Closing Costs

NEW -> Contingent Buyer Assistance Program
SoCal78_IHB

SoCal78_IHB

New member
I am wondering what it's like in Irvine these days when it comes to closing costs. Maybe one of the realtors can chime in or somebody who has recently bought a property. Does it seem to be business as usual with each party paying their own? Or is it becoming any more common to see sellers contributing to the buyer's closing costs? Any info is appreciated, thanks.
 
[quote author="SoCal78" date=1241306606]I am wondering what it's like in Irvine these days when it comes to closing costs. Maybe one of the realtors can chime in or somebody who has recently bought a property. Does it seem to be business as usual with each party paying their own? Or is it becoming any more common to see sellers contributing to the buyer's closing costs? Any info is appreciated, thanks.</blockquote>
Good question.

I'm anxious to hear responses as well.
 
I think it depends on the sale.



It seems like it should be a buyer's market and they can ask for closing costs and get them... but Irvine homeowners are stubborn.



I know when I sold in December, our buyer asked for 10k closing but their offer was below our asking. When we told them we would go with another offer... they removed the closing cost request.



But if you buy new... I think EVERY builider is offering some type of closing bonus.
 
Closing costs really do depend on a lot of things...sales price, loan amount, rate buydown, etc. A typical rule of thumb is to set aside about 2% of the sales price as the closing costs before any agent and/or seller contributions. Most lenders will limit how much they will allow to be credited to your escrow from the agent/buyer but I think it's 3-5% on a owner occupied property.
 
Banks holding REO's are loath to pay closing costs. Rarely will they pay but you've often got to go with their own lender choice. They are the market currently and that's what I've seen.



Agents will take a full price offfer with closing costs to be paid. The question then is "will it appraise"? Many 'Tards still think you can list at $500k in a $490k market then goose the price $10k to finance closing costs. With HVCC now the law of the land, appraisal inflation is going to be negligible compared to the problems we hand in the past.
 
[quote author="Soylent Green Is People" date=1241481836]With HVCC now the law of the land, appraisal inflation is going to be negligible compared to the problems we hand in the past.</blockquote>


I had to look it up, so here is a link: HVCC: <a href="http://brokerscience.com/legal/hvcc/hvcc-hurts-consumers-agents-and-brokers/">How It May Negatively Affect and Change Real Estate as We Know It</a>



<blockquote>Wednesday is the deadline for submitting feedback regarding HVCC or the Home Valuation Code of Conduct. The HVCC, in its current form, contains select language that hurts brokers, agents, appraisers, and consumers.



The underlying story is how well this story has flown under the radar. A handful of appraisers, agents, and mortgage brokers I have spoken with were either unaware or vaguely aware of the HVCC and its implications. Unlike legislation moving through the Senate and House, the HVCC has received very limited coverage. While we are acutely aware that with less then 36 hours until the feedback deadline meaning a petition may be a bit late, we are also aware that you miss every shot you don?t take, that is why we ask you to join us in signing the Petition to Reconsider HVCC.



History:



After an investigation by New York Attorney General, Andrew Cuomo into Fannie Mae and Freddie Mac Appraisal practices, the agencies (with the Office of Federal Housing Enterprise Oversight (OFHEO)) agreed adopt new changes to how appraisals are processed in the mortgage industry in exchange for an end to the investigation. The centerpiece of the agreement is the HVCC, which contains many positive and common sense initiatives to help clean up the industry, but also contains significant negative changes to the how brokers and agents are able to work with appraisers and how appraisers are able to operate, hurting consumers, mortgage brokers, agents, and appraisers.



What it means for Brokers:



1. Brokers (or anybody compensated on a commission basis upon the successful completion of a loan) may not choose appraisers to be used for loans they originate and may not engage in any communication with appraisers. Choosing appraisers and all communication with appraisers is delegated to lenders. This means that brokers are not only not allowed to choose appraisers based on quality of work and professionalism, but ultimately lose control of an integral part of the loan origination process, possibly increasing loan funding times and increasing costs to the consumers in the form of longer rate locks and the need to order new appraisals if there is a change of lender.



2. Since appraisals are made in the lender?s name and not the broker?s, if the broker chooses a new lender for the deal, a completely new appraisal will need to be ordered. This increased consumer costs and the time involved in the transaction.



3. All relationships with appraisers are rendered meaningless overnight.



4. Brokers lose control over transactions and are put at disadvantage as power is shifted toward and biased towards large institutions.



What it means to Appraisers:



1. Must use AMC?s (appraisal management companies), meaning independent appraisers are forced to join and AMC and give 40% or more of their income to the AMC. You read that correctly, this will deprive independent appraisers of nearly 50% of their income in most cases (this could likely mean many experienced appraisers will leave the industry altogether). AMC?s are not regulated, by the way.



2. Unfairly targets appraisers, does not affect AVM?s (Automated Valuation Models) and BPO?s (Broker Price Opinions). This not only hurts appraisers as Lenders may prefer unregulated and unrestricted alternatives that are not included in the HVCC and in a manner which is in contrast with the stated purpose of HVCC.



3. Disallows appraisers from engaging in ANY communication with mortgage brokers, loan officers, agents, or others that may receive a commission upon funding of a deal. This means appraisers are not allowed to talk to their clients, a restriction no placed on any other industry to date. This means all the client relationships they have built are rendered meaningless overnight, an unprecedented act against any industry segment to date.



What it means to Consumers:



1. Higher Costs: If there is a need to change lenders or brokers as a new appraisal will be necessary.



2. Increased time to fund loans as brokers lose control of choosing and managing appraisals and may necessitate longer rate locks or extensions of existing locks. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing time to funding.



3. Decrease incentive to change lenders or brokers if they are not getting the service they deserve due to increased costs and time involved.</blockquote>


BTW, most of the opinions of the author are nonsense, but it is true that this change will prevent cozy relationships between brokers and appraisers from influencing appraisers to puff values. It is a great step forward.
 
[quote author="Soylent Green Is People" date=1241481836]Banks holding REO's are loath to pay closing costs. Rarely will they pay but you've often got to go with their own lender choice. They are the market currently and that's what I've seen.



Agents will take a full price offfer with closing costs to be paid. The question then is "will it appraise"? Many 'Tards still think you can list at $500k in a $490k market then goose the price $10k to finance closing costs. With HVCC now the law of the land, appraisal inflation is going to be negligible compared to the problems we hand in the past.</blockquote>


I actually got the Bank that owned the property I purchased to chip in $5,000 in closing costs. I know it's not a HUGE number, but that covered a large portion of my closing costs. So it seems like they are willing to do it if they're desperate to get rid of the property.
 
What it means to Consumers:



1. Higher Costs: If there is a need to change lenders or brokers as a new appraisal will be necessary.







Why is this? Isn't the consumer going to receive a copy of the "certified appraisal" that any bank should accept? No way I'm paying for multiple appraisals.
 
[quote author="freedomCM" date=1241491589]What it means to Consumers:



1. Higher Costs: If there is a need to change lenders or brokers as a new appraisal will be necessary.







Why is this? Isn't the consumer going to receive a copy of the "certified appraisal" that any bank should accept? No way I'm paying for multiple appraisals.</blockquote>


You will pay it somewhere. Either the lenders will bill you directly, or they will hide the cost somewhere in their plethora of junk fees. Nobody is going to do this for free.
 
[quote author="IrvineRenter" date=1241494353][quote author="freedomCM" date=1241491589]What it means to Consumers:



1. Higher Costs: If there is a need to change lenders or brokers as a new appraisal will be necessary.







Why is this? Isn't the consumer going to receive a copy of the "certified appraisal" that any bank should accept? No way I'm paying for multiple appraisals.</blockquote>


You will pay it somewhere. Either the lenders will bill you directly, or they will hide the cost somewhere in their plethora of junk fees. Nobody is going to do this for free.</blockquote>


Many times lenders require a second appraisal and will take the lower of the two estimated values. Remember that THEY are buying most of the home in most cases. It is an extra fee, but it protects buyers.
 
If you first shop your loan professional, not the rate or the fees per se, that will be your best path. Most loan professional's rates and fees are within .125 (r) and $500 (f) respectively. Because you have settled your lender question first, the likelihood of a loan denial or appraisal issue is very low because of the professionalism of your LO. Could it still happen? Certainly. Is it likely? Not really. You've put the proverbial cart before the horse. Most professional LO's will hyper-screen your information and property data before you put pen to application. That time spent on the up front details will avoid many future issues.



In a worse case scenario, if your loan professional has brokered the file to Bank A, and after Bank A reviews the entire file you get turned down, Bank A might (big might...) release the appraisal to Bank B. The problem here is that Bank B could have that particular appraiser on a black list. What if the property is out of the area? More issues... In any case Bank B will either order a review ($300) or a retype in Bank B's name ($300) or both ($600). You will have to pay for this. The LO isn't.



The bottom line: expect multiple appraisal fees if you want multiple approvals. There is no way around this unless the HVCC guidelines are changed.



No one thinks of the unintended consequences before leaping forward. This is a prime example.



My .02 - SGIP
 
Forgive my ignorance, but if the buyer is paying the fee for the appraisal, does the buyer not receive a copy thereof?



I understand that a second bank may not "like" that appraisal, but if this HVCC thing is supposed to produce independent appraisals, shouldn't they have to accept the HVCC appraisal, no matter which appraisal company it comes from? I thought the whole idea was to divorce the lender from the appraiser, so that they cannot 'influence' each other.



Thanks for any insight.
 
I agree completely with getting undue influence out of the appraising business. HVCC does this to some extent. The regulations are vague and overreaching. In some cases (closing table states) HVCC is not an issue. In Escrow states (Cali for one...) it's a bigger deal.



You do get a copy of the banks appraisal. It's not yours however. The customer who ordered it - in this case the bank - owns the appraisal. They are simply billing you for the work done on your behalf. Strange, but that's how it is.



HVCC requires that you get a reviewed copy of the appraisal and have to sign off on the receipt of the report before closing. Note the term "reviewed". This means that if the appraiser comes in at $450k for your $450k purchased home, yet the Underwriter feels that based on recent closed comparables or adjustments to the $450k appraisal are unwarranted, you could find your $450k value reduced.



That value cut might be justified and thus no matter who gets the appraisal (which is still in Bank A's name...) they may reduce the value as well.



We almost need a different thread for this subject. I'm off line till tomorrow. It will be interesting to see where this goes.



My .02 - SGIP
 
[quote author="freedomCM" date=1241501554]Forgive my ignorance, but if the buyer is paying the fee for the appraisal, does the buyer not receive a copy thereof?.</blockquote>


When I was a homeowner, I had the house re-appraised during the bubble years in order to remove my PMI. The lender would not let us see the appraisal that we were paying for. They would only give us a yes or no answer if the value was what we were looking for. I guess it's like you were saying SOYGIP - doesn't matter if you're paying for it, they own it? Strange that I wasn't even allowed to have a copy, though. I don't know.
 
You must log in or register to reply here.
Back
Top