I am the buyer in northern california. My agent has given me an addendum to the purchase contract where he authorizes the escrow company to credit me, the buyer, half of his commissions. My lender told me that I couldn't use it towards my down payment but I could use it for the closing cost.

The problem is that this credit is going to be about $5000 more than the closing costs. So, my question is how can I get this money back from the escrow company. Can they give me a check? what is the legal way to get this money back?

Thanks

It depends on the lender and it may not be possible, but maybe you could get it as a credit towards repairs/improvements?

It will all depend on the lender. Many times a lender won't allow you to receive cash in a transaction. They hate to see money cashed out. I would say that you could try and get the money outside of escrow, but that may be illegal. Every dollar in escrow is accounted for on the HUD-1, so if it's done in escrow, the lender will see it. Check with the lender first if they will allow you to get it for some other reason other than closing costs.

Let us know what you decided to do.

If all else fails, use it to buy down the interest rate.

You have your own money for the down payment. The property closes and the bank is out of the deal. The escrow agent writes you a check for half the commission and you spend it on new carpet or whatever you want. No problem.

The lender just wants to be sure you have your own money for the down payment.

Can you do that in California? For instance, if I'm helping my sister buy a house, can I give her my full commission?

Your state real estate commission can tell you that NOT your REALTOR association. It varies from state to state.

It is legal in California as long as the lender is aware of it and it is done at closing, not after it.

Check out the legal blog at CAR. There is a whole thread on it.

would your sister go to work for 2 weeks and then give you her paycheck?

you would actually be at a loss when you figure out gas and time plus business missed out on. dont forget that if something goes wrong you could end up in a suit!<<and i am not talking about the one you wear to work!

It is up to the lender. See if the lender will allow prepayment of the next year's property taxes and insurance.

Have it be held in escrow as a redecorating allowance. Have it set up so that you can be reimbursed for purchases for household items. Most lenders will allow this if it is worded right in the contract.

Yes you can take the money back. You are party of the transaction and you are in title to.

In MOST states, maybe not all, as long as you are a principle in the transaction, you can receive money back from the agent's commission. Most agents won't do this though because it makes us look bad. Most people don't realize where all our money goes. They just think we are all millionaires.

Wow. That's not even legal in my state. The only thing we can do is reduce our commission rate. But personally I never do that unless the other agent will also do it and it becomes neccessary to get the deal go through. I'd check else where other than this forum because the laws vary in each state. But, in mine that is 100% illegal.

I closed my property in San Diego, and I went through the same exact scenario, and in my case, the escrow company wrote me a check for the commission which my broker kicked back to me, no big deal

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Over in these parts the lender wants you to have legitimate estimates for any "maintenance allowances" for this exact purpose. Otherwise we can write up tens of thousands of credits

Barring Cancer or the like(which means you probably shouldnt be buying anyways) I can't find a good enough reason to be sold to me on why I would give cash back out of my commission so I dont have to worry about this issue. (unless I did it for a miracle kids home,etc., for charity)