Buyer Rebates Become Legal in NJ
The New Jersey Legislature recently passed a law that will allow buyers to get part of the sales commision on the purchase of a home rebated back to them. Of course, the local agents are up in arms without even really knowing what this means or what affect it might have on their business. Why are people so afraid of change? What is really does is allow brokerage firms with a different (and innovative) business model to enter the local Hoboken real estate market.
Take a look at these companies and the way they do business:
What this new law really means is that some or all of these companies are coming to Hoboken. In fact, right on the CondoDomain site, it says “coming to Hoboken” and a bunch of other places. They are all expanding and Redfin has raised over $30 million in venture capital.
I’ve also heard lots of agents saying look at Foxtons – they tried to cut commissions and failed. This is nothing like Foxtons. This new way of doing business recognizes consumers willingness and desire to search for homes on the internet. Have you not heard a traditional agent make the pitch in a listing presentation that 86% of buyers start their search on the internet so we are going to aggressively market your home for sale on line? Perhaps this added competition in the brokerage marketplace will be good for the consumer? These companies work with both buyers and sellers. I’d be very interested to hear what you all think about this.
Is a Rebate Taxable Income?
Local brokers have been exclaiming that buyers will have to pay taxes on the rebates making them far less attractive, yet the IRS has already ruled that rebates are NOT taxable income.