3 Ways to Level the Home Buying Field
3 Ways to Level the Home Buying Field
Real Estate Agent
Use a flat fee service. Most real estate agents work off of an outdated model of commission based on a percentage of your home value. This is an archaic system that offers a clear bias towards high ticket sales. Your $333,000 home purchase might pay the agent $10,000 while the $500,000 purchase one neighborhood over might pay the agent $15,000. It’s the same type of transaction with vastly different pay and that compensation disparity will drive behavior. Everyone deserves the highest level of service and a flat compensation model means that you will receive the same attention without sacrificing attention to detail or urgency.
Mortgage Finance
Origination fees can be negotiated or eliminated. It is common to negotiate the purchase price of a home, but it’s uncommon to negotiate the financing with the same intensity. The savings on the cost of the home are often tangible and easier to visualize. For example, if you are working with a builder and can negotiate a $4,000 upgrade on your countertops for free, you can literally see the difference in your home. Alternatively, if you find that the roof is going to need to be replaced on an older home then you can negotiate a $5,000 discount on the price of the home and instantly the amount of cash that you bring to the table can be reduced. What most people don’t realize is that lowering the interest rate by .375 on a $350,000 mortgage will likely save you over $26,000, depending on the term of the loan. The impact of the interest rate has a significantly higher return for your bottom line. To level the playing field with your lender, ask for a lower rate and if there is a cost for the lower rate, ask them to waive it. Many lenders and individual loan officers have an incredible amount of leeway on what fees they can waive, but better yet you can find one that offers a no hassle policy of waiving their origination fees and offering at or below market rates.
Title Company
Choose your own title company, or request that the sellers pay the title company fees. In most parts of the country, it is common practice for the seller’s real estate agent to select the title company that will close the transaction. Just because this is a common practice, doesn’t mean that it is required. Title companies will spend a good amount of time and effort to develop relationships with real estate agents because they know that almost no one will question the recommendation or negotiate those fees. In most cases the seller of the home has zero preference on the title company, has simply agreed to the path of least resistance and relied on their listing agent for advice. If you call a title company and speak to them you will almost surely be able to receive a lower quote. Submit this quote with a counter offer to use your own title company, or you would be happy to use the agent recommended company if the seller pays for the higher fees. Often the existing title company will lower their fees to match and you can move forward with the transaction with less cash due at closing.
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