Russ - I tend to disagree with a loan being more visible than realtor fees. For me, the realtor fee was very cut and dry - 6%. As for the mortgage side, I didn't know that much of the fees in addition to the origination fee, can and are padded - not to mention the ysp that isn't passed on to me. My broker gave me estimates and my realtor gave me a solid figure.

If I as the consumer, am more focused on the mortgage side than the realtor fees, wouldn't I be stepping over pennies to pick up dollars?

I find it interesting that just about every broker says that they can't be beat. Mine said this too. What mine didn't tell me is that I had to go out and find a better deal for him to lower his. All he told me was that he is the lowest fee/best rate guy around and no one else can beat him.

Dogwood-

For most consumers, the cost of their mortgage boils down to rate and fees. These are highly visible as you have to write a check for them every single month. It is the most visible expense of any household. To the typical consumer, 6.25% is better than 6.5%. End of discussion. Realtor costs on the other hand are not as visible. Yes, you know it is six percent and it is built into the price of the house. However, would you have been willing to pay that six percent if it came directly out of your pocket in one lump sum and not financed in the cost of the home? Probably not. You would be calling around "rate shopping" just like you did on your mortgage. If this was the case, you damn sure would be thinking about going with the 5% Realtor instead of the 6% realtor. This is why you never even thought to ask if the Realtor side was negotiable. There are a ton of Realtors who would have gladly rebated some of their commission back to you if you has asked. Consumers just don't think to ask because the fees are not visible, Realtors tell you "the seller is paying my fee", hide behind buyers agreements and contracts, and Realtors for the most part aren't as quick to cut each others throats as lenders are.

I do agree with you that being upfront is important. Many mortgage brokers are upfront. In fact, federal law requires that any YSP has to be disclosed on brokered loans. However, service release premiums (SRPs) that mortgage bankers get are not disclosed. On the other hand, most consumers still only want what they perceive to be the best rate, not transparency in pricing. Being upfront about pricing does not guarantee the lowest rates. It just guarantees the loan officer/broker's commission.

Mortgage pricing is very fluid and there is no such thing as the "best rate". Mortgage rates change every single day depending on the financial markets. In addition, there are so many little things with loans - ltv, loan size, credit, property type, location, lock period, etc that can have an impact on the rates quoted.

I understand your desire to get the best deal, but since I have been in this business it has baffled me that consumers use price as a deciding factor on the largest and most complex financial transaction of their lives. Not that price isn't important, but it amazes me how people will worry about saving $50 bucks on a $500k purchase. Especially when this purchase involves reams of legal contracts, tens of thousands of dollars can be at risk, emotions running high, and is basically the most complex purchase of most of us will ever make. Of course, the $50 sounds like a lot of money until the escrow blows up because the internet lender you found with the "best deal" doesn't come through.

Nevertheless, you did good by shopping, because it sounds like the guy you were using did have you priced a little high, if it was so easily beat by a substantial amount. I hope everything else goes/went well with your transaction.

www.smartmortgageadvice.com

Russ - I admit that I never thought to ask my realtor to float some of his commision. And I do see your point. That is good to know for future reference. I don't know how significant the rebate would have been but maybe it would have - every bit counts. I still can't help but think that the loan is more significant especially when you plan on being in the home 10+ years. Over the long haul - how much did I actually save myself. $3100 out of pocket and a 1/4% over 10+ years is pretty significant.

So why don't brokers question the fees of the realtor - or at least suggest that the borrower try to negotiate them?

Thanks for your input Russ, it is good info that, your right, most consumers probably don't think about.

Cause the realtor brings more business to the broker in the form of other buyers. If the broker starts negotiating against the realtors interests its goodbye, so long I can find another mortgage broker for my buyers. The buyer generally only has one house and no leverage except as a possible future customer for a refi or a bigger house in 7 years.

Hi everyone,

I am new to this forum, but i would like to say why does it matter if the loan officer is getting a rebate. I think as long as the client get what they want and they are happy then it should not matter. What homeowners need to understand is that they are paying for a service. A loan Officer job is not a easy as it seems. We charge for our service and our time. What clients have to remember is that this is how we make our living. Example: Doctors, lawyers, etc.. Have any one ever been to their doctor and tell them that they charge too much and that they need to reduce their fees. No because thats their job and to be the best doctor they can be and take care of their clients just like loan officers. So for me I will never lower my standards and not charge my clients.If I did that i would not be able to pay my bills, Put food on my table. Who ever wants loan officers to work for nothing why don't you tell your boss you want to work for them for free.

Hi Lscalder,

Welcome to the forum and thanks for responding. I am not disputing the fact that you should get paid. You should. A good honest mortgage broker should be successful just as with any other profession. That is not my issue. The issue is that my broker chose to charge me higher fees and a higher rate even when faced with the opportunity to get me a better rate and better fees. He got greedy plain and simple and I called him on it. I found two better rates and fees on my own that beat his. He told me that nobody can beat him and I trusted that until it was brought to my attention that he really wasn't working in my corner. If you can find me a killer deal, I could care less that you get an upfront fee and a yeild from the lender. But if I can do better on my own, something is wrong here. Lscalder, it really isn't hard to understand that a broker should get paid. I never said that they shouldn't get paid. Just be honest, upfront, and don't get greedy. Let me ask you a question - What is honestly stopping you from looking for the best deal for yourself instead of for me? My answer to that is an informed consumer. There are plenty of you good guys out there that do it right. But just as with any profession, there are bad apples too. I am not bashing you guys as mortgage brokers at all here. Many of your responses seem to indicate that I am doing so. Again, all I ask is a fair deal. If you make good money off of me but do a good job and find me a good deal - I am totally fine with that.

Craig