Home Buying in Costa Mesa>Question Details

Madison, Home Buyer in Newport Coast, CA

Escrow fee...Buyer or seller have to pay ??

Asked by Madison, Newport Coast, CA Sun Oct 9, 2011

I am planning on making an all cash offer for a property in costa mesa and dont have an agent yet and the listing agent wrote up the offer for me and it says in there that the buyer and seller will share the cost of escrow expenses...is this normal...please advise thank you so much for your help !!

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Madison, your questions are exactly why it is important for first time buyers to have an agent represent "their" best interest and to take first time home buyer classes prior to making an offer. I have taught such classes in Boise, Idaho for over 15 years and am amazed how many of the students have already made accepted offers before attending the classes.
0 votes Thank Flag Link Sun Oct 9, 2011
I'd like to add a couple of clarifying thoughts.
1) Both the buyer and the seller have escrow fees, so when "each pays own", you are technically not splitting the fees, because they are already separate fees. "Each pays own" means exactly that.
2) Just because the listing agent fills out the purchase agreement, it doesn't mean that they are representing you. Page 1, Section2, Section C, spells out who is representing you.
Final Thoughts:
The little bit of information that you provided with your questions reveals some misconceptions in regards to your understanding of the process and the legally binding paperwork. I don’t understand why you would not have someone representing you. You’ve said that you don’t have an agent YET, but once you sign the purchase agreement you will have locked yourself out of representation on this deal since it is spelled out in the purchase agreement. Now, obviously you can hire an agent to help you with the rest of the process at your own expense, but to do so after the purchase agreement has been signed may be too late if you’ve already agreed to unfavorable terms in writing. Why pay for limited assistance when full representation is available for FREE?
The biggest misconception among buyers without agents is that they are saving themselves and the seller money because there is only one agent. Understand that the Seller agrees to a certain commission when he/she lists the home. They have a signed contract committing them to that amount. When there are two agents the agents split the commission. When there is one agent that agent keeps the entire amount. The seller still has to pay the full amount per the listing agreement. It is possible that the listing agent had agreed, in the Listing contract, to take less money if there was no other agent, but that is not the norm.
0 votes Thank Flag Link Sun Oct 9, 2011
Good morning Madison.
First as stated below, you DO have an agent representing which is the listing agent.

As far as paying escrow fees, agents write it one of two ways. First they either write it as Buyer and Seller to Split the fees 50/50 or second each to pay their own. You want to pay your own as fees can vary from side to side.

As to whether or not you negotiate concessions from the Seller, that depends on what kind of offer you wrote upfront and if you are offering on an equity sale, a short sale or a bank owned property.

Each transaction is different so it is important to understand the agents strategy they are offering for you.

As far as this transaction goes, you have representation, if this does not work out and your seeking an agent to work for you so you have your own representation we are happy to meet with you.

You are welcome to go to our website: http://www.TheSoCalLife.com and see more. To to the "About Us" tab for our resumes and then to the "Testimonial" Tab and see what our clients have to say.

Sincerely,
Jade Beardsley
949-246-2078
Web Reference: http://www.thesocallife.com
0 votes Thank Flag Link Sun Oct 9, 2011
Madison - It is common in Orange County to have both the buyer and the seller pay their own escrow costs though it's often possible to negotiate to have the seller pay some or all of the buyer's closing costs.

However, with a cash offer, it generally makes more sense to deduct those from the purcase pric.

Additionally, you say that you don't have an agent. However, if have the listing agent writing the offer on your behalf, you likely do have an agent for this transaction. You should look to see if the listing agent intends to represent both you and the seller under dual agency.
Web Reference: http://www.donovanblatt.com
0 votes Thank Flag Link Sun Oct 9, 2011
Great question, yes is is very typical for a buyer and a seller to each pay their own escrow fees. You can of course ask for costs to be paid by the seller. If you need assistance, please don't hesitate to contact me.
0 votes Thank Flag Link Sun Oct 9, 2011
In our area escrow is typically split between buyer and seller. "each to pay their own escrow fees" Is what is typically put on the purchase agreement. It is fully negotiable and should not cost more than $200 + $2. per thousand of Sales Price. If you or your agent asks escrow company for a discount most companies will give it to you. Fees Seller typically pays in our area are: Title, HOA doc and transfer fee, home warranty, county and city transfer tax, section 1 of termite repairs, and cost to strap water heater and smoke / CO2 detectors. If it is a short sale, sellers lender may not agree for the seller to pay some of these fees.

Most importantly, regaurdless of the agent you choose make sure you have seen all available comparable homes and understand the sales in the area so you can avoid overpaying. I also research the area for people late on their mortgage because this most likely will affect the future value of the homes in that area. ALWAYS GET A HOME INSPECTION and ask for repairs even if it is sold as-is.
Web Reference: http://www.bradcoleman.com
0 votes Thank Flag Link Sun Oct 9, 2011
SOP Madison. I'm not trying to come across self-serving but the listing agent has a fiduciary responsibility to his client, the seller, and only to be fair and honest to you the buyer. What this means is that if push comes to shove the agent's going to do what's best for his client as opposed to what's best for you.

I'm a San Diego broker and have no personal interest or self serving motive but just to pass along a little friendly advice. You'd be wise to use a local agent if you're not a seasoned RE investor. You can always negotiate the commission based on the foot work you've already done or are willing to do.
0 votes Thank Flag Link Sun Oct 9, 2011
Madison,

While I never condone using a dual agency broker, always have your own broker.

Escrow is a neutral third party doing as instructed by the buyer and the seller in the transfer of money and real estate. It is very normal to each pay half.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
harold@socalhomebuying.org
http://www.socalhomebuying.org
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Sun Oct 9, 2011
Madison, you said: "and dont have an agent yet and the listing agent wrote up the offer for me"

Actually, if the listing agent has written an offer on your behalf, you DO have an agent - the listing agent. That isn't illegal, or immoral, but that agent DOES have to disclose to you that they are representing both parties.

If you decide to bring in "your own" agent later, that agent might have difficulty earning a commission, as they were obviously not the procuring cause of your purchase. That's MY opinion, anyway. Good luck on your purchase.
Web Reference: http://bit.ly/mls-search
0 votes Thank Flag Link Sun Oct 9, 2011
Hi Madison,
Yes, this is very common. It defines how expenses will be divided up. As Terry suggested, it is also common to ask seller to pay for some buyer's closing costs in certain situations.
Good luck and enjoy your new home.
0 votes Thank Flag Link Sun Oct 9, 2011
Madison:
You might also want to decide whether having the seller's agent represent you is a good plan.
Terry
0 votes Thank Flag Link Sun Oct 9, 2011
Madison:
Yes, that is normal (although all closing cost fees are negotiable).
With an all cash offer, I would probably negotiate for some concessions from the seller.
Terry
0 votes Thank Flag Link Sun Oct 9, 2011
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