 Most home closing costs are negotiable
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 Dear
Real estate Adviser,
Which fees are negotiable for a buyer at closing?
-- Ms. Ann
 Dear
Ms. Ann,
Most of them are negotiable. In fact, the negotiations on closing
fees can begin early on with the seller when you're hammering out
your purchase/sales contract. As a way to sweeten the deal, the
seller may agree to pay all or most closing costs, which is potentially
savings of thousands of dollars for you. In recent years, sellers
were much less likely to offer such an enticement, but since the
advantage in most of the U.S. has now swung back to the buyers'
side, there's no better time to take advantage of this negotiating
tact than the present.
How the closing fees are traditionally
divvied between buyer and seller varies from state to state. Similarly, how much
is actually spent can vary from lender to lender. New York,
for example, had the highest title and settlement costs in the country, according
to the latest annual Bankrate
survey of closing costs. Texas was second, followed by Hawaii, Ohio and Florida.
Home buyers in Missouri pay the lowest closing costs, according to the year's
study, followed by Michigan, New Hampshire, Montana, and Wyoming.
Without knowing what's expected in your situation,
I can tell you there are many fees that you can negotiate or even
dispense with entirely, especially if you're an intrepid negotiator.
For example, a document preparation fee, considered by most to be
a junk fee, can be $150 to $250 and should be something you can
dispense with outright. To me, it's akin to being asked to pay for
"undercoating" and "finder's fees" in the purchase of a new car,
because it's a fee that can be nebulous (read: dubious) in its origin.
Similar are the "commitment fee," "underwriting fee" and "processing
fee" -- all costs supposedly tied to loan review and loan processing. If
any of these will be included in your closing-fee package, ask what
specific services they cover, and be particularly wary if more than
one is assessed.
Incidentally,
the federal government requires lenders to provide buyers with reasonable "good
faith" closing-cost estimate well before closing date, but that doesn't mean a
few others won't be tacked on at the end. As you can see, there's a lot at stake.
Buyer closing costs can range from 2 percent to as high as 7 percent of a home's
sale price, or $4,000 to $14,000 on the purchase of a $200,000 home. This
might be a good time to remind you and other readers that most fees and charges
in the real estate game -- including agent fees -- are negotiable. Happy
bargaining.
To ask a question of the Real Estate Adviser, go
to the "Ask the Experts" page
and select "buying, selling a home" as the topic.
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