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Closing Costs Are Negotiable?

Real Estate Agent with RE/MAX Associates RS - 0019092

Many customers don’t realize that closing costs are negotiable, mortgage experts tell The New York Times.

“There’s a lot of room for negotiation in the costs of closing and consumers should examine every charge and not hesitate to challenge them and try to bring them down,” says Barry Zigas, director of housing policy at the Consumer Federation of America.

Closing costs can really add up when buying or refinancing, running anywhere from 3 to 6 percent of the price of the property. For example, in 2010 the average closing costs for a $200,000 purchase rose nearly 37 percent to $3,741, according to Bankrate.com.

Many of the fees associated with closing are negotiable and consumers should review line-by-line estimates and challenge them.

Simply ask the lender which fees are negotiable and which are fixed to find out where there’s wiggle room. Questions such as “Who is getting paid this fee, and why am I being asked to pay it?” can start the conversation, experts say.
“It’s not a time to be polite,” says Kathleen Day, a spokeswoman for the Center for Responsible Lending. “You have to have a strong stomach and a stiff spine and not bow to pressure from the other side of the table to close the deal.”

Lenders are required within three days of receiving a loan application to provide an estimate of closing costs for buying or refinancing a home. Good-faith-estimate forms provided by lenders can be used to easily compare closing costs among lenders in shopping around for the best deal too.


Source: “Curbing Close Costs,” The New York Times (Jan. 27, 2011)

Posted by


Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

"Many customers don’t realize that closing costs are negotiable,"

That's unfortunate.  Sounds like they aren't getting the advice they should be.

Feb 01, 2011 02:14 PM
Leanna Scott
Leanna Scott Homes - Palo Alto, CA

I don't believe asking which fees are negotiable will get an honest useful answer.  It may be more productive to get 3 quotes and negotiate downward to the one that has the most reasonable fees. 


Feb 01, 2011 02:56 PM
Jeff Wilmoth
Barrett Financial Group, LLC - Senoia, GA
If you need a mortgage, call us! 404-597-5662.

WOW!  Some very interesting comments from both sides, as well as a few shockers.  

The acts of discussing a borrower's closing costs, monthly payment, down payment, prepaid expenses, Loan Program, Interest Rate or even the ability to qualify for a mortgage in general, are just a few of the duties and functions of Loan Origination.

The S.A.F.E. Act.


Now lets all get along & SELL!!!

Feb 01, 2011 03:06 PM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

I think it is not at all surprising that while most of those commenting here are actually talking about the idea of negotiating fees with their buyer's lenders while shopping for a loan, there are also several commentors who jumped right in... talking about buyers and SELLERS negotiating closing costs... thus showing that there's a very good chance that they didn't even read Christopher's post... but just assumed what it was about from only reading the title.

Feb 01, 2011 04:50 PM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I'm speechless.  I think it is important to understand what the closing cost are for.  I don't know how much wiggle room there is these days.

Feb 02, 2011 02:43 AM

Most originators make 2% on a loan & that is split with the company. Realtors charge by and large a 6% fee. Yes, they do pay for advertisment, split with the house, listing agent, selling agent, etc... If we are negotiating fees and REALLY have the buyer and sellers interest at heart, let's start with the realtor fees and negotiate down from there!

Feb 02, 2011 03:47 AM
Jackie Hawley
Coldwell Banker Professionals - Oxford, MI
Southeast Michigan Real Estate

Why was this featured on the daily drop? I sure as hell hope there isn't going to be a featured post suggesting clients beat up real estate agents on our fees. It's pompus and unprofessional for a real estate agent to advise clients and potential clients to ask their loan officer to reduce their pay- because those are the "fees" that get cut.

Why were comments 1, 2, 26, 61 and 62 deleted and why hasn't the "author" been back to reply to any of the comments?

I've had deals NOT close with the CHEAPEST lender.

Feb 02, 2011 05:38 AM
Brenda, Ron, Lee Cunningham & Tara Keator
West USA Realty - Phoenix, AZ
Realtors, Homes for Sale - Phoenix Metro

Wow this thread is like a war zone.  As professionals we need to do a good job for our clients.  Outstanding is my goal!  The best lender or loan for each individual may not be the lowest in costs.  I think as a Realtor we can suggest several lenders that we feel do a good job and have reasonable fees.   The client can use them or whomever they prefer to use.  I want to work with lenders that not only have reasonable fees, but that are EXCELLENT lenders.  Lenders that get the job done and do what they say they can do in the time they say they can do it.  I don't want to save my client $200 in lender fees only to have that lender not get the loan done in time and cost the seller $100 a day for extension fees.  Or worse yet cost the buyer his earnest money for not performing as the contract states...    None of us, be it lender, Realtor, inspection company, title company, etc want to make less money. Neither do our clients; so I think most of them are reasonable when it comes to fees.

As far as post #79:  I can't imagine the professionals (title, lender, inspectors etc) wanting to have a close working relationship with someone if you are beating them up each time on their fees.  I find that good service goes along way at putting together the transactions.  Using people we don't have this relationship with doesn't always go through smoothly.  This is why we like to give names to our clients so that they are not dissapointed with the service they get, and so that they also get the end results they want.    My title company doesn't charge to notorize documents, discounts are given for certain situations, I wouldn't think of having a termite inspection company not get paid for the work they do...if they are one and the same as the inspection company then they are compensated through the fee charged for the inspection.  And not paying points... any buyer can at any time get a loan without the discount points... it just depends on the interest rate they choose.  There are many different loan programs.  There are loans without fees, depending upon the rates...  These decisions can be made (and we can help our clients understand their choices) without trying to have it where the other service providers don't make a living.  No one wants to work without a reasonable pay.  We do enough work without pay when the transactions we work on (sometimes for months as in a short sale) don't close.

Feb 02, 2011 09:19 AM
Jason Schultz

Adam Aguillar #79

You were so proud of yourself for reducing everyone else's income, how much did you drop your commisison rate?

You clearly have no understanding of what YSP is. Whether a loan is closed by a bank or broker, the profit on a 0 origination loan is 1% to 2% on conventional. Banks don't have to disclose the profit on the loan like brokers do with YSP. Banks earn SRP when the loan is sold, but be clear, they are still making 1% to 2%.

With the rate earning a 1% to 2% YSP, I still beat or meet the rate of every name brand bank in town.

If the lending was earning $12,000 in YSP, I bet you made more than that on the commission. Why is it okay for you to make 2.8% on a buy side and 4.2% on the list side?

You remind me of every new, inexperienced and unproductive agent I have ever met. These are the classic agents who want to micromanage every aspect of the loan approval process.

Try putting together of trusted team members who can get your closings done on time and create happy clients who refer and let them do their job... you just might end up losing all that free time you have to beat up everyone's fees and drive documents around town for your clients.

Feb 02, 2011 09:28 AM
Brian West
imortgage - Gilbert, AZ
Arizona Lender

Brenda and Ron Cunningham - Thank you! I think your post is right on target. The only thing I would correct is that points may be put on loan for reasons other than just reducing rates. Please feel free to read a blog I did earlier today on this subject:

My Blog Post from earlier today

Thanks again for your post, we all appreciate it!


Feb 02, 2011 09:54 AM
Kevin Quarterley
Starboard Financial - Gold Canyon, AZ

Wow, this certainly got a lot of response from Lenders out there. I do not feel the need to defend myself, or the one flat fee that I charge. Origination/interest rate is negotiated with the borrower up front, and I help them understand what makes sense for them. All other fees charged by Title, escrow, Homeowners Ins, etc are what they are. My Real Estate PARTNERS (emphasis on partner) refer clients to me because of my reputation and emphasis on service. FYI- I usually beat the major banks, and dont have to deal with YSP as a direct lender. Do not be fooled - nothing is for free. I would not consider tampering with an Agents commission any more that I expect them to tamper with mine. The agents that choose to partner with me continue to do so for these reasons. If you dont trust your partner, end the relationship.

Feb 02, 2011 01:51 PM
Kate Reilly Lund
RE/MAX Diamond, Realtors - Edison, NJ

Everyone has to negotiate everything these days.

Good post.



Feb 03, 2011 08:39 AM
Sean Railton
Park City Realty Group - Park City, UT

This post was ok the information that came from the comments priceless.  Thanks for arguments from both sides of the aisle.  I am also an appraiser and I am looking forward to 4/1/2011 if just to see how they come up with customary and reasonable!  I am switching to being an agent because I am tired of being at the bottom of the hill!

Feb 06, 2011 06:04 AM
Kelsey Barklow
Hurd Realty - Johnson City, TN

I'm not so sure that it's the Realtor's job to explain closing costs to buyers. Really, that's the lenders job but I do think that Realtors should suggest to their buyers that they ask questions about the closing costs. I never thought to ask which are negotiable and which are fixed. Great topic and post.

Feb 08, 2011 01:42 PM
Jeff Wilmoth
Barrett Financial Group, LLC - Senoia, GA
If you need a mortgage, call us! 404-597-5662.

Kudos to Brenda & Ron Cunningham and Jackie Hawley!!! 

It's the lender or originators job to explain loan programs, closing costs and fees (see S.A.F.E. Act). 

There is nothing worse than losing deals as a result of a select few who choose to discuss loan programs, quote rates or payments to buyers when its not their responsibility. 

Feb 09, 2011 03:09 AM
Sylvie Stuart
Realty One Group Mountain Desert 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagsta

If there's ever been a time to get closing costs, it definitely in this market. Most contracts we're seeing is asking for closing costs.

Feb 10, 2011 02:02 AM
George DiGregorio -Zenith Mortgage Advisors

This article is about five years too late. With recent changes in how a Good Faith is disclosed and then re-evaluated prior to closing for variations, you aren't seeing any sort of bait and switch in regards to fees. Any fee increase due to a legitimate change in circumstance must be documented and signed off by everyone, including the borrower. Fees and rates vary wildly with the risk based pricing that has taken over the industry. If you have ten clients buying identical homes at the same price and loan, you can see ten different sets of fees all from the same lender. If you are serious about wanting to  learn what your clients should expect for fees and what causes them to rise, invite a mortgage professional to your next office meeting to discuss it.


Feb 10, 2011 07:24 AM
Margaret C. Taylor
Century 21 New Millennium MD - Mechanicsville, MD
St Marys/Calvert/Charles MD Real Estate Agent

Hi Chris excellent explanation allowing the Buyer to remain in control and make choices about closing costs.  I agree it is the Loan Officer/Lenders job to explain, and my job to guide the Buyer to the Loan Officer/Lender. I have found it necessary to have the Buyer ask for the GFE because they have not received it yet.  Margaret C.

I Suggested this but thought it was already featured.

Feb 12, 2011 02:49 PM
David Evans
HUD NLB Cumming GA

In my market, closing cost credits are a givin with almost every offer...

Feb 17, 2011 02:36 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

Of course all closing costs are negotiable and you can find a ''better deal'' for any vendor. Yet, there are also local customs who pays for what and we usually try to respect that. 

Nov 27, 2016 07:19 PM