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JoshMclean

Beach Fanatic
Jan 15, 2007
995
128
Santa Rosa Beach
Not sure if this is the right forum for this. Feel free to move it Kurt. I wrote this in my blog today and wanted to get some different thoughts.

"I got to thinking about tithing and closing gifts at different points today. Thinking that I need to be more consistent with my donations even more so in this down economy. I was also thinking about some of the silly closing gifts I've purchased for clients that just bought a $700,000 property. I know that most people buying in that price range donate to one charity or another during the course of the year. Why not combine my tithe with a closing gift to my client? I've decided what I will do is take 10% of my commission check and split it with my client. 5% of that check will go to my church or charity of choice and 5% will go to that of my client. It seems like a win-win for both parties involved. I'll keep a running record here of the charities that we contribute to. I would love to hear someone else's thoughts on this subject."

Would people rather have this as a closing gift? Would anyone have any negative thoughts or concerns if you got offered this as a closing gift?
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
That is a very thoughtful gesture, but I think you should seek legal council. As I understand it, if you do not disclose to all parties in a transaction, both sellers and buyers, that you are sharing your commission with your customer, you are in violation of the Law. Once you cover that disclosure, your customer is required, by law, to disclose any amount over $25 per closing, to the IRS as a gift, to be taxed at their highest tax rate.

Do people follow the law? I doubt most people follow the rule on this one. Whether or not you choose to is up to you, but you might want to consider not making that statement of your decision in writing. You might want to make sure that your blog doesn't say that you are doing this, unless you check the laws and discover that I am incorrect in my understanding of the law.
 

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
Josh,

Nice try but no banana.

Aside from all the legal mumbo-jumbo bought up by SJ, it smacks of you trying to get a two-fur. You owe it to the Lord to fork over 10% of your earnings AND, according to NAR's unwritten bylaws, you are expected (but not obligated) to bestow upon your client a nice parting gift.

Trying to "financially engineer" your required 10% tithing puts your client in the unenviable and uncomfortable position of saying, "No, I don't want you to donate money in my name to charity--I'd rather have a Godiva gift basket, a bottle of decent champagne and a nice flower arrangement."

I think you should scrap this idea.
.
 
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traderx

Beach Fanatic
Mar 25, 2008
2,133
467
Closing gift? Never received a closing gift and have bought and sold many properties. Most people I know buy their agent a gift after closing, a practice I have never understood.

Josh, it seems to me that you are trying to mix too many ingredients together that don't belong together. I would abandon this idea.
 
There were so many transactions in the recent past where a buyer would pay more for the home than it was worth, get a huge loan then split money on the side with the seller in a sham arrangement. These cross gifting arrangements will invite inquiries into past deals. It seems like a consensus opinion is developing here.
 

Joe Mammy

Beach Lover
Mar 26, 2007
140
40
Closing gift? Never received a closing gift and have bought and sold many properties. Most people I know buy their agent a gift after closing, a practice I have never understood.

I have received gifts from clients at the closing table and I always give one- a Home Depot gift card with a card that says, "I hope your new neighbors don't suck!"
 

JoshMclean

Beach Fanatic
Jan 15, 2007
995
128
Santa Rosa Beach
That is a very thoughtful gesture, but I think you should seek legal council. As I understand it, if you do not disclose to all parties in a transaction, both sellers and buyers, that you are sharing your commission with your customer, you are in violation of the Law. Once you cover that disclosure, your customer is required, by law, to disclose any amount over $25 per closing, to the IRS as a gift, to be taxed at their highest tax rate.

Do people follow the law? I doubt most people follow the rule on this one. Whether or not you choose to is up to you, but you might want to consider not making that statement of your decision in writing. You might want to make sure that your blog doesn't say that you are doing this, unless you check the laws and discover that I am incorrect in my understanding of the law.

That's a good thought SJ. I would consult the NAR hotline before I ever did it. Of course, no money would every exchange hands. I would just write a check for whatever charity that they chose. I'll definitely find out.
 

JoshMclean

Beach Fanatic
Jan 15, 2007
995
128
Santa Rosa Beach
Thanks for the input guys. I really thought that it would be a more personal gift to donate to a charity of their choice. I will definitely have to reconsider because I can see where you are coming from. The last thing I want to do is make someone feel uncomfortable. 99% of my clients I get to know on a personal basis so I wouldn't see that happening. I will definitely take everything into consideration before doing anything.
 
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