Real Estate

Buying agent with most cash back?

Deal Expert
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Feb 11, 2009
20055 posts
9837 upvotes
Toronto
oasis100 wrote: The best way is actually for agents to have their own brokerage pay out the rebate to the client. The agent will only pay the taxes on what they received in their pockets. So there isn't any complications during tax time with deducting.

Mind you, not all brokerages do this for agents.
Not exactly. This makes 0 difference.

Hypothetical Scenario: $1M Property, 95/5 Broker/Agent split., 50-50 Cash Back split

Buyers Brokerage Charges Sellers Brokerage - 2.5% + HST = $28,250 (incl. HST) -- This is the total charged to the seller buy the buyers brokerage regardless.
Brokerage's cut - 5% - they keep: $1,250 + HST = $1,412.50
Remaining - $1,000,000*0.025 * 0.95 = $23,750.
50% Agents Split = $11,875 + HST = $13,418.75
50% CB Split = $11,875 Total.

Now you're probably wondering...what happened to the HST on the cashback split? Well it works like this.
Buyers Broker receives $3,250 worth of HST they have to remit in total.
Buyers Broker pays out 13% HST on Agents pay out = $1,543.75. This $1,543.75 is now a Input Tax Credit for the Broker, and is now due to the CRA by the Agent
Buyers Broker retains the HST on $1,250 = So has to remit the $162.50 as they normally would, net of credits.
But...because the buyer receiving cash back doesn't in theory have an HST number to charge the broker, there is no HST remitted to them, and at the same time no HST Credit. As such the portion that would go to the buyer is simply remitted directly by the Buyer's Broker.

In total essentially all you're doing is making the buyers broker pay out the HST to the government rather than the agent. This has no impact on the total amount charged to the Sellers.
Realtor (Investment Properties) - CPA, CA
Deal Addict
Feb 19, 2019
2347 posts
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Stouffville ON
Sanyo wrote: Are agents able to deduct cash back for their commission as an expense on their taxes or do they have to put the whole amount on their taxes?

For example commission is $20k, $10k they have to give to their client, do they put $20k on taxes and show $10k as expense or full $20k?
Cash back is a deductible expense so the taxes are paid on the total commission less expenses including cash back.
In my previous brokerage I would have received T4A based on the commission less cash back, my current brokerage doesn't do it so the T4A is for the full amount of commission, the cash back rebates are deducted as expenses on my return.
I would definitely prefer the have the cash back deducted at source since it would create less chances of being audited, but there are other reasons why I switched the brokerage.
If audited I have back up for everything so it will be simply a matter of providing the info, the net tax liability is the same regardless how it's handled.
Full Time and Full Service Realtor
Member
Jul 23, 2020
290 posts
240 upvotes
CondoMan98 wrote: I would never ask for a cash back from a realtor. Personally, I want my realtors to work for me and when you are badgering them about the quality of their service by demanding crazy cash backs, why the heck would they ever put in the time to work for you? You think they do this for free?!?!

Also, when you are the cheapskate who constantly asks for cash backs, I can guarantee you that you will be the last call for the a hot deal, etc.

I guess we should ask for cash backs from our plumbers and gardeners too Face With Tears Of Joy
For sellers what incentive is there for the realtor to provide value when all the realtor is working for is commission based off the price you are buying for. Obviously it benefits the realtor for you to pay as much as possible as then the realtor gets more commission.

You don't get any commission when buying from a plumber or gardener because its absurd. Realtors have control of the market which is why things are this way, only to benefit realtors.
Member
Aug 16, 2011
268 posts
163 upvotes
Oakville, ON
This is the same way my brokerage does it. They will not directly pay the cashback but have no problem with me adding a schedule to the BRA outlining the cashback arrangement.
Registered Real Estate Sales Representative
Jr. Member
Sep 13, 2007
148 posts
184 upvotes
toronto
ricodeals wrote: For sellers what incentive is there for the realtor to provide value when all the realtor is working for is commission based off the price you are buying for. Obviously it benefits the realtor for you to pay as much as possible as then the realtor gets more commission.

You don't get any commission when buying from a plumber or gardener because its absurd. Realtors have control of the market which is why things are this way, only to benefit realtors.
I am not the best however I do claim to know a thing or two about RE. However I never knew "realtors have control of the market".
Member
Jun 1, 2019
251 posts
337 upvotes
als98 wrote: I am not the best however I do claim to know a thing or two about RE. However I never knew "realtors have control of the market".
Realtors do not have control of the market, at all. Its a free market, now more than ever with free information for buyers & sellers via internet.
Full Service Realtor
Niagara / Hamilton-Burlington
Jr. Member
Sep 13, 2007
148 posts
184 upvotes
toronto
Tailwind72 wrote: Realtors do not have control of the market, at all. Its a free market, now more than ever with free information for buyers & sellers via internet.
I am a realtor as well. I forgot to add the emoji for sarcasm there in my earlier post.
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
i think in this hot market i would expect at least 25% back... especially if they couldnt get a discount at all, what am i paying you for?

If you can get me a good deal absolutely worth it... if its just a full price or over offer, psssh better give me some of that money unless they took me to like 20 properties and showed you actually did real research and not print a listing off housing sigma, then definitely they deserve their full commission.
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
Sanyo wrote: i think in this hot market i would expect at least 25% back... especially if they couldnt get a discount at all, what am i paying you for?

If you can get me a good deal absolutely worth it... if its just a full price or over offer, psssh better give me some of that money unless they took me to like 20 properties and showed you actually did real research and not print a listing off housing sigma, then definitely they deserve their full commission.
If a Realtor shows you any printout from anywhere other than TRREB, demand 75% of the commission for them being out to lunch, unknowledgable, cheap and lazy.
Member
Jun 1, 2019
251 posts
337 upvotes
licenced wrote: If a Realtor shows you any printout from anywhere other than TRREB, demand 75% of the commission for them being out to lunch, unknowledgable, cheap and lazy.
This comment is only valid for GTA properties. RFD is Canada-wide.
Full Service Realtor
Niagara / Hamilton-Burlington
Member
Jul 23, 2020
290 posts
240 upvotes
als98 wrote: I am not the best however I do claim to know a thing or two about RE. However I never knew "realtors have control of the market".
MLS/TREB and realtors keeping the same commission structure as 30 ago as if the average house is 100k.
Deal Fanatic
Jul 3, 2011
6517 posts
3798 upvotes
Thornhill
I always know my audience.

Sanyo is GTA.

But if you prefer...

If a Realtor shows you any printout from anywhere other than their MLS System, demand 75% of the commission for them being out to lunch, unknowledgable, cheap and lazy.
Jr. Member
Apr 6, 2020
123 posts
84 upvotes
Toronto
deal_with_singh wrote: Huh? 10%? That sounds more like a gesture/gift. Something myself and a lot of others typically give as a "closing gift"

A realtor giving 80% cash back is a completely different story.

Cash back is really just about how much the agent values the job he did.

If the buyer comes up to you and says "I want this property, all I need you to do is do the paperwork and split the cash back 50-50" - Sure...that makes sense to me....

But common 80-90%??...I just don't see any reason other than desperation and lack of any value/service offered.
100% agree
GTA Real Estate Agent
Jr. Member
Apr 6, 2020
123 posts
84 upvotes
Toronto
ricodeals wrote: For sellers what incentive is there for the realtor to provide value when all the realtor is working for is commission based off the price you are buying for. Obviously it benefits the realtor for you to pay as much as possible as then the realtor gets more commission.

You don't get any commission when buying from a plumber or gardener because its absurd. Realtors have control of the market which is why things are this way, only to benefit realtors.
You're out to lunch
GTA Real Estate Agent
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
Another question -- do you think its smart if you see a property you like to call up the seller agent and negotiate for them to be your buyer agent for that transaction only and try to get 50% cash back if the deal closes since they will also be getting a commission from the seller?

So basically i assume 1-2% seller commission + 1.25% buyer commission would still be a sweet deal for the seller agent.

Does this happen often?
Newbie
Jul 29, 2020
1 posts
2 upvotes
Hello, was looking to make an offer this week in GTA area. Please PM me.

Thanks
Jr. Member
Sep 13, 2007
148 posts
184 upvotes
toronto
Sanyo wrote: Another question -- do you think its smart if you see a property you like to call up the seller agent and negotiate for them to be your buyer agent for that transaction only and try to get 50% cash back if the deal closes since they will also be getting a commission from the seller?

So basically i assume 1-2% seller commission + 1.25% buyer commission would still be a sweet deal for the seller agent.

Does this happen often?
Dual agency is a very complex matter. Conflict of interest is a major concern. Seller agent has fiduciary duties to his or her client. Buyer is better off finding a good realtor that will best serve his or her interest.

Double ending does happen however I am not a big fan of it.
Deal Expert
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Feb 11, 2009
20055 posts
9837 upvotes
Toronto
Sanyo wrote: Another question -- do you think its smart if you see a property you like to call up the seller agent and negotiate for them to be your buyer agent for that transaction only and try to get 50% cash back if the deal closes since they will also be getting a commission from the seller?

So basically i assume 1-2% seller commission + 1.25% buyer commission would still be a sweet deal for the seller agent.

Does this happen often?
Most buyers agents will give you 50% cash back for a deal where its just a single property case like you described. In that case its better to use a separate buyers agent so you know for sure you're able to negotiate and still taking advantage of the difference in commission, and you have someone representing you not the seller.
Realtor (Investment Properties) - CPA, CA
Deal Addict
Mar 2, 2017
3841 posts
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Toronto/Markham
Sanyo wrote: Another question -- do you think its smart if you see a property you like to call up the seller agent and negotiate for them to be your buyer agent for that transaction only and try to get 50% cash back if the deal closes since they will also be getting a commission from the seller?

So basically i assume 1-2% seller commission + 1.25% buyer commission would still be a sweet deal for the seller agent.

Does this happen often?

In theory what you are proposing makes perfect sense and would work well if all agents were created equal (have the required knowledge/objectivity/etc to carry this out as a win/win for all). Because this is hardly ever the case and because they don't have a client obligation to you as a buyer you take on quite a bit of risk engaging the seller agent.

In short It's doable and it works, but buyer beware.
RE Broker
Penalty Box
Mar 27, 2004
10493 posts
9009 upvotes
Toronto
Sanyo wrote: Another question -- do you think its smart if you see a property you like to call up the seller agent and negotiate for them to be your buyer agent for that transaction only and try to get 50% cash back if the deal closes since they will also be getting a commission from the seller?

So basically i assume 1-2% seller commission + 1.25% buyer commission would still be a sweet deal for the seller agent.

Does this happen often?
so you want the listing agent to represent your interests in negotiating. while the agent is also suppose to get the highest price possible. do you not see the conflict there?just get your own buyer agent and get a rebate
Full-time Realtor

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