Donating Commission to Charity
The key to the program is that the realtor offers to reduce his commission with the agreement that his clients will donate that commission-savings to a mutually-agreeable charity, paid out of escrow at closing. Everybody wins:
1. The selected charity wins because it gets a significant donation
2. The client wins because he gets cash back from Uncle Sam by deducting the donation on Schedule A of his federal income tax return
3. The civic-minded Realtor wins because he directs considerable support to a good cause, pays lowers taxes, and earns the gratitude of a client that is now more likely to send referrals
Cash back to the client can be considerable.
Most Realtors are not in a position to give away much of their commission . Even so, charities and clients will still warmly welcome their commission-donation program. For instance, if a Realtor at a large brokerage represents only the seller on a $160,000 transaction, he would typically receive a commission of $2,800. If he can afford to give 5% of his commission, that still generates a gratefully-received donation of approximately $140, which will add-up with each transaction during the course of a year
Commission-donation programs help Realtors in three ways:
1. Differentiates via Cash Back from the IRS and State government (when applicable): When commission rates are identical, clients save more money by working with an agent that will give them the credit at escrow for a donation to charity (which generates a tax deduction for the client)
2. “Closes” New Clients by Building Trust: During the “beauty contest” when real estate agents try to sell themselves to prospective clients as worthy of trust, they offer similar stories of civic-minded involvement in their communities. But a commission-donation program to a mutually-agreed charity shows who to trust, in actions, not words.
3. Turns Former Clients into Enthusiastic Referrals: Past clients will be happy to tell future prospects, “I sold my home through XYZ, supported a good cause, and got a terrific tax deduction.”
I have found this a very rewarding thing to do. It is a win win situation fo all parties involved. It makes Selling Atlanta Real Estate a better experience for me.
Posted on November 13th, 2007 by Dwayne
Filed under: Uncategorized
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