Buyers Rebates May Become Legal in NJ
As reported by the New Jersey Association of Realtors: At yesterday’s Senate Commerce Committee meeting, lawmakers approved bill A-373/S-139 sponsored by Assemblyman Patrick Diegnan (D-18) and Senator Nicholas Scutari (D-22). The bill permits rebates to be provided to consumers in real estate transactions. Only brokers could offer rebates to those buying property, not individual real estate licensees. Rebates would have to be in the form of a credit or check and must be documented in a contract at the beginning of a brokerage relationship in a written or electronic form or in a buyer agency agreement. The legislation pertains only to purchases of residential property. The bill will need to be considered by the full Senate before it reaches Governor Corzine for his approval.
Why is this important? Our entire current commission structure is limited by the law that prohibits buyers from getting rebates. There are real estate agencies like Condo Domain , for example, operating in many other cities, who structure their commission relationship very differently. They work as true “buyer’s agents” and are paid a flat fee rather than a percentage of the sales price. The buyer’s agent never also represents the seller. At this particular agency, there are two models to choose from – the full service option where you start your search on their website (which includes for sale by owners, etc.), their agent takes you out to see properties and handles everything up to the closing. You would get a 20% refund of the buy side commission. Or you could choose the “do it yourself” option where you would not have an agent to take you to see properties – you do that at open houses – but they work with you from offer to closing and you get back all but $5,500 of the buy side commission. Wouldn’t that shake things up in the Hoboken real estate market!
Take a look at this video to see what I mean:
Interestingly, I was approached to be an agent for this company in the Hoboken market. The current state of the law in NJ, however, made it impossible. Perhaps things are changing?