Your Guide to Redfin Rebates for Buyers

Redfin Refund — Redfin’s home buyer rebate program — is a credit that eligible home buyers can receive at closing when they buy their home through a Redfin agent.

However, this program isn’t as straightforward as it might sound. Buyer rebates are notoriously complicated, and several states don’t allow them at all. Because of this, Redfin rebates are only available in some markets and under certain circumstances.

If you’re a buyer in an eligible state, our friends at Clever Real Estate make it easier to get cash back after your home purchase. Clever Cash Back refunds qualifying buyers a check for 0.5% of their new home’s purchase price after closing.

Learn more about Clever Cash Back today!

Key Takeaways

Redfin claims that its average buyer rebate is around $1,500 — but this exact amount varies considerably
A Redfin Refund is subject to numerous terms and restrictions, and is never guaranteed
To be eligible for a Redfin Refund, buyers have to work directly with a Redfin agent, but agents only operate in select areas
Several states that Redfin operates in don’t allow rebates — check that yours does before starting the process

What Is the Redfin Refund for Buyers?

The Redfin Refund is Redfin’s home buyer rebate program. A buyer rebate is when a buyer’s agent or broker shares a percentage of the commission they earn on the transaction with the buyer.

These rebates are often a percentage of the typical 2.5-3% commission that buyer’s agents earn after a home purchase, or a flat amount.

The benefits to all parties are pretty obvious:

The buyer gets money back when they probably need it most
The buyer’s agent or brokerage can advertise a rebate to attract more clients

Redfin rebates follow this standard approach. Here’s how it works:

At closing, the seller pays the Redfin agent 2.5-3% of the sale price (whatever’s typical in your area) as a buyer’s agent commission
Redfin contributes a portion of that money towards your closing costs
If there’s money left over after settling the closing costs, you may receive a check back for the rest

The key phrase there is “you may receive.” Buyer rebates are subject to minimum qualifications, lender approval, and state law. We’ll cover that in more detail below, but first let’s touch on Redfin’s requirements for their rebate program.

Minimum qualifications for Redfin rebates

Not every buyer is eligible for Redfin rebates. You must meet these conditions:

You must work with a Redfin agent (and Redfin generally only operates in major metro markets)
Your purchase cannot be a short sale or another ineligible type of property
Your purchase must take place in a state where rebates are allowed

✍️Editor’s Note

Redfin may refer you to a Redfin partner agent if you’re not located in one of its covered markets. If you’re working with one of its partner agents, you may only be eligible for a much smaller rebate.

Lender approval restrictions

On top of those minimum qualifications, most rebates require lender approval or lenders may dictate how they can be spent.

Why? The IRS considers a buyer rebate “an adjustment to the purchase price of the home.” This means the rebate effectively lowers the cost basis (or actual purchase price) of your home.

Lenders use this cost basis to calculate your initial loan terms. If the rebate jeopardizes your eligibility for the loan — or impacts your lender’s profit margins — they may limit or prohibit you from receiving one.

If you fail to disclose the rebate beforehand, it could result in your financing falling through or even mortgage fraud.

How do you know if your lender will allow you to receive a home buyer rebate? Ask your loan officer early in the process what the lender’s specific policy is and how it could impact your loan.

How Much Are Redfin Rebates For Buyers?

Short answer, via Redfin: their average rebate is $1,500. Long answer: it depends on a number of factors, including purchase price, location, market conditions, and more.

If you’re buying with a Redfin agent, you’ll generally be eligible for a percentage-based rebate. If you work with one of Redfin’s partner agents, your rebate is capped at a $500 flat fee.

How do you find this amount? If you look at a property on Redfin’s website, eligible listings will include an estimated Redfin Refund.

How is Redfin calculating this rebate? It’s not entirely clear, and comes back to our long answer above. Redfin uses a number of factors to calculate your potential rebate, but these factors aren’t stated on its website.

In this example, $1,258 is actually about one-tenth of 1% of the list price. This is only an estimate, of course, but it’s still low — and quite a bit lower than what most brands with built-in rebates and cash back programs offer.

Redfin hidden fees for buyers rebates

Even if you receive lender approval, and meet Redfin’s qualifying conditions, you have a few more hurdles to clear.

Redfin has minimum fees built into its rebate program. Per Redfin’s disclaimer: “Redfin Refund is subject to adjustment or cancellation” if the Redfin agent’s commission is less than 1% of the sale price or $6,500, whichever is greater.

Doing a little math, if we assume a standard 3% buyer’s commission, you’d have to buy a house worth at least $216,666 to qualify for a Redfin Refund.

But there’s more: Redfin often accepts a buyer’s commission of only 2%. This increases that minimum qualifying home value to $325,000.

The bottom line is that Redfin rebates are tricky business, but our friends at Clever Real Estate make it simple.

Eligible Clever buyers get a cash check for 0.5% of the purchase price after closing, guaranteed. You can spend the money however you want — from new ceiling fans to moving vans.

Contact Clever today to learn more!

Get Cash Back on Your Next Home!

Clever Real Estate offers eligible buyers 0.5% cash back on the purchase price of their new home. Start saving thousands today.

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When Does My Redfin Rebate Come?

If you meet all of Redfin’s qualifying conditions and minimum fees, when do you actually receive your Redfin Refund? According to Redfin: “the Redfin Refund can be provided at or after closing.”

If it’s at closing, that’s a straightforward and exact date. But if it’s after closing, that could mean a number of things. A day after closing? A week? A month?

Make sure you discuss exact time frames with your Redfin agent beforehand, especially if you’re counting on your Redfin Refund to cover your closing costs or fund your transition between homes.

Is the Redfin Rebate Taxable?

Good news: home buyer rebates are not taxable. That’s because the IRS considers a home rebate a reduction in your home’s cost basis — not taxable income.

Make sure your agent is clear on this point: in the past, some agents have mistakenly issued 1099-MISC forms to their clients, thinking their buyer rebate was taxable income.

Unfortunately, if the IRS receives a copy of this erroneous 1099, they’ll be expecting a payment from you, and this could complicate your tax status down the line.

If your agent does give you a 1099-MISC in error, ask them to issue a corrected form. Failing that, attach a statement to your annual tax return that explains the situation. In this case, you’ll have to file on paper, as any tax return with an additional statement can’t be filed electronically.

Find the Perfect Agent and Save with Clever

Securing a Redfin Refund is a long, tricky process — and there’s no guarantee Redfin offers rebates in your market or price range.

On the other hand, Clever’s Cash Back program is available in every state that allows rebates and cash rewards. After closing, eligible buyers will get a check for 0.5% of their new home’s purchase price (for homes valued over $150K).

You can spend this money however you want, and the full amount is 100% guaranteed for those who qualify.

Savings aren’t the only benefit to working with Clever.

When you buy with Clever, you’ll work with a top-rated local agent from a major brokerage, like RE/MAX or Keller Williams. Clever’s free agent-matching service connects you with multiple agents in your area, so you can interview them until you find the best fit.

You’ll have a full-service experience while buying your dream home, and receive a cash check from Clever after closing.

Ready to learn more? Contact Clever now to save on your home purchase!