Recently purchased a new construction home through an agent. Our broker and agent agreed to rebate us (buyer) most of seller commission because we know them well.
However we found out after closing that sellers contract says buyer can only use this rebate money toward closing cost, any remainder goes back to broker. There is a huge remainder sum (~30k) we were expecting as cash back, but now escrow is saying it is illegal for them to give cash back to us. And broker is saying they may also now have legal and tax implication.
Feels like we are being given a run around. I would like to understand how agent commissions and broker rebates work, legally.
1. Why is it illegal for escrow to disburse me remaining cash? Even if this is the instruction from broker?
2. Escrow has already disbursed cash to broker. What is the legal issue with broker giving me that money as cash back?
3. If this money is income for broker, is it a legal and equivalent expense to write it off as cash back to buyer?
4. Does broker have option to return the money to escrow and ask for it to be given to buyer?
5. Any ideas on how I can part of this commission without fees and taxes being cut?
- Chase AmhitIt goes by the whatever it is written on the contract. What you could have done is to use the remaining credits to pay for points for lower interest. It counts as lender's cost so they have to pay this fee for you