Closing Gift Ideas for Real Estate Agents: Thoughtful and RESPA-Compliant Options

 Who doesn’t love a present? With the holidays coming up—we wanted to give our real estate partners some ideas for the perfect settlement day gift. Some you may have already seen or done; some may be new—all of them RESPA compliant of course! Speaking of which, we want to start out this blog by taking a moment to review the current RESPA rules surrounding gifts before we get into the fun stuff.  

The Real Estate Settlement Procedures Act (RESPA) sets clear guidelines for real estate agents and brokers regarding gifts to ensure fair practices in settlement services. Under RESPA, agents are prohibited from receiving “things of value” for referring clients to settlement service providers, such as mortgage lenders and title companies. While certain promotional and educational activities are allowed, they must not cover costs that the agent would typically incur and cannot be tied to any referral arrangements. Agents must ensure that any goods or services provided in return for payment are necessary and distinct from their usual offerings, with payments reflecting fair market value. Remember, each state may have specific regulations that further define what is allowed. Make sure to check in on your specific state and if you’ve got questions, always remember to check in with your broker.  

The Internal Revenue Service (IRS) does not regulate real estate transactions directly, which has led to misconceptions that agents are prohibited from giving gifts to clients. The IRS is primarily concerned with receiving the appropriate tax payments, regardless of whether an agent chooses to provide gifts. Agents can deduct up to $25 for business gifts given to each individual. Gifts that feature the agent’s branding are exempt from this limit, as they are classified as advertising and promotional expenses rather than personal gifts. Ultimately, an agent who gives gifts out of genuine kindness or to foster positive client relationships will remain on solid ethical ground. 

Customized Gifts 

50% of consumers are said to love customized gifts. And we just love those odds! Gifts at the closing table should be memorable, something that will always remind them of a happy milestone in their life—and more importantly, who gave it to them! Check out our list of favorite customized gifts for the settlement table. We’ve linked each recommendation to a site where you can easily purchase them. 

1) Welcome Home Mats 

2) Cutting Boards 

3) Kitchen Knives 

4) Holiday Ornament 

Lots of people opt for gift baskets instead. There are millions of gift baskets to choose from. Many people opt to create their own as well. Here’s a link to an article recommending some popular gift baskets and another link for how to create your own.  

Services 

Physical gifts can make a lasting impression and show appreciation to clients, but providing services can significantly ease the transition into their new home. By paying for a service, agents can help clients navigate the often-stressful move-in process, allowing them to focus on settling in rather than managing to-do lists. Here are some thoughtful service options realtors can offer as gifts at the settlement table: 

1. Home Warranty: Provide a one-year home warranty to cover repairs and replacements for major systems and appliances, giving clients peace of mind after their purchase.

2. Cleaning Services: Offer a gift certificate for a professional cleaning service to help clients get their new home ready for moving in.

3. Landscaping or Lawn Care Service: A voucher for landscaping or lawn care can help clients spruce up their outdoor space after moving in.

4. Moving Services: Provide a discount or a gift certificate for a local moving company to ease the transition into their new home. 

These services not only demonstrate thoughtfulness but also contribute to a smoother and less stressful moving experience for clients. 

Credits 

Offering a credit toward the client at closing can be a practical way to ease their financial burden while adhering to RESPA guidelines. Agents can provide closing cost credits, typically up to 3% of the purchase price, although some lenders may allow credits as high as 6% or 9%. It’s important to note that these credits cannot exceed the total closing costs, as excess credits would go to waste. Closing cost credits can cover both nonrecurring costs, like title fees and appraisals, and recurring costs, such as interest and property taxes. Make sure to consult with the lender before negotiating credits so they can determine the maximum allowable credit, review the total estimated closing costs, and ensure there are no pre-existing credits from the lender that could impact the client’s overall credit availability. All credits must be brought to the lender’s attention before they create the Closing Disclosures and loan documents, as any late additions can complicate the process and delay the closing. 

Conclusion  

As we wrap up, we encourage agents to stay informed about their state-specific laws and regulations regarding gift-giving at closing. It’s always a good idea to consult with your broker if you have any questions about the guidelines or best practices. We hope you found our gift ideas helpful and inspiring as you prepare for the upcoming holiday season. Offering thoughtful gifts can not only enhance your client relationships but also set a positive tone for their homeownership journey. Here’s to a successful and joyous start to the holiday season!