New site targets transparency in real estate fees

December 15, 2006 allows vendors to advertise fees

By Glenn Roberts Jr.
Inman News

A new Web site that aims to provide more transparency into real estate fees provides consumers with estimates for a variety of these fees based on quotes submitted by vendors.

The managers for say the site could potentially cut costs for consumers while giving vendors a new venue to market their services.

Michael Kratzer, president, CFO and co-chairman of Lowerfees Inc., said that the real estate industry "is still in the Dark Ages," and the site sheds some light on the various components of a real estate transaction. Consumers may not realize that they can choose different service providers themselves, as real estate or mortgage professionals often suggest that their clients work with specific vendors., Kratzer said, at least provides a baseline to consumers on what they can expect to pay for various fees associated with a real estate transaction.

Taking a page from the Web 2.0 playbook, the site's basic tools are free for consumers and vendors to use, registration is not required, and consumers can volunteer content from their own real estate transactions to help build a database of industry fee practices.

The site also features a blog section that will serve as an "open forum focused on real estate and mortgage transactions costs," though it currently has no content.

Consumers who use the site can request a free "Quick Quote" by selecting their interest in purchasing, selling or refinancing a property, and providing details about the type of property, ZIP code and estimated price. Other advanced site features can be accessed by vendors and consumers for a fee. For example, vendors can pay to receive leads generated by site users.

The Web site provides a list of vendors across the country for a variety of transaction-related services, including a real estate broker or agent, mortgage broker or loan consultant, wholesale lender, title insurance agent, escrow/lawyer/closing agent, appraiser, home inspector, and hazard insurance provider.

The vendor list includes a quote for fees and a fee total, though a disclaimer at the site notes that "all transaction quotes and information generated on this system are not guaranteed," and "real estate sales commission and mortgage origination points may also not be included."

Consumers can click on a vendor for contact information, and the site automatically lists the vendors with the lowest quoted price in the top position.

The system, which launched to the public this month and is still in beta testing, has some initial flaws. Some vendors are not listed in the correct categories, are based in another state, or are not even associated with real estate transactions. A Web site development company was listed in the "real estate broker/agent" category for one search, as an example. Also, some vendors contacted by Inman News said they don't recall entering their information at the site.

Kratzer and Mark Zimmerman, Lowerfees CEO, say they are working to address those problems, and they encourage site users to notify them about such problems. Zimmerman said, "We are going through the list right now and updating, correcting information. Some of it may be user error."

Lowerfees, based in Westlake Village, Calif., also offers a free "Fee Analyzer" tool that analyzes transaction fees based on Good Faith Estimate or HUD-1 Closing Statement information entered by consumers. This tool provides a description of various fees, comments and opinions by Lowerfees, and a comparison with national statistics. The Good Faith Estimate is a required disclosure of estimated settlement charges that consumers are likely to face in a real estate transaction at closing.

Zimmerman said Lowerfees could help to curb so-called "junk fees" -- which are inflated or unnecessary fees that consumers can face in a real estate transaction -- by providing a place where vendors compete for business. "Different vendor groups will have different fees. It's a tricky way for vendors to charge more fees," he said.

Kratzer added, "There is an array of different junk fees out there. There is a strong call from consumers, 'What is this and why do we have to pay it?'"

They noted that some vendors charge a so-called "e-mail fee" that can range from $50 to $75 simply to e-mail documents, or a "print fee" of $120 to $130 to print out documents. "Paper and print is not that much," Kratzer said.

A Money magazine report in October states that "Americans spend $110 billion a year buying and selling houses, not including the cost of the homes themselves," and home buyers "now pay eight times as much in closing costs as they did 40 years ago."

The Lowerfees Web site claims there are potentially billions of dollars worth of junk fees charged to consumers each year. contains a scrolling list of U.S. average costs for a range of fees associated with real estate transactions. The list includes: loan origination fee ($1,212), underwriting/lender fee ($933), lawyer fees ($476), processing fee ($413), home warranty ($385), and settlement or escrow closing fee ($352), among others.

Kratzer and Zimmerman say they have been developing the site for the past four years. Both men are licensed real estate and mortgage brokers in California, and both have been actively involved in the retail and wholesale mortgage lending business for both commercial and residential real estate.

Kratzer said he has an active business called Pacific Financial West and Insurance Services Inc. though he is "in the process of converting it over to Lowerfees."

Zimmerman, too, said he also has a personal investment corporation -- Landmark Brokerage Inc. -- that he has operated for several years, and he no longer works with a wholesale mortgage lender. Both men say they are "winding down" their companies.

Zimmerman and Kratzer also said that they are not using leads that are received through for their own purposes, and their personal companies have no other stockholders or investors. Lowerfees is personally financed at this point, they said.

Eliset "Ellie" Martinez, an escrow officer with Federal Escrow in Encino, Calif., who is listed as a vendor at the site, said she has already received several leads from the Web site related to property purchases. Martinez said she offers services for a flat fee and does not charge any "miscellaneous junk fee." She said she previously has worked with Zimmerman as a client and learned about the site from the founders. "It does work," she said.

George Woodrum, a discount mortgage broker for Express West Mortgage Inc. in Vista, Calif., said he hasn't yet received any business generated through the Lowerfees site. "I know there is a buzz about it. Many of my closest competitors are on the site as well, so that motivated me. There is no cost associated with it."

Woodrum said he typically purchases online leads from sources like, and "Marketing in this business is a huge expense," he said.

He said that might be more useful for his company and consumers if the site posted mortgage interest rates.

Linda Williams, owner of Escalade Termite and Repair Inc. in Vallejo, Calif., said she was contacted by Lowerfees about the Web site and agreed to be listed at the site. "I was a little worried at first, but they confirmed it was at no cost to my company. In short, I have not received any leads. One of the problems might be because they really don't have a category for my (company). All termite companies included in the referrals are listed under appraisal and should be under termite inspections."

Zimmerman said that there are about 12,000 vendors that are included in the site now. As consumers input data at the Fee Analyzer, he said that the site will offer more robust reporting on real estate transaction fees, such as average fee costs for a given state, county or ZIP code.

He said that in addition to drumming up business for vendors at the site, Lowerfees could also help vendors to network with other companies listed there.


Copyright 2006 Inman News

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