Are real estate rebates legal?

Real Estate rebates for buyers are legal in 40 states.  The other 10 states ban or restrict rebates for Buyers.  The 10 states that ban or restrict rebates are Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon, and Tennessee. 39 states allow real estate rebates to Sellers.  The 10 states noted above as well as New Jersey ban or restrict rebates to Sellers.

The broker of the real estate company must agree that their agents can offer a rebate.  This is a business decision and has nothing to do with being legal or illegal.  If you have had an agent or broker tell you that rebates are illegal in a state that allows them, they either have no idea what they are talking about, or, their broker doesn’t allow them to offer rebates.  If you are in a state that allows rebates, then it’s just a matter of finding a brokerage that allows their agents to offer rebates.

There are also lender guidelines that can’t be exceeded.  It’s important to have the lender involved as soon as possible so there are no surprises as you get closer to closing.  Rebates aren’t common enough for all lenders to have dealt with them before, so sometimes it’s just educating the lender and having them check with underwriting, etc. as to how they want it handled.

The United States Department of Justice says, and I quote, “Rebates make buying a home less expensive”.   The United States Department of Justice has worked to get some states to remove their restriction or ban on rebates and they continue to try to get the states noted above to change their laws to allow rebates since they benefit consumers.