Real Estate Commission Rebates (EXPLAINED)

Real Estate Commission Rebate: 

Almost all homebuyers leave money on the table when buying a home.. don’t be one of them.

You can save thousands of dollars on your next home purchase by receiving a real estate commission rebate – yet most homebuyers don’t even know what a real estate commission rebate is.

By understanding this, you can position yourself as one the savviest homebuyers in your market.

What is a Real Estate Commission Rebate: 

A real estate commission rebate is when you (the homebuyer) receives a portion of your real estate agent’s commission when you buy a home with them.

Yes, it’s that simple! A real estate commission rebate is when your agent shares their commission with you. Wahoo, you’re now one of the savviest homebuyers in your market 🙂

How are Real Estate Agents Paid:

In most real estate transactions, there is a homebuyer and a home seller. Typically, the homebuyer and the home seller are represented by their own individual real estate agents. 

The real estate agent representing the home seller, is known as the “Listing Agent.” The real estate agent representing the homebuyer is known as the “Buyer’s Agent.” 

Here’s where it gets a bit confusing: in most real estate transactions, the Listing Agent (representing the seller) pays half of their total commission to the Buyer’s Agent (representing the buyer). This payment is a reward for bringing a homebuyer to purchase the property that the Listing Agent has listed on the market.

That’s right, the Listing Agent is the one who’s actually paying the Buyer’s Agent– I know, it’s super confusing. 

Now, you might be asking yourself “Okay I understand who pays the Buyer’s Agent, but who’s paying the Listing Agent?” 

The Listing Agent is paid a commission from the home seller when the home sells! Oftentimes, this commission is between 5% and 6% of the total cost of the home when it’s sold. 

Check out the diagram below for a visual of how this works:

Getting Paid a Real Estate Commission Rebate: 

At Joy, we rebate 70% of the Buyer’s Agent commission directly back to our customers when they buy a home with us! 

Here’s how real estate commission rebates works when buying a home with Joy: 

If you buy a $750,000 home, and the Listing Agent earns 6% of the home price as commission, Joy would receive half of that (or 3% of the total home price). From that, we’d rebate 70% of the commission back to you - an impressive $15,750!

Finding Homes and getting a Real Estate Commission Rebates: 

Checkout Joy’s search tool HERE! It’s similar to Zillow, but we do two unique things:

1. Joy’s search tool shows the estimated real estate commission rebate amount on each property! (find it in the green text box)

2. You can use natural language for searching for homes. For Example, you could search "I'm looking for a 3 bed 2 bath home between 450k and 600k" or "I'm looking for a studio apartment that has an HOA under $300 a month in Seattle"

Pretty cool right!

Brief History of Real Estate Commissions:

Let’s quickly review the history of real estate agent commissions!

The earliest recorded real estate transaction in the US dates back to 1890, only 135 years ago! Back then, there were no regulations or licensing required to buy and sell real estate. This era was known as the “Wild West.”

In 1913, the National Association of Real Estate Exchanges (now known as the National Association of Realtors, or NAR) introduced a standardized commission system. 

Under this system, real estate agents representing home sellers had to agree to split their commission equally with any fellow member who brought a homebuyer to the table.

Realtors were actually required to charge the same commission rates. Deviating from the schedule commissions rates wasn’t just frowned upon and was a violation of the NAR’s Code of Ethics!

But in 1950, a Supreme Court decision changed the game. After this ruling, NAR stopped mandating a specific fee structure. Instead, they shifted to allowing agents and brokers to set their own commission rates. 

Real Estate Commission rates overtime:

• 1920s: The average commission rate was around 2.5% of the home's sale price. For example, on a home priced at $6,296, the Listing Agent would earn $157.40, which would be split with the Buyer's Agent, resulting in $78.70 per agent.

• 1980s: The commission rates had rose to 5% - 6%, which has remained common to this day.

How Technology is Reshaping the Real Estate Industry:

The real estate world has undergone a significant transformation over the past 25 years.

Back in the early 2000s, buying a home was a completely different experience. If you wanted to see which properties were for sale, your first stop had to be at a real estate broker’s office. There, you’d sit down with an agent who would flip through their “black book” of properties to show you what properties were for sale in the area.

Fast forward to today, and the process couldn’t be more different. Platforms like Zillow, Redfin, and Joy, make finding your next home as easy as getting online. With a few clicks, you can browse available properties, view photos, and access detailed information - all from the comfort of your couch.

The Future of Real Estate Commissions:

This wave of technological innovation isn’t just making house hunting easier, it’s also changing how homebuyers and sellers value real estate services.

What does this lead to? More competition in the real estate industry and alternative ways to buy and sell homes, which ultimately benefits both homebuyers, home sellers and industry professionals.

If you want to receive a real estate commission rebate of 70%, make sure to check out Joy!