SAN DIEGO--(BUSINESS WIRE)--ClosingCorp, a leading provider of residential real estate closing cost data and technology for the mortgage and real estate services industries, today released its most recent closing cost data, which showed that in 2018 national average closing costs for a single-family property were $5,779 including taxes, and $3,344 excluding taxes.

ClosingCorp cost calculations include lender’s title, owner’s title, appraisals, settlement fees, recording fees, land surveys and transfer tax. To determine the average single-family home sale ranges, ClosingCorp uses home price data from CoreLogic, a leading global property information provider, to create a $100,000 price range. ClosingCorp uses ranges, rather than average sales prices, because it allows them to see real transactions.

Dori Daganhardt, senior vice president of Data Strategy, explained it this way: “The average home price is a number, but not necessarily a real property with a real closing. To get a sense of what is really going on in the market, we compared real cost data on more than 1.5 million purchase transactions that went through our SmartFees platform in 2018. We also used ‘market-specific’ rates and fees charged by the most active settlement services providers in each geographic area, not just network averages.”

The 2018 report shows the states with the highest average closing costs, including taxes, were: District of Columbia ($24,613), New York ($13,581), Delaware ($13,309), Washington ($12,667) and Maryland ($11,395). The states with the lowest closing costs, including taxes, were: Missouri ($1,887), Indiana ($2,002), South Dakota ($2,149), Iowa ($2,248) and Nebraska ($2,267).

The states with the highest average closing costs, excluding taxes, were: District of Columbia ($5,694), New York ($5,586), Hawaii ($5,318), California ($5,284) and Washington ($4,701). The states with the lowest closing costs, excluding taxes, were: Missouri ($1,887), Nebraska ($1,919), South Dakota ($1,995), Indiana ($2,002) and Iowa ($2,011).

“Because closing costs are based on sale price and taxing jurisdictions, the rankings of high and low-cost states tend to be relatively static,” said Bob Jennings, chief executive officer of ClosingCorp. “However, that doesn’t mean that various jurisdictions aren’t continually contemplating increases and adjustments. Our research showed more than one-third of all counties considered an adjustment to their taxes in 2018 and adjustments in more than 200 counties actually went into effect. These include some interesting twists. For example, four New York counties let their local mortgage tax expire and then reinstated the same tax; and the city of Baltimore introduced a ‘yield tax,’ which is essentially a ‘tax on tax.’ We expect to see even more adjustments in 2019, including a new law which increases the mansion tax on a sliding scale for transfers where the consideration is in excess of $2 million in New York City—already one of the cities with the highest closing costs.”

Additional CBSAs and county-level data available upon request.

Methodology

ClosingCorp average closing costs are defined as the average fees and transfer taxes required to close a conventional purchase transaction in a geographical area. These costs consist of fees from the following service types: title policies (both owners and lenders), appraisals, settlement fees, recording fees, land surveys and transfer tax. Actual closing fees for 1.5 million single-family home purchases from January 1 through December 31, 2018 were analyzed. Homes within a $100,000 range of the average home price (source: CoreLogic, a leading global property information, analytics and data-enabled solutions provider) were used to estimate closing costs for an average home at the state, core-based statistical area (CBSA) and county levels.

The average service type component fee was computed for every geographical area where at least 30 transactions occurred in the specified range during the period under review. Total cost to close was then computed as the sum of the service type averages. Land survey fees only were included for Florida and Texas single-family homes where land surveys are required. If a geographic area did not contain at least 30 data points for a given service type (excluding transfer tax), the average of the next largest geographical unit within the $100,000 range was used as an estimate. Only one estimate was allowed per geography. Cost to close was computed with and without transfer taxes.

By Pat Sherlock

During one of my recent presentations, there was a lot of discussion about how to handle underperformers. The managers I spoke with agreed that some originators were not performing and needed to be fired. Many managers blamed HR for not letting them terminate the underperformers for fear of triggering a lawsuit. This is something I hear quite a lot. Unfortunately, this is an excuse for why managers are not addressing sub-par sales professionals. Considering that an estimated 60% of mortgage originators are not meeting performance standards (Stratmor), I thought it would be a great time to review the parameters for firing originators who are not making budgeted goals. As we all know, the marketplace is changing dramatically and underperformers can no longer be financially supported.

[caption id="attachment_9789" align="alignright" width="300"] Pat Sherlock[/caption]

In my opinion, there are three signs that a manager should seriously consider terminating an underperforming originator:

1. When the time and resources needed to change the originator would be better spent with other team members. If sales professionals barely hit production goals after a manager has spent considerable time in trying to help them, it may be time to cut the cord. Inconsistent sales performance is an indicator that an originator does not have the sales talent to match what is required to succeed in today's difficult marketplace.

2. After sales training or coaching, the originator is not progressing or changing his or her sales activities. One topic to focus on is prospecting. If the underperformer is not prospecting and getting new referral sources, it is time to hire someone who will.

3. When the sales professional constantly complains that operations (or everyone else) is at fault for poor production. This is a clear sign that the producer is not self-aware enough to change his or her behaviors. Frankly, these individuals are not willing to learn new selling techniques.

Of course, there are other red flags but in my experience, most managers know the warning signs but are hesitant to terminate sales professionals because it is difficult to recruit new originators. Producing managers who are the primary volume generators may also feel that any volume from secondary players is fine with them.

While no one wants to say the words "you're fired," these dreaded words are needed now more than ever. Letting go of underperformers is something that no manager wants to do but in a more challenging market, it is a requirement for sustainable success. The fact that an originator is on 100% commission does not mean that there is no cost of having someone in the position who is not generating a profit, clogging operations, has a negative impact on the group or is wasting the manager's time. I haven't even mentioned the lost sales opportunities associated with having the wrong hire in the position.

While HR gets cited as the reason that underperformers are still in place at many banks or mortgage groups, the real reason is that managers have failed to document poor performance. Managers need to keep a written record of all warnings; any improvement plans agreed upon and any probation plans provided. A paper trail is an essential component when termination is being considered.

While firing an employee is never easy, sometimes an employee's performance does not match a lender's current needs. The time to take an honest, objective look at originator performance is now.

I am having a bit of a debate with those who run this firm. I am a high-producing branch manager who would like to limit the number of loan officers I hire to higher-quality and consistent producing loan officers. Others want to hire “numbers,” no matter how little they produce or how much trouble they cause. It seems to me that five loan officers producing six loans each month is much better than 15 each producing two. And if one of the five is causing an issue with every loan—I would rather go without the production. What is your opinion?    Branch Manager from Delaware

I had to shorten this question a bit—and the fact that your question was so detailed tells me a lot about your frustrations.

When I entered the industry over 30 years ago—it was a full-time profession for 99.0% of those in the industry. We were dominated by banks and savings and loans —not by brokers. The good loan officers looked “down” upon many Realtors—because many were part-time. Times have changed. As the brokerage industry has grown, the residential lending industry has come closer to the real estate industry from a personnel standpoint -- especially during the real estate boom more than ten years ago. It has returned closer to its original state during the financial recovery, but there is still a strong broker segment. Most traditional lenders operate in accordance to the “older traditions,” but there are many others that operate under the “numbers” concept you have just described.

[caption id="attachment_9654" align="alignright" width="268"] Dave Hershman[/caption]

It is true that some companies in the past tried to hire 1,000 loan officers and put them in their homes with minimal training. If they get a loan from half of them each month—they had a winning business model. What the consumer got was 1,000 untrained and unprofessional loan officers—and the potential for predatory lending including fraud. And this contributed to the financial crisis and the rules that followed--including licensing requirements.

So there are two models. In one, a manager hires numbers and hopes each hire brings in a few loans. In the second model, the manager hires fewer originators, but tries to make each hire a quality producer. My vote is for the second model. Why?

First, because of profitability. Some managers would argue that an extra loan officer who is on 100% commission does not cost the company anything. I beg to differ. There are many costs. These costs include support—no matter how little support you give to each loan officer. Even answering questions uses precious resources. For example, if you provide processing, the efficiency of that processor falls significantly if they have to deal with many untrained loan officers. And, of course, the numbers game prevents you from providing quality support and advancing these loan officers. So turnover increases and it becomes a vicious cycle. There is nothing which is more expensive and detrimental to the bottom line than turnover.

Second, because of quality. Think from a customer’s prospective (this is called empathy). What kind of experience is it for them when they deal with an untrained, unsupported and probably part-time originator? Is this how they should be supported in the most important financial decision they will ever make?  What kind of experience do you want your company to be known for?  And that is the good scenario. In the “bad” scenario—unsupported loan officers commit fraud -- sometimes just out of ignorance.

Finally, quality attracts quality. No quality originator wants to be surrounded by a company of originators that don’t know what they are doing and have the potential to hurt the quality name the originator brings to the organization. Top originators want to be challenged—not only by their boss, but by their peers. In this case, the strong get stronger.  Dave

Dave Hershman is Senior VP of Sales of Weichert Financial and the top author in the mortgage industry. Dave has published seven books, as well as hundreds of articles and is the founder of the OriginationPro Marketing System and Mortgage School – the online choice for expert mortgage learning and marketing content. His site is www.OriginationPro.comand he can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.