Which costs are potentially negotiable in closing costs

Asked by Trulia, San Francisco, CA Sat Mar 3, 2012

Are there negotiable and non-negotiable closing costs?

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Lana Lavenbarg’s answer
Lana Lavenba…, Agent, Grants Pass, OR
Sat Mar 3, 2012
At this point - if you are will to pay close to sellers price - you can ask the sellers to pay closing costs for you. Although in that - you normally have to pay for any of your own tests or inspections, prepaid taxes and insurance. I do not beleive sellers are able or allowed to pay those in some places.
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Marvin Von R…, Agent, Tigard, OR
Sat Mar 3, 2012
I forgot to add that some lenders have requirements about who can pay for closing costs. If anyone other than the borrower does, it can have an effect on the appraised value.
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Marvin Von R…, Agent, Tigard, OR
Sat Mar 3, 2012
First, regarding lenders and real estate agents fees---one should never use the word 'standard. Especially real estate agents who can break anti trust laws by even thinking it. Loan agents fees used to be all ove the board and were case by case, espcially considering that the rate vs points could be manipulated byt the borrower and agent to mutually agree on a bottom line price. So called REBATE or YSP pricing was a fantastic way for a borrower customize their up front costs. Our government, in its infinite wisdom, listened to people like the Mortgage Professor, Jack Guttantag, who made the word 'rebate' into a terrible thing. OIur glorious and ignorant government put a series of limitations on this type of pricing and the way its disclosed. Did it help the consumer save money?? NO WAY. To a degree mortgage agent fes are negotiable but within a much tighter range then real estate fees. I suppose one could say title company etc fees are legally negotiable...by that I mean there are no regulations that say they do or dont have to. Its just not done. They dont need the business so much that they will negotiate.

You can negotiate our fees, loan agent fees, an estimate of work to be done by contractors, anyone who isnt part of a large company who controls what the representative can and cant do.

By the way---what do you do for a living? Will you agree to take a pay cut?
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Dave Sutton, Agent, Portland, OR
Sat Mar 3, 2012
good answers earlier, but remember there are two different types of costs that affect how much you have to bring to the closing. Lenders and title fees are one type, prepaids are the other type. The most obvious here is that the lender will want you to prepay for one year's insurance on the home, and depending on what time of year, prepaid taxes may be a significant amount. Prepaid interest, too, but not usually more than a couple hundred dollars or so.

You will have more luck negotiating closing fees than prepaids.

One thing for sure, if you don't ask, they won't pay.
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Marge Bare, Agent, Portland, OR
Sat Mar 3, 2012
you've already figured out we don't know enough to answer your question well, but I'm going to assume you mean that you're a buyer and you want to negotiate that some of your closing costs be paid by the seller. In that case, your lender will have input because the type of loan you have will have different requirements for that. For example, FHA allows up to 6% today of the purchase price, that the seller can pay of the buyer's costs. However that is going to change with the upcoming guideline changes, and will be less. Some banks selling foreclosures will state that they are willing to pay "allowable" closing costs, so they limit what costs they're willing to pay for the buyer. Some banks/sellers also include a 3% seller contribution to buyer's closing costs in their advertising, as an incentive to buy.
Bottom line, it varies depending on the situation, your loan, and the seller in the transaction. That's when you lean on your Lender and your Realtor to advise you in that particular situation.
Then when you figure out what is allowable, you need to get the seller to agree. In this market where sellers have been hit so hard, it might be difficult to find sellers who have enough equity to pay a buyer's closing costs. Remember sellers have their own closing costs to pay, and they may not have enough or the interest to pay for your costs on top of theirs.
Again your Realtor and Lender can best advise you on what properties work best for you to get some costs paid, if you need them, and then, you negotiate.
Best to you,
Marge
Web Reference:  http://www.betterhomesnw.com
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Tom Hoffman, Agent, Portland, OR
Sat Mar 3, 2012
It really depends on who your asking to negotiate with. Your Lender has certain fees that could be negotiated, as does the title company. You just have to ask, each of the professionals involved in your transaction.

What buyers typically negotiate is a credit from the sellers so that the buyers can reduce there out of pocket expenses in order to purchase the home. This credit typically runs about 3-6% and most closing costs in a transaction will fall into that range.

Of course having an expert negotiator on your team will help you find the best value in a home.
Web Reference:  http://www.tomshometeam.com
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Melina Tomson, Agent, Salem, OR
Sat Mar 3, 2012
Negotiable with whom? The lender, the seller?
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