This question comes from a PropertyQube user, and having opened an escrow yesterday, it seemed appropriate:
I saw a closing cost estimate and there were about 8 fees all adding up to a good amount of money. Are any of these fees negotiable? If so, do I negotiate before escrow or at the closing with escrow?
There’s an old saying: Everything’s negotiable
The first question in this negotiation is who do you negotiate with? On a preliminary HUD-1, escrow companies list fees from a number of different sources. They have fees from themselves, lenders, inspectors (potentially), insurance companies, taxes, HOAs, attorneys, etc. If you feel a fee is being charged that you don’t like, the first step is to find out who’s really charging it, and then you can start the negotiation.
If a lender is charging a processing fee, talk to the lender. If the escrow company is charging you a courier fee, talk to the escrow company. The best time to start that negotiation is as soon as you learn of the fee. I wouldn’t advise someone to risk their earnest money, or the purchase of a home, over a delay caused while you try to negotiate a fee. Always remember that during the purchase of a home, time is of the essence , which (among many things) means you can’t delay a closing because you wish to negotiate the fees.
Costs reported on a HUD-1 related to insurance, taxes, HOAs, and inspections probably cannot be negotiated, although I have had cases in which the lender requested an excessive impound, and we negotiated with the lender to reduce the impounds.
In my stable of partners, I’ve found a lender and escrow company that do business like I wish they all did, without any junk fees. I can’t stand them either, and so I’ve sought partners that feel like-minded. My recommendation for any buyer is to ask these types of questions at the time the partners in the deal are being selected, so that you know what to expect. In the absence of that, go back to my first statement: Everything’s negotiable.
{ 1 comment… read it below or add one }
david bethoney 12.22.07 at 9:28 pm
Hey Steve, Cool blog post and thanks for supplying a great answer on Propertyqube Conversations.
Have a great holiday!