[Warning: rant ahead].
Recently I’ve closed a couple of REO transactions lately where I’ve been dismayed at what the escrow companies are charging the buyers. They claim it’s is warranted because of the extra work that goes into processing a bank owned property…I could almost buy this EXCEPT it’s not the buyer who has created any additional work.
Adding to my frustration is that this exorbitantly higher escrow fee tends to not be split equally between the buyer and seller (the bank or lender). I’ve heard of builders receiving discounted escrow fees, however the buyer pays what would have been the normal half. With the REO’s I’ve seen lately, the fees have been almost double what I would consider “normal”. Some of the fees have been so high, it can jeopardize a smaller transaction becoming a “high cost loan”.
On a recent closing, on a $70,000 condo in West Seattle, I called to obtain a quote from an escrow company where Freddie Mac was the seller. The quote I received was for $848. I asked the assistant if this was the full fee or the buyers half, since the quote I was using from my preferred provider was $438. She replied “full” (meaning the $848 would be split 50/50 between seller and buyer). When we received our estimated HUD, the buyer’s escrow fee was jacked back up to $848 and to make matters worse, the escrow company was trying to not honor their written quote to me. After dealing with several managers, the escrow company agreed to meet my quote of $438…it’s not half of $848 but it’s definitely closer to what would be a fair escrow fee for the buyer in this price range.
To add insult to injury, it seems the service from these escrow companies is lack-luster to say the least. It’s as if the company “won” a big bid and therefore service to the buyer, the consumer, just isn’t important since there will be plenty of gravy business to continue.
Home buyers can shop for their escrow provider, however when it’s an REO situation, 9 times out of 10 (if not all of the time), the escrow company has already been dictated.
I understanding charging more when there is more work that is actually being done with a transaction – as long as it’s fair and reflects the actual level of work that’s being done on that transaction.
It really frustrates me.
SIDE NOTE: I’ve only had excellent service from Legacy Escrow – my rant has NOTHING to do with them.
Rant over…for now! 🙂