Are You Supposed to Tip Your Realtor?

When you buy a home, your realtor does a lot of work. They will take you to see different homes, help you coordinate inspections, and sometimes get all of the paperwork done. They present offers on your behalf or receive them from the buyer and help negotiate your deal. People are often very thankful and wonder if they should tip their realtors because they do so much. Unfortunately tipping a realtor is not like tipping a waiter.

Realtors don’t expect to get a tip for doing their job. In fact, providing a tip or gift to a realtor can place them in a compromising situation. While they may be very thankful for the gift, legal requirements may force them to reject your gift or disclose it as part of the sales contract.

If you want to show some appreciation for the hard work your realtor has put in on your behalf, there are legal ways to do so that won’t create a problem with the sale. Continue reading to learn why you shouldn’t tip your realtor and what you can do to show appreciation.

Are You Supposed to Tip Your Realtor?

Buyers and sellers alike often wonder if they should tip their realtors. They do so much, and people are usually really excited when they find the perfect home or when they sell the one they own. Realtors drive people around to look at as many properties as it takes, and the best realtors go above and beyond what you might expect.

I am originally from Spain where tipping is totally optional and it’s not very common. In the US, on the other hand, you feel obligated to tip most people.

However, being a realtor is not one of those professions where tips are expected for two main reasons. They usually earn between three and six percent of the selling price as a commission, and they have an incentive to find buyers the perfect home and help sellers sell their homes. And most importantly, there are federal and state laws that prohibit direct gifts unless there are of very modest value.

Why Shouldn’t You Give a Realtor a Tip?

Back in 1974, the Real Estate Settlement Procedures Act (RESPA) was enacted to protect consumers who finance a residence. One of the sections of the act essentially prohibits a person from paying or accepting money in return for future business in connection with a mortgage loan.

Because the consequences of violating federal law and other state requirements can be serious, the best practice for realtors is to report and record any gifts as part of the real estate sale through the broker.

If you give a gift the right way, then the real estate broker will have a paper trail that documents the gift. Everything will be disclosed, and nothing will be called into question. In addition to cash gifts, you can’t give expensive presents or offer services. If you own a business, you can’t offer the realtor free services or goods after the fact.

What Are You Allowed to Do?

Remember that realtors rely on their commissions to earn a living. They often appreciate repeat customers and referrals. You can refer friends, family, neighbors and return to them if you want to buy or sell a property later.

You can also leave positive reviews about your experience online. Be honest and tell the public that they did a great job, especially if you successfully sold a split level house. You can also offer to write a testimonial for the realtor’s website or social media page. These are great legal and ethical ways to show your appreciation that won’t get your realtor in trouble.

And remember, you can also send them a thank you card. After all, it’s the thought that counts. But make sure it is not an expensive card –just kidding!

Final Words

Realtors work hard when they help people buy or sell a property, and people often want to show their appreciation with a tip. The bottom line is that you should not tip your realtor. Most gifts you give must be recorded as part of the real estate transaction. If you want to do something nice for your realtor, you can refer others to them and write positive reviews. This way everything will be in the clear, and there won’t be any concerns about ethical or legal violations.

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