A title industry executive claimed at the Real Estate Providers Council's annual meeting in Las Vegas that "too many" vendors have their hands in the residential real estate cookie jar.
Patrick Stone, president of the Williston Financial Group, said that anywhere from five to 18 different vendors are involved in the typical home purchase transaction, "making for a complex and disappointing experience" for consumers.
And costly, too. Whereas the fee to purchase $250,000 worth of securities is $1,250 and the commission to buy a $250,000 Ferrari is $7,500, Stone pointed out, home buyers generally pay a whopping 8% – a total of $20,000 – in fees to purchase a $250,000 house.
Stone said firms that operate affiliated business arrangements can and should "drive some of that cost out" of the transaction. "If you control the point of sale," he ventured, "you should be able to cut the cost almost in half."
"If done correctly," the veteran title executive suggested, "ABAs can be much more than simply vehicles for revenue sharing."
Stone also told the conference that the housing finance sector can get along just fine without Fannie Mae or Freddie Mac, as the Obama Administration has proposed, as long as consumers are willing to give up the right to refinance without incurring a prepayment penalty. Otherwise, he said, investors will stay away from mortgage-backed securities because they will not be able to compute their yields.
