Questions to ask when selecting a title company – Part I

Part I

The Real Estate Settlement Procedures Act (RESPA) allows homebuyers/sellers to choose their own title company, yet the title and closing process is puzzling to the average consumer.  Homebuyers devote 2-7% of the cost of their home on closing costs, most are not clear about what those costs include, who they are hiring, how much they are even spending, or why.  

Brokers often try to support their clients by referring homebuyers/sellers to a title company, but consumers are ultimately responsible for selecting a title insurance provider.

Keep in mind, when selecting a title insurance provider there is more to it than price alone. The quality and type of services provided by the title and closing company can make all the difference between a smooth transaction and one that never makes it to the closing table.

As a homebuyer or seller, you will want to ask the following questions of title insurance company

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1. Is my money safe?

Question 2 Property GuidingThe news stories you read are true: People do lose money as a result of incompetent, insolvent, or dishonest title and escrow companies. The way a title company handles its escrow funds is of utmost importance.

What internal controls and procedures do the title companies have in place to safeguard buyers’ and sellers’ funds? And, if you are a Realtor recommending the title company, would you send $200,000 of your own money to this company?

Just because a title company is small or new does not mean they do not have the controls in place to protect funds. Make sure, however, that you are comfortable with the stability and reputation of the company you select.

Realtors who ask these questions on behalf of their buyers are exercising their fiduciary duty to apply “reasonable care and diligence” to the transaction.  A reputable title company will be happy to talk about their controls for protecting clients’ funds—after all, it’s their business.

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2. Are you locally owned and operated?

There are several reputable national title insurance companies that offer adequate products and services.

However, many title companies outsource the production of the title commitment.  A product prepared locally, by local employees, offer advantages that an outsourced product cannot.

A local title insurance company knows the local real estate market, plus you’ll be supporting local employees who live and work in your communities. Local independent businesses return more money to the local economy, are more invested in its future, and give an average of 2 to 3 times greater support to local non-profit organizations compared to national firms. You’ll also find quicker response to issues as they occur, because decision-making happens locally, and their local reputation depends on excellent customer service.

Part II – coming with more questions.

Call us now at 239-415-6574 for us to answer these or any other questions you may have!!

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Posted on January 4, 2013, in Title and tagged , , , , , , , , , , , , . Bookmark the permalink. 2 Comments.

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