Once you’ve determined a sale price on your home, you still have a checklist of real estate costs to negotiate. Yes, we said negotiate. Some expenses are easier to bargain down than others but don’t just hand over money because a broker or a real estate agent tells you to. Know what you’re paying for
Once you’ve determined a sale price on your home, you still have a checklist of real estate costs to negotiate. Yes, we said negotiate. Some expenses are easier to bargain down than others but don’t just hand over money because a broker or a real estate agent tells you to. Know what you’re paying for and negotiate the real estate costs.
These negotiations don’t have to be stressful or take forever. When you know what you’re talking about, you come across as confident and reasonable — and you get what you want out of the deal.
“A lot of home buyers and sellers are getting gouged when they close because they don’t know any better,” says Jared Fletcher, president of. “We need a lot more transparency around these real estate costs.”
Here’s what you need to know to keep costs down and close without any drama:
Real Estate Commissions
These need to be negotiated upfront when you sign with a realtor or broker. Most agents get 6% from the seller. If you’re selling, you can sometimes negotiate down to 5% (or maybe more depending on the circumstances), but keep in mind that, even on a $500,000 home, you’ll save $2500 if you negotiate it down to 5.5%. When closing time comes, you’ll be glad to keep the money for yourself.
Pro Tip: This is easier when your broker can act as the listing and selling broker. That way, the entire commission goes to one person instead of two. Since your broker is used to splitting the commission with another broker (who represents your buyer), he or she is more likely to negotiate to know they’ll keep the whole thing, anyway.
Most people have no idea what title insurance really is. Think of it like this: homeowner’s insurance protects a home from future events, like storms or fire. Title insurance protects the home from past events, like a contractor who put a lien on the home for unpaid work. You only need to buy title insurance once, and the home is covered for the entire period of ownership. In Florida, heirs who own the property end up covered, too.
“Almost no one knows this is negotiable — but only to a certain extent,” shares Fletcher. “Florida law sets the prices for title policies, but the law also lets us offer a rebate. This rebate is practically a state secret. No one asks for it until we tell them about it. People need to ask for it.”
Pro Tip: The rebate Fletcher is talking about is The Butler Rebate. It’s the result of a Florida Supreme Court case. This rebate is negotiable up to 30% in some cases. It applies to both kinds of title insurance, your owner’s and your lender’s policy, so you can save big. We have more details on how it works, but you can just ask your title agent to apply it to your account, too.
Title-Related Closing Costs
Title-related closing costs can mean a lot of things to a lot of people. That makes it messy, so start by asking for a breakdown of exactly what you’re getting. Some companies will offer a flat fee to close your home. This is an amazing deal — or it possibly a nightmare of hidden real estate costs that mean nothing.
“Are you charged a courier fee?” asks Fletcher. “Who uses a courier, anymore? I mean, some professions in some cities do, but your closing agent in Florida probably isn’t using a courier. We do almost everything digitally and mail things overnight if we have to. It doesn’t cost anywhere near these so-called courier fees.”
Pro Tip: Fletcher makes a good point. Ask your closing agent exactly what you’re paying for with a flat fee. Often, there’s a closing fee and then junk fees like wire, notary and courier fees. If the answer is anything besides “everything,” that’s not a flat fee. Ask them to honor their promise of a flat fee or just deal with a service that is transparent from the start.