Profile picture for strangeroddly

GFE is $2,300 more than the Zillow quote -- is this bait and switch?

Broker is highly rated on Zillow, and the quote certainly drew me in.  Information I provided for the quote was accurate, but broker says Zillow quotes do not include lender/payoff bank attorneys fees, UCC-1 fees (NYC), or lien search.  In this case, all those add up to an additional $2,300 in costs not reflected in the original quote.  95% sure that I should walk (or run) away from this deal, but is there ANY reason I shouldn't?
  • January 20 2012 - Queens
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Answers (7)

This is an old blog post that addresses why it's really difficult to get a "quote" on line or over the phone for a loan.  The post is about a purchase, but even in refinances there are several things involved so that unless an experienced lender (who understand the loan process) spends 20 minute or so going over all of the costs, fees and potential additional expenses, there is no way to really understand what is going to happen, and what all of the costs are.  (This post was written for another blog and posted well before the new Reg Z changes that took place 1/1/2010. The new ‘disclosures' are even more fun!)

I'm often asked "why are all of these real estate loan disclosures so confusing?" The answer is pretty simple – even if it's not what most people want to hear: Real Estate loans are just not simple, and no amount of disclosure will make them simpler.
To understand why this is you have to understand that on a real estate loan – especially a purchase real estate loan – you are doing more than just taking out a loan. In fact, for most buyers you are really doing 6 different things.

1) Purchasing the property – Cost associated with this part are: escrow fees, real estate agent fees (usually paid by the seller,) transfer taxes, and recording fees.

2) Assuring the adequacy of the property – Costs associated with this part are: appraisal fees, home inspection fees, pest inspection fees, etc.

3) Making sure you actually own the property when everything is done – Costs associated with this are: title insurance and surveys.

4) Setting up a system to make sure that the major ongoing costs of owning a home are taken care of – this would be establishing an impound account for the payment of future taxes and insurance payments. (Conventional loans with larger down payments do not require this.)

5) Purchasing insurance – this includes homeowners' insurance, home warranties and possibly flood insurance and even earthquake insurance if desired.

6) Oh, and taking out a loan – these costs include: loan fees, processing fees, administrative fees, tax service fees, flood zone check fees, etc.

And as if doing 6 different things at once – possibly involving as many as 15 different entities – isn't complicated enough, you also (usually) have two different real estate professionals putting together a contract that may be as long as a phone book for a small community (and about as exciting) negotiating just who is paying what. Could this get any more convoluted? Sure, but fortunately here in California lawyers are usually not involved in residential real estate transactions.

So what does all of this mean? Simply put – real estate transactions are not simple, and it would be wrong to expect them to be. This does NOT mean that they are so complicated that the average person cannot understand what's happening – quite the contrary. If you are working with competent professionals you should be able to go through a real estate transaction with a reasonable understanding of every step of the process.

  • January 20 2012
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Yes, the ratings hardly mean what they used to mean.  Be cautious of putting too much weight on those ratings.  And, AA always says to pay more attention to the negative feedback versus the positive feedback, which I agree with.
  • January 20 2012
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Quotes on Zillow usually only have lender fees and 3rd party fees collected by the lender.  This enables a customer to compare apples to apples.

Third party fees (title, recordation, etc...) should be the same regardless of the lender you choose.  The reason the quotes do not include 3rd party fees is lenders can manipulate 3rd party fees to make their quotes look better.  A good loan officer will estimate those 3rd party fees a little high, so there is a pleasant surprise at settlement.  Good loan officers like to underpromise and over deliver.  The bottom line is 3rd party fees should be the same with any lender you choose because you select the title company.  They are disclosing everything on the GFE so this does not appear to be a bait and switch to me.

And, Chris Corica would be an excellent choice to contact.
  • January 20 2012
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Profile picture for Dunes ..
"highly rated on Zillow"

Thanks..needed a laugh
  • January 20 2012
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The quoting format is somewhat desirous. It lacks needed detail. I guess it comes back to a split between Zillow's tightwadness, and leaving Lenders room to do some creative fishing.

WetDawgs question cuts to core of the issue. This also exemplifies the fact that free anonymous internet quotes, for any service, may only be worth what you put into them. Nada. Good luck with all that.

Somewhere in the Zillow archives is a great discussion of Lender Bait and Switch theory. There's some good work on that thread.
  • January 20 2012
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Title/Settlement fees are typically not included with the quotes.  The reasoning is that they should be basically about the same no matter then lender.  Now $2300 does seem a little excessive since I am guessing by you using the term UCC-1 you have a CO-OP.  I do not believe there is title insurance or mortgage tax with a CO-OP so your closing costs should be minimal.  I will admit though it has been awhile since the last time I handled a CO-OP transaction so things may have changed.  You owe it to yourself to get a second opinion.  Chris Corica is well respected on this site and should be able to help  Type his name into the professional directory and he should pop up.
  • January 20 2012
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Profile picture for wetdawgs
Do the quotes from other lenders include those fees?

  • January 20 2012
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