How to save your buyer from over-paying escrow fees for new construction in Olympia WA
This post is written to buyer’s agents representing clients who are purchasing new construction. Buyers, you have enough to worry about; this is not meant to add any more stress to your purchase. If you have a competent Realtor representing you, you won’t have to worry. (And you do have your own Realtor, right?)
How to save your buyer from over-paying escrow fees:
Step One: Read the builder contract and look for the escrow fee disclosure.
Some builder contracts will include a disclosure that the builder/seller will receive a discounted escrow rate but the buyer will pay the escrow fee according to the fee schedule and not get this discount. If this disclosure IS a part of your purchase and sale agreement, you won’t be able to save your buyer in escrow fees. If this is NOT disclosed, see Step Two below.
Step Two: Read the estimated HUD Statement and look at the charged escrow fees.
If the builder/seller DID get a discount in escrow fees AND NO disclosure existed in the purchase and sale agreement, then the escrow fee should be split between the parties equally.
National builders tend to accept just their own contract forms and not accept the local contract forms, so typically, the escrow fee and how it is to be paid and split is addressed in their forms. But sometimes, builder/sellers will accept the local contract forms and then add their addenda to the contract. This type of scenario is where I find the lack of disclosure.
For example, if I write up an offer using our local contracts, it clearly states that the seller and buyer shall each pay one-half of the escrow fee (unless the buyer is using an FHA or VA loan). And then if I add the builder addenda to the offer and the escrow fee disclosure is not addressed in the addenda, the local contract language prevails.
What I am experiencing as a Buyer’s Agent of New Construction
What I am finding is escrow companies are not following the purchase and sale agreement and they are costing the buyer more in escrow fees than necessary.
In many cases, this is a moot point because my buyers are either VA where they are not obligated to pay the escrow fee, or the builder/seller is contributing to the buyer’s closing costs. However, I am concerned because I am seeing this more and more where escrow companies are not pricing rates in accordance with the purchase and sale agreement.
Buyer’s Agent of New Construction: Please look out for your clients and read the addenda and HUD to make sure your buyers are not being over-charged for escrow fees.
Buyers: If you need a competent and professional Realtor on your side when purchasing new construction, contact me today. I’ll guide you through the process successfully!