Negotiating Closing Costs

[Rajiv R.]

Excuse the rookie question as maybe it's obvious, but having only purchased a primary property a couple years ago and under contract to purchase my first investment, looking for some guidance (not expecting a line by line breakdown). 

Which of the closing costs are generally up for negotiation? I imagine "Loan Origination" and anything paid to the bank itself can be negotiated but I am being quoted different amounts and line items are labeled differently in each quote (e.g. Credit Report fee is $56 vs. $200; I don't see a "Closing Protection Letter"  or "Abstract" in all of the quotes).

Two varying examples below:

[Tyler Warrick]

Hey @Rajiv R. good questions. Pretty much everything is negotiable in real estate.

Loan Origination is how much the lender is going to make on the file (if direct lenders: this is typically a junk fee; if brokers: this is your loan officers compensation).

Points: this is the cost for the rate itself (if direct lenders: this can be negotiated, as they manufacture the rate sheet with profit baked in; if brokers: the rate is the rate, you are getting bottom of the barrel pricing).

Credit report/appraisal: these are the actual costs -- no money can be made. Some credit providers charge $50, some charge $200 and you don't have control over this unfortunately.

Title fees: since you are purchasing, you probably didn't choose the title company, however this can be negotiated when you submit your offer. Title controls title's fees.

At the end of the day, your lender can only control the lenders fees. It's a misconception that lenders control all costs. This is what makes a loan officers job difficult -- estimating the third party fees from the beginning (they will get actual costs once in process).

Hope this helps!