Hey Richie!

In a word...NO.

The commission rebate, when properly done (meaning both buyer and SELLER, yes, Seller, need to approve the rebate, and the lender has to be aware of the rebate and approve it as well...trust me, I used to do this all the time and I know of what I am writing), cannot be used as a down payment.

The rebate CAN be used to pay for loan related costs--points, fees, buy down interest, and for escrow fees, but not a single penny can be used for downpayment.  The buyer must prove proof of funds for the downpayment withOUT the help of additional, contingent funds.

Hope this helps!

NO. The commission has not yet been earned. 

Wow, where do you live that allows that and what agent has lost their mind!

Yes, it can be used towards closing costs. I've done it, but always need a letter from the broker-in-charge authorizing it. I've also had a seller reduce the purchase price for the amount of the credit back and pay a lower commission.

Richie,

I think you have your answer. Wishing you a great week. A

No, that won't pass Underwriting guidelines...

If I remember right I did this with a builder some years back

The way we would do that is to discount the commission paid at closing to the selling agent and that same amount to be given as a credit to buyer from the seller to be used toward closing costs, prepaids. It takes two separate agreements. This amount cannot go toward down payment.

I say no. I do not think it is legal to give people who are not licensed money.

Closing costs and rebates, not the loan.

In most cases no. It has to be disclosed to the lender and approved by them. Here in NH it is illegal as only $50 can be given back to the buyer

Unless the buyer is the agent, no.

Grace has the best answer!

My answer would be: down payment needs to be in as part of the loan process.  Agents don't get their commission until after the loan docs are signed and the escrow closes.  If the monies are needed for the down, but don't exists until the close, you cannot borrow from the future for something in the present.

I would say with full disclosure and lenders apprvoal.

Lots of excellent answers here; great question but it has been answered already!

Depends on the lender.

Depends on the buyer.

Depends on the broker. 

Depends on the law.

no

Already some of the best answers I have read about the subject!

Only if this will be allowed by the lender. Then, follow their instructions.

Richie Alan Naggar now that is interesting! Something that is not yet earned will not be a down payment...

Reduce home price? NCRR is a common one.

Yes if they advance it up front and the lender approves it.

in  my region it can only be done with full disclosure and if the individuals are related parties.  It is legally precarious and lenders dont like it here.

Ya gotta love the vast array of knowledge here on AR!  Grace Morioka is the star of this thread!  

I would defer to Grace Morioka for a very good answer.

Two answers:

• Towards the down payment--never!
• Towards closing costs--Yes--up to all of the closing costs.

Minimum cash from buyer has to be = or  > the minimum down payment required for the loan product...

I think that Grace has given you an excellent answer.

Hi Richie - We haven't had a problem doing rebates (although we don't do them often) but we've never been able to get a lender to agree to use a rebate as a down payment.

I know there is a trick to this. Grace is also correct here BUT what about the buyers agent rebates from Redfin?

There's no reason why, with agreement from the lender, the agent cannot issue a credit to the buyer at settlement.  Many companies are now rebating portions of the commission to their buyers, and I'm guessing that the title companies have figured out how to make it legal.