Home Closing Costs…it’s time to call BS!
For anyone who has done a little research into the “Millennial” population, one thing you have learned is that the cohort asks a lot of questions about “the way things have always been done.” And, for anyone who reads a lot of media, there are all sorts of opinions about how the Boomers view this generation at work, at school, and so on. Some folks (like me) support our younger colleagues and also realize they are not so young anymore (born 1981 and later). Others find the younger set to be entitled, whiny, and lazy. Whichever view you ascribe to, we must realize that some of the questions they ask may benefit the entire population, regardless of age. I find myself taking a lesson from this group (I’m an Xer) and asking more questions about traditional and cultural processes as of late. My most recent beef comes with the closing costs associated with buying a home.
A few weeks ago I looked into buying a small property, and for math’s sake let’s say it was 100K. After working with my lender it appeared the closing costs would be about 3K. For what? What do I get out of that 3K? So, I carefully went over the list of things associated with the home closing. I also compared the list to things associated with my other home which closed in 2006. You know what’s changed? Virtually nothing. With the market crash, the bank issues, and government regulations, virtually nothing about closing costs works in the favor of saving the client money (some things protect the client like insurance and title coverage—I get that). For the purpose of this article, and in true Millennial fashion I want to bring to light the archaic nature and shameless cash-cow of the home closing scam. To do this, I want to highlight four specific line-items from the home closing that we must stand up and call—BS.
The first is the “recording fee”—what is this? Of course I had to Google-it. It appears it is to “record the original cost and record of ownership.” In my list it costs 205 dollars to do this. 205 dollars to make a note!? The next item is the “courier fee”—had to Google that one too since it seemed so, I don’t know, 1990. Sure thing it is the “cost associated with transporting documents.” The next one I’ve always hated is the “doc stamp tax” which according to Google is levied in Florida at .70 cents per every 100 dollars to record the transfer of interest in Florida real property.” Finally, what the hell is a “Florida Form 9” and why is it 216 dollars? Again, according to Google it’s “an endorsement to a Florida title insurance policy that protects a lender against any loss which may occur from four main categories.” Hmmm….so here we have 820 dollars in “stuff” that seems like it is stuck in 1965. Also, don’t forget a lot of the things associated with closing get more expensive the more expensive the property gets, regardless of the fact that the same thing is still taking place—seems legit right?
For starters, why can’t all of this be done online for free? It is 2014 why are we paying for a recording fee? Digitize everything and make this cheap. Courier fees? Amazon Prime is 70 dollars for the year and I get all the 2-day free shipping I want on real items that appear at my doorstep. 50 dollars for some Fedex of papers that come from trees is stupid. The doc stamp tax? Didn’t the recording fee take care of that? Why is there so much duplication in this process? Why can’t it be as official as applying for a marriage license—one and done? Finally, that pesky form 9 seems a little redundant since the title company already vetted your house—why don’t they take that safety measure up with the bank that paid for your house? Makes sense to me.
Here’s how I see it and this might be mighty Millennial of me. Popular attitudes are changing. Owning a home is no longer the American dream, it’s a pain in the ass. All of these closing fees are more a right-of-passage and a form of hazing in a process that used to be so amazing and so official. No one under the age of 40 is going to sit in a home for 30 years anymore hoping to one day pay it off and give it to their kin. I wish we would just call a “spade” a “spade” and treat home buying more like car buying. Think about that for a second. The last time I was car shopping, the dealer was more than happy to sit down and finance me a 70K car (of which I can’t afford) all in one day. Good credit—check, down payment—check, dealer fees and license taxes—check. Out the door in one day—none of this long, painful, tiresome, redundant, and questionable closing process hazing.
So, I’m sure there’s someone out there who would say I don’t know what I’m talking about—and they may actually be right. But the impetus of the Millennials is to ask the questions, not answer them; and in fact, if I am far off-base why are closing costs clouded in a shroud of mystery? Why did I have to Google so many things just for this article? No—I think it is time to call BS on the closing process. If we really want the market to re-surge for the real people (not the investors), we need to make these closing costs more reasonable. My solution is to treat the process in 2014 terms—and to make it more like buying a car. The good thing about cars is when they start to break down you can get fed-up and drive them into the Hillsborough River…good luck trying that with your cozy 2/2 with off-street parking. But, I digress—I did want that house!
Chris Gurrie is an assistant professor and the director of the speech communication program at The University of Tampa. He also teaches first-year experience seminars and advises undergraduate students. In 2011 he finished his dissertation “The Immediacy and Impact of Students’ Nonverbal Cues in the College Classroom” which researched communication habits of Millennial students. He holds a doctorate from Nova Southeastern University, and when he is not teaching he speaks about the concept of immediacy and student-instructor connection. He has published other articles about communication and Millennials.