the local real estate agent in your area. It offers a free agent matching service, and you have no obligation to use it once you have signed up. However, HomeLight does not advertise a rebate and you may negotiate with the agent for that.

HomeLight’s automated platform offers a quick response even if you contact them after business hours. Many of HomeLight’s competitors will only provide you with a match after you’ve spoken to one of their agents. If you initiate the process outside business hours, you might have to wait until the following day to hear back from the agent. 

Customers generally like HomeLight’s service, and it has a rating  of 4.8 out of 5 based on 1,074 reviews on Shopper Approved. But there are many online complaints about the company allegedly selling customers’ data to third parties, as users noted spam and unsolicited phone calls after signing up with their service. 

10.6 Movoto

Movoto is an online real estate company that makes your home search easier. It is one of those companies that sets exceptionally high standards for its real estate agents. Their agents are in the top 5% in their local market, with over three years of experience. Although Movoto does not advertise a rebate, you can negotiate one directly with the agent they put you in touch with.

When it comes to homebuyers, Movoto has an extensive knowledge base in the form of a blog. Its toll-free number is designed to connect real estate agents and prospective home buyers, making the home buying process faster. 

Overall, customers felt Movoto has better customer service than other sites. Movoto has an excellent user-friendly website for customers with detailed information about homes, including the number of beds/baths, square footage, price, etc. It has a customer rating of 4.6 out of 5 stars based on 532 reviews on Trustpilot. 82% of customers rated it as excellent while only 6% rated it as bad. 

10.7 Circle One Realty

Circle One Realty is a real estate firm that offers full service to home buyers. According to them, their agents are committed to providing high-level customer service and expert insights to each buyer. Circle One Realty encourages its buyers to use websites like Trulia and Zillow to find a perfect home. Once you shortlist a few homes, Circle One Realty will help you with the showing. If you want to visit homes on your own, you can do that. Buyers who have already done the home search can get up to 50% of the agent’s commission. Your rebate depends on the number of days when Circle One Realty shows you homes. The higher the number of days used, the lower the rebate.

0-2 days 50% commission at closing
3 days 40% commission at closing
4 days 30% commission at closing
5 days 25% commission at closing

Circle One Realty is one of the most highly rated companies in Illinois in the real estate market, with an average rating of 4.9 out of 5 stars on NiceLocal.com.

Here’s a summary of websites/agents offering rebates, as mentioned above:

Website/Firm name Rebate Offered USP
Clever Real Estate 0.5% of home price Big savings at most price points. Top brand agents to choose from.
Redfin 0.22% of home price User-friendly website
UpNest $150 + 0.3 to 0.75% of home price User-friendly website
Realtor.com You can negotiate a rebate when you get in touch with an agent Quick online service. Good for gauging the market situation
HomeLight You can negotiate a rebate when you get in touch with an agent User-friendly website
Movoto You can negotiate a rebate when you get in touch with an agent User-friendly website
Lucid Realty 20%-50% of agent’s commission Local agents familiar with the market
Circle One Realty 25%-50% of agent’s commission Local agents familiar with the market

11. First-Time Home Buyer Programs

For a first-time home buyer in Illinois, the state’s housing development authority offers down payment assistance and loan programs. Almost all Illinois Housing Development Authority Programs are valid in any Illinois county.

Here’s a list of programs offered in Illinois that you can avail of:

11.1 National First-Time Home Buyer Programs

You don’t have to be in the state to access these programs, as the following national programs help the first-time home buyers across the U.S to buy their homes.

11.1.1 Conventional Mortgage

The first-time home buyer can get a conventional home loan at 3% if the mortgage meets the eligibility requirement. If you can put at least 20% down, you don’t have to pay for mortgage insurance. Most lenders qualify you for a conventional mortgage if you have a minimum score of 620, but a score around 740 earns the best interest rates.

11.1.2 FHA Loans

Federal Housing Administration Loans or FHA loans provide relaxation in qualifying requirements in terms of credit score and down payment. You qualify for an FHA loan even with a credit score as low as 500, but you will need to pay a 10% down payment. You can reduce this down payment by 3.5% if you have a credit score of 580 or higher.

11.1.3 VA Loans

VA loans are only for military members, veterans and surviving spouses. There is no minimum credit score, no down payment, and no need to take mortgage insurance. However, you have to pay a VA funding fee to avail all these benefits. 

11.1.4 USDA Loans

USDA loan encourages rural and suburban homeownership by providing zero down payment mortgages to low-income homebuyers. Even if you are someone who has non-traditional credit data like rent or utility payments, you can apply for a USDA loan. If you want to have a faster loan processing, you need to have a credit score of 640 or above. 


11.2 IHDA First Time Home Buyer Loan Programs

You must have a minimum credit score of 640 to qualify for any of the below loans.

11.2.1 IHDAccess Forgivable

IHDAccess Forgivable offers a cash assistance of up to $6,000 or 4% of the home purchase price to pay for the down payment and closing costs. This cash assistance is forgiven monthly without payment over 10 years. This applies to all types of loans, including FHA, VA and USDA. 

11.2.2 IHDAccess Deferred

IHDAccess Deferred offers 5% of the purchase price up to $7,500 in assistance for the closing costs and the down payment as an interest-free loan. You don’t have to pay this until you sell your house, refinance, or pay your mortgage.

11.2.3 IHDAccess Repayable

IHDAccess Repayable offers 10% of the purchase price or up to $10,000 in assistance for the down payment and closing costs shown as an interest-free loan. But this loan has to be repaid over ten years.


11.3 Collinsville First-Time Home Buyer Program

Collinsville First-Time Home Buyer Program provides upto $5,000 as down payment assistance to first-time home buyers. The amount varies based on the income of first-time home buyers in the city of Collinsville. Eligible applicants must be first-time home buyers within the corporate limits of Collinsville city, and median Area Income is used to determine the level of the buyer contribution.

12. Does the buyer need to disclose that he is getting a rebate?

Yes, the home buyer needs to disclose the buyer rebate to all parties involved in the real estate transaction, including the lender, seller, attorney, etc. 

You also need to disclose your rebate on the HUD-1 settlement form, covering all the settlement costs. Your agent will help you out with respect to this.. 


13. What happens if the lender does not approve of the rebate?

Not all lenders will allow the same rebate amount. Some may not even approve the rebate at all. If the lender disapproves, you can ask your agent to get the  seller to reduce the home price (by the rebate amount) instead.  

A first-time buyer must talk to multiple lenders before you sign up with one. This is to ensure that the lender approves of a rebate, otherwise you may lose thousands of dollars in savings. It is advisable to talk to at least three lenders before you decide to work with any of them. Get all the quotes on the same day and compare rates, lender fees, and loan terms. Also, consider customer service and lender responsiveness while selecting a lender, especially when most lenders are loaded with multiple mortgage applications.


14. How to negotiate buyer rebate with your agent

 It is important to ensure that you negotiate for the highest rebate, especially when your agent offers you a low rebate or no rebate at all. Many agents are willing to offer high rebates; you can do your research and find the best that meets your needs.

These tips will help you negotiate for a buyer rebate:

14.1 The best thing to do is talk it out

Talk to several agents and ask them if they can offer you a rebate if you do some of their tasks. Examine their negotiation skills and use their advice on other agents. Reach out to many agents and tell them that you’ll work with the one who offers the best rebate deal. 

14.2 Spread the word

If you plan to buy a home, talk about it to your friends, family, and neighbors. If anyone has already purchased a home, they may give you some suggestions on agents that offer rebates.

14.3 Get yourself pre-approved for a loan

If you’ve made up your mind to buy a home, the next step is to meet a mortgage lender and get yourself pre-approved for a loan. Though pre-approval doesn’t guarantee finance, the agent will take your offer to buy a home seriously and will be willing to offer you a rebate to close the deal quickly. 

13.4 Narrow down your home search

With the increase in internet usage, buyers can do their home search on websites like Zillow, Realtor.com and Trulia.com. Once they narrow down the search, they can reach out to multiple agents. Most of the agents will agree to offer a rebate as the buyer has already reduced their work of finding a home. Compare the rebates offered by all agents and close with the one that offers the best deal.

13.5 You can opt for a service where agents compete for business

Some real estate companies like UpNest connect you with agents who compete for your business. The competition among agents makes it easier for you to get the best savings without much negotiation. Their user-friendly website gives you access to read agents’ reviews and talk to them on the phone or meet them in person. You can interview multiple agents without any awkward moments, as your information remains confidential until you have decided to work with any specific agent.


14. Will taking a rebate affect the services I receive from the agent?

No, you don’t have to compromise on your services for a rebate. There are agents who offer full-service and a rebate to home buyers at the same time. 

Make sure that you don’t lose out on any of the services while availing of a rebate. Here is the list of services that an agent offers a buyer. 

  • Helps you clarify your priorities.
  • Assists you in the negotiation process.
  • Provides accurate information on neighborhoods, schools, and communities.
  • Suggests service professionals such as inspectors and exterminators.
  • Suggests sources of financing.
  • Evaluates particulars of the property.
  • Selects and arranges property showings.
  • Explains forms and agreements in a simpler way.  

15. How do agents feel about giving rebates?

More and more agents are sharing their commissions with buyers as part of their business model. But many buyers do not know about rebates offered by agents, which can save them thousands of dollars. Even the Department of Justice is trying to raise awareness about buyer rebates to increase the competition among agents and help buyers save money on their home purchases.

However, considering that there are eight states in the U.S. where rebates are banned, it is clear that there is still resistance to the concept. Some agents still feel offering buyer rebates is a bad idea and that such inducements can get out of control and that it could lead to reduced profits. 


16. FAQs

16.1 Are Homebuyer Act and First-Time Home Buyer Tax Credit the same?

Yes, both Home Buyer Act and First-Time Home Buyer Tax Credit are the same. On April 28, 2021, U.S. lawmakers introduced the First-Time Homebuyer Act of 2021. The bill revises the IRS tax code to grant first-time buyers $15,000 in refundable federal tax credits. The tax credit equals 10% of your home’s purchase price and may not exceed $15,000 as per the inflation rate in 2021. When you receive a tax credit, it is applied directly to federal tax as rebate. The First-Time Home Buyer Act aims to help low-income and middle-income Americans attain homeownership. The Act applies to all homes purchased from January 2021 onwards, but the bill is yet to be passed as of today. 

You can check out the current status of all proposed government programs here.

16.2 Realtors claim that they work for free for home buyers. Is this true?

No, realtors do not work for free with home buyers. Though the seller pays the realtor commission after closing, it is baked into the purchase price of a home which ultimately the buyer pays. So, it is important to ensure that you find an agent who offers the best deal. 

16.3 Who is qualified to get a rebate?

 

Though most agents offer rebates these days to entice homebuyers to use their service, some agents have specific conditions to qualify home buyers for a rebate. Some may require you to either do your home search online or work with minimal assistance from agents to offer you a rebate. Some agents may even require you to be pre-approved for your loan. If you make their work easier, agents will be more willing to offer you a rebate as an incentive for your efforts in the home purchase. Make sure you read the terms and conditions before you sign up with agents.


Buyer rebates not only help home buyers save thousands of dollars but also help sellers to close the deal quickly. Agents also benefit from rebate since they attract more business by advertising that they are willing to give a portion of their commission to home buyers. Many home buyers are going online and doing the home search by themselves, which reduces agents’ work. Therefore, it makes sense for agents to offer rebates as an incentive for the efforts put in by home buyers. Rebate acts as a win-win situation for everyone – buyers, sellers, and agents.

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