New Jersey’s General Assembly on Monday voted 46-25 to pass a measure that allows real estate brokers in the state to give rebates to homebuyers — counterpart legislation has not yet been passed by the state Senate.
The New Jersey Association of Realtors, a statewide real estate trade group, has earlier opposed legislation (see Inman News article) that sought to lift the state’s rebate ban.
A spokesperson for the New Jersey Association of Realtors could not be reached for comment after hours on Monday.
The U.S. Department of Justice has taken action to reverse statewide real estate rebate restrictions, and lists New Jersey at an Antitrust Division Web site among the states that prohibit real estate brokers from offering rebates to consumers. "New Jersey consumers are unable to benefit from rebates that consumers in other states may receive," the Competition and Real Estate" site states.
Derek Eisenberg, a flat-fee broker who has operations in New Jersey, said, "I could not be happier about the (possible) repeal. It’s a huge boon to consumers that will indirectly let buyers negotiate commissions on the purchase the same way sellers can negotiate at time of listing.
"I regret the fact that this legislation was ever necessary. I never believed that returning a portion of the commission to the buyer or seller was sharing commission with an unlicensed person."
He added, "However, one concern I do have in light of the financial calamity we are in is that the rebate be recorded on the HUD-1 and the lender be made aware of the rebate before funding the loan. Undersecuritized loans are why we are in this financial mess so it’s important that rebates are on the up and up and not a cash kickback on the side."
Other supporters of the legislation include the U.S. Department of Justice, the Consumer Federation of America, the National Association of Exclusive Buyers Agents, the American Real Estate Broker Alliance (an organization of flat-fee brokers), and the American Homeowners Grassroots Alliance.
The Assembly bill, A373, had sought to allow brokers to give rebates to both buyers or sellers, though the Assembly Regulated Professions Committee removed the provisions in the bill that would allow sellers to receive a rebate and clarified that "a rebate may only be paid to a purchaser of residential real property," according to a committee report.
In order to receive a rebate on home purchases, "the broker and the purchaser (must) contract for such a rebate at the onset of the broker relationship in a written document, electronic document or a buyer agency agreement," according to the bill text, and the broker must comply "with any state or federal requirements with respect to the disclosure of the payment of the rebate."
Also, the broker must recommend that the buyer "contact a tax professional concerning the tax implications of receiving that rebate," and that the rebate be paid as "a credit, reducing the amount of the commission payable to the broker, or a check paid by the closing agent" made at the time of closing, the bill text states.
The Senate version of the bill is S139.
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