Your home, your car, and your long-term investment plan are likely among the three biggest financial transactions you'll deal with in life. As your most valuable assets, understanding where you can potentially reduce the costs associated with them can save you thousands of dollars. Here's how.
Mortgage loan fees/rates.
If you're shopping for a new mortgage loan, or refinancing, you can and should negotiate everything with the exception of third-party fees for things like titles and appraisals, says Richard Whitman, VP of mortgage lending at Texas Trust Credit Union
. Though completing an online prequalification may be the quickest way to go, Whitman says that because the "best loan" is a matter of how well rates, fees, payments, and terms serve your individual financial objectives, speaking directly with several lenders is to your advantage. Ideally, have the conversations over the span of no more than a few days to ensure quotes are "apples to apples." Obtain a good faith estimate, sometimes referred to as a GFE, from every lender you speak to, and leverage them to negotiate. "Don't hesitate to take the lowest estimate you receive to the lender of your choice and ask them to match or beat it," says Whitman.
Commissions/fees associated with selling real estate.
Selling your home used to present one of two options: hire a listing agent and pay commission (usually 3% of the sale), or sell your home For Sale by Owner (FSBO). Though sites like ForSalebyOwner.com
have been around for more than a decade to provide FSBOs an online presence, the National Association of Realtors
maintains that selling FSBO commands a lower asking price than one can ultimately net with a Realtor -- not to mention an online listing still costs up to $700. Thanks to technology and a hot-again housing market, buyers and sellers now have more options in the form of discount, or "flat fee" real estate agency models that allow sellers to pay only for the services they need. Joan Elflein, owner of Ohio Broker Direct
, explains that her flat fee brokerage services -- which cost $299 for a basic multiple listing service (MLS) -- are a fit for homeowners willing to show their own homes and facilitate negotiations, but who don't want to pay thousands of dollars in full service broker rates. Additionally she provides MLS exposure for builders, investors, and commercial real estate professionals who otherwise lack access to it. For sellers who are unsure if they're prepared to forego the help of a real estate expert, Elflein also offers consultations to sellers on questions that arise throughout the selling, negotiating, and closing processes. That service costs a flat fee of $500.
Property tax liability.
If your local auditor's office says your property is worth far more than it really is, you may be able to save some major cash. Start by researching your county auditor's site to find the stated value of your property compared to similar properties in the area. Additionally, consider when the value was last assessed. If you purchased between 2004 and 2007 and your assessment has not been adjusted, for example, you're likely overpaying in tax simply because the market hasn't returned to those levels. If you feel there is a discrepancy between the real and the assessed value of your property, Marsh Bilby
of Marsh Bilby Appraisers & Consultants, LLC says to seek out a qualified appraiser who is well versed in challenging county auditor appraisals, because he or she may need to accompany you to hearings. If you "lose" and the county upholds its appraisal, you're out some of your time and about $400 for the appraisal, in addition to any fees the appraiser may charge to speak on your behalf at hearings. Knowing that risk, you'll first want to ensure that challenging the value is cost-justified. If you determine it is, however, the savings could be huge. For example, Bilby says that if the auditor valued your home at $300,000 but concedes that it's actually worth $225,000, you could save about $1,500 in annual property tax assuming a millage rate (the amount per $1,000 that counties use to calculate taxes on property) of 2%. (An important note: Your auditor-assessed home value in no way determines the actual market value of your home should you choose to sell it.)
Financial planning fees.
The industry average for a financial advisor who manages your money on an ongoing basis is about 1% of assets under management, but you may pay slightly more or less based on your advisor and the services rendered. Though 1% may sound insignificant, consider the cumulative effect that CNBC's Shelly K. Schwartz
noted in a 2013 article: An investor with a $500,000 portfolio earning 7% per year would have $2 million after 20 years. The same client who paid an advisor 1% per year on those assets would have $364,000 less at the end of the two decades. If you don't value having a personal, face-to-face relationship with your advisor, online investment firms may be a cost-effective alternative. For example, LearnVest
provides financial planning advice for investors for a flat fee of $399, with a $19 monthly subscription. Though Vanguard's Personal Advisor Service
requires that you have at least $100,000 to invest, it charges just .3%. Based on that $100,000, you'd pay just $300 for the services of a designated financial advisor with CFP credentials who would help you formulate an appropriate financial plan and put it into action once you've approved it. The CFP would also communicate with you by email, phone, or video conference when needed.
Finding the best car deal with less pain.
Dreaming of welcoming summer with some new wheels? Wait it out a bit. Experts at TrueCar say that August is the best time for consumers to find a great deal on a new car as dealers are trying to make room for new models. Consult up to five car dealerships to make contact with a salesperson who will become your point of contact, and be specific about everything you are looking for, including color, accessories, mileage, and down payment. Ask each salesperson to email a detailed quote, including all fees, taxes, and offer for any trade-in that may be part of the deal. Using these quotes, cross-reference a free online comparison tool like the one offered at TrueCar
. It considers your "must have" criteria in tandem with the sticker price, and what others in your area have recently paid for the same vehicle to give you a viable "pre-negotiated" price to have in mind to guide negotiations, and ideally, minimize haggling with dealers.
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