Do we have to use seller's title company? Possible to shop around?

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Funletter2020
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Do we have to use seller's title company? Possible to shop around?

Post by Funletter2020 »

Hi, we are 1st time home buyers purchasing through Redfin. We just signed a Purchase Agreement but did not realize that the seller's had chosen a Title Insurance Company already. Our agent never pointed this out and we have since learned that this is a service folks can usually shop around for. After we brought this up with our realtor, he said that "in this market, the seller always chooses the title company and it's not worth shopping around because that could jeopardize the seller's wanting to work with us". Does this sound right? Were we just screwed out of the opportunity to shop around for title service or is there any way to contest this?
Bigt3142
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Bigt3142 »

We used a different title company then our sellers on our home purchase this summer. No big deal using two, they do their part and yours does yours.
fabdog
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Re: Do we have to use seller's title company? Possible to shop around?

Post by fabdog »

Well, there's the title company (really acting as the settlement agent) that your seller has selected. and no, you likely can't change that.

They will offer to sell you title insurance policies (likely required by the lender) and you can also obtain an owners title insurance policy. Those you can shop for but be ready for the title company acting as the settling agency to throw up FUD (fear, uncertainty, doubt). Ask your agent for recommendations and be clear what specific service you are asking for. Depending on your location there may or may not be a range of prices for the actual title insurance

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PoppyA
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Re: Do we have to use seller's title company? Possible to shop around?

Post by PoppyA »

Why would you want to shop around? The cost is minimal….
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Funletter2020
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Funletter2020 »

I've read previously here on bogleheads and elsewhere to shop this expense as it could save several hundred dollars. Granted, not a lot in the scheme of things when purchasing a house in today's market. But the title/escrow company is charging $1,700 which isn't nothing either.
PoppyA wrote: Wed Nov 24, 2021 6:15 pm Why would you want to shop around? The cost is minimal….
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Funletter2020
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Funletter2020 »

Yes, I thought we could choose our title company but our realtor is telling us we can't. He says the title company was listed on the purchase agreement that we signed and so we are bound to that.
Bigt3142 wrote: Wed Nov 24, 2021 6:08 pm We used a different title company then our sellers on our home purchase this summer. No big deal using two, they do their part and yours does yours.
bsteiner
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Re: Do we have to use seller's title company? Possible to shop around?

Post by bsteiner »

In most states, the buyer may buy title insurance from any title company if he/she wants title insurance (or if the lender requires the buyer to buy title insurance).
linuxizer
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Re: Do we have to use seller's title company? Possible to shop around?

Post by linuxizer »

I’ve used Entitle Direct (more recently they go by Radian) on every refi and sale for 10 years. Always give the realtor’s title company a chance to match the quote. They are usually a thousand or more off. Choose your own adventure. I doubt the seller cares.
andypanda
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Re: Do we have to use seller's title company? Possible to shop around?

Post by andypanda »

Heck, when I sold my home last year I let the buyer pick the title company that closed the deal. I paid half of the $550 closing cost fee and the buyer bought his own title insurance. I also paid my buddy the lawyer $300 to advise me, handle my end of the paperwork and take it - and a voided check - to the company's office. There were no agents or mortgage companies involved and the money appeared in my checking account two days later. I could have dropped by the company after the closing to pick up a check, but I didn't mind waiting. Fwiw, sellers don't attend closings here.

But that was here and I know different areas have different rules and traditions.
Northern Flicker
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Northern Flicker »

This varies alot from state to state.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
UpperNwGuy
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Re: Do we have to use seller's title company? Possible to shop around?

Post by UpperNwGuy »

There are so many more important issues in buying a home than picking a title company. Just go with what the contract says.
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Bogle7
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Bogle7 »

Title insurance is necessary.
Title insurance is a ripoff.
Shopping does not really save that much money.
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MP123
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Re: Do we have to use seller's title company? Possible to shop around?

Post by MP123 »

It's highly variable. In my state the seller pays for title insurance normally. In any case your purchase offer probably specified the title company. I wouldn't jeopardize the deal over changing the title insurance company, especially these days.
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David Jay
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Re: Do we have to use seller's title company? Possible to shop around?

Post by David Jay »

At this point in the process [i.e. under contract], insisting on a different title company screams at the seller: "This buyer is going to be an royal pain in the keister!". It that the message you intend?
Last edited by David Jay on Thu Nov 25, 2021 10:04 am, edited 1 time in total.
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5outof10
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Re: Do we have to use seller's title company? Possible to shop around?

Post by 5outof10 »

It is the rare Purchase Agreement that will dictate where the buyer must go for title/closing services. Almost every state says it's the consumer's choice to select representation.

Your Realtor is really worthless if they didn't point that out to you while they "negotiated" on your behalf. Feel free to print this and show your Realtor.

I suspect, but do not know, that your Realtor has a relationship with the chosen title agent. Most large Realtor companies have sister companies that issue title. This is to help the organization collect more revenue from each transaction.

Remember, Realtors are financially rewarded for getting the sale closed, not for doing a good job representing you. Both Buyer's Realtor and Seller's Realtor make more money as the sales price climbs. Realtors also hate - hate - title issues delaying closing. Realtors like to use sister title companies and title companies that don't raise ("find", "uncover") title objections. Neither of which protect you.

Title issues, if not fixed now, can easily cost $10,000 to $15,000 or more, and can even cause you to lose the property.

Lawyers can review your Purchase Agreement and can examine title. They look to catch the problem before you own the problem.

Title insurance agents use past statistics to make business judgments on insuring a risk. They insure the whole pool of risk betting on fixing after-the-fact claims later. Which is fine business model for profit, unless you are the one that has the claim (which may or may not be covered, btw) and the headache.

You may want to search for an experienced real estate attorney in your area and get the correct answer of what is going on. It may be worth a few hundred dollars to get your largest purchase done correctly.
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5outof10
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Re: Do we have to use seller's title company? Possible to shop around?

Post by 5outof10 »

There is a 99.9% chance the seller doesn't care about who your title/closing agent is. Only if they are related.

Hell, buyers switch title/closing agents in the middle of a transaction all the time.

You don't send any signal to the seller, and why would it matter if you did, if you pick your own rep.

Unless state law requires the seller to choose (rare) or it's contracted in the Purchase Agreement (rare, and a worthless Realtor) then you pick.
Last edited by 5outof10 on Thu Nov 25, 2021 12:39 am, edited 1 time in total.
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RudyS
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Re: Do we have to use seller's title company? Possible to shop around?

Post by RudyS »

In Michigan, title insurance cost is determined by the state, no point to shopping. At least this was true a couple of years ago when I sold my house. But the use of a title company to run the closing is a different issue.
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Funletter2020
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Funletter2020 »

Yes, this is what bothers me so much! That our realtor never drew our attention to the fact that the agreement we signed specified a title company that we must work with, nor called out that we could negotiate this and push back to select the title/escrow company of our choice. As first time homebuyers, this was not clear to us at all.

I pushed back a bit to the realtor, who is now telling me that we can shop for this service (title/escrow) but that if we switch, we will loose all the "pre-work" the existing title company has already done, and this could add a week to closing.

Part of me agrees the realtor is worthless and we should push back to select our own title company, and part of me agrees with other folks who have pointed out this isn't worth the fight. I'm still not clear on what the potential risks are of annoying the sellers if we decide to select our own company -can they decided to walk? (I don't see how if we've signed a purchase agreement). Could we loose our earnest money if we don't close on time?
5outof10 wrote: Wed Nov 24, 2021 10:28 pm It is the rare Purchase Agreement that will dictate where the buyer must go for title/closing services. Almost every state says it's the consumer's choice to select representation.

Your Realtor is really worthless if they didn't point that out to you while they "negotiated" on your behalf. Feel free to print this and show your Realtor.
5outof10
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Re: Do we have to use seller's title company? Possible to shop around?

Post by 5outof10 »

You need a experienced real estate lawyer licensed in your state to review your Purchase Agreement and give their counsel. Any statement by someone on here is almost certainly conjecture.

They should be able to tell you whether the Realtor did anything to violate your state's Realtor laws or ethical rules. Perhaps the Realtor has to own up to their actions and would be responsible for the first title company's costs. Or for the costs of extending the closing date.

Practically speaking, did you hire the first company? Or did the Realtor? Based on the Purchase Agreement you signed?

The Realtor says you will lose a week, but will you? What does your preferred attorney/title agent say about turnaround?

What did first title company do already? Order 40-year searches from a 3rd party abstracting company? If so, don't you own the results of that search?

I just find it hard to believe a seller gives two rips about your choice of title/closer. Can your Realtor "negotiate" on your behalf and ask for that term to be switched.

Remember, Realtors are paid for deals closed, not for doing client service.

Again, you may want to have an experienced real estate attorney licensed in your state review the Purchase Agreement.
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5outof10
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Re: Do we have to use seller's title company? Possible to shop around?

Post by 5outof10 »

I had a typo in the first sentence of my post that included 99.9% in it. I added "doesn't care".

If the Realtor is now saying you can shop, it makes me wonder if it was in the Purchase Agreement at all.

If it wasn't in the Purchase Agreement, and the Realtor just shipped you there, I'd be interested in hearing why the Realtor chose that one - and without your consent.

Likely given: I use them all the time because they do a great job closing on time, never any hiccups. Really great people. Really care.

What you want to actually hear: I use them all the time because they do a great job catching title defects and fixing them in a timely and cost efficient manner, very rarely do I have a buyer that uses them go on to later sell a property only to find out there is a title defect that was missed at the time of the purchase and now they have to pay to fix it.
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celia
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Re: Do we have to use seller's title company? Possible to shop around?

Post by celia »

This is a state-dependant question.

Sometimes one party (buyer or seller) has a reason to use a particular one. And you can negotiate who to use if you both have to use the same title company (like in CA). Escrow company is also negotiable unless your state says you can each chose someone different (which sounds ridiculous to me, when you could split the fees in half).
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Funletter2020
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Funletter2020 »

According to the realtor, the sellers selected the title company. That supposedly in this "fast paced" market, it is common for sellers to take care of the preliminary stages of the title insurance steps prior to listing.

The purchase agreement that we signed stated the name of the title insurance company and the closing agent. Again, we didn't realize what this was and that it's not actually common for this to be filled in with the seller's chosen company.

Practically speaking, I'm not 100% sure who "hired" this title/closing company. We now understand that we signed the agreement listing this company, but we certainly didn't actively choose them. I don't actually even understand what product we're getting (the company sent us a "commitment" letter specifying the policy is a "ALTA HomeOwner's Policy (12-02-13)".
5outof10 wrote: Thu Nov 25, 2021 12:37 am
Practically speaking, did you hire the first company? Or did the Realtor? Based on the Purchase Agreement you signed?

The Realtor says you will lose a week, but will you? What does your preferred attorney/title agent say about turnaround?

What did first title company do already? Order 40-year searches from a 3rd party abstracting company? If so, don't you own the results of that search?
5outof10
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Re: Do we have to use seller's title company? Possible to shop around?

Post by 5outof10 »

celia wrote: Thu Nov 25, 2021 12:57 am This is a state-dependant question.

Sometimes one party (buyer or seller) has a reason to use a particular one. And you can negotiate who to use if you both have to use the same title company (like in CA). Escrow company is also negotiable unless your state says you can each chose someone different (which sounds ridiculous to me, when you could split the fees in half).
+1
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Re: Do we have to use seller's title company? Possible to shop around?

Post by 5outof10 »

Your state/market is very, very different from mine.

Purchase Agreements here say seller wants nothing to do with title exam, buyer title insurance services, buyer closing, etc. All costs and selections are buyer's. That way if it doesn't close then seller holds the house, owes nothing for title services, and then can move on to the next buyer.
EF: 20% Interest Checking, 80% VTEB in Taxable | Retirement: 72% VTI, 18% VXUS, 10% BND | I would like to own a gold bar one day, to be able to say I own a gold bar.
5outof10
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Re: Do we have to use seller's title company? Possible to shop around?

Post by 5outof10 »

Having the same title company rep the seller and the buyer may be a conflict of interest. Many states would require both the buyer and seller to receive a conflict of interest notice and both sign a dual rep waiver before the title company can work on both behalves. Is this true in your state? Wouldn't your Realtor, the one that is being paid to look out for your interests, advise you to have your own title company/attorney looking out for you?
EF: 20% Interest Checking, 80% VTEB in Taxable | Retirement: 72% VTI, 18% VXUS, 10% BND | I would like to own a gold bar one day, to be able to say I own a gold bar.
invest4
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Re: Do we have to use seller's title company? Possible to shop around?

Post by invest4 »

Unfortunate. I wouldn't give much more energy to this and instead look forward and enjoy your new home.

In my view, the real-estate agent adds a lot to the costs of the transaction, but relatively little in the way of real value. In the future, your money is better spent on a real-estate attorney.
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jfn111
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Re: Do we have to use seller's title company? Possible to shop around?

Post by jfn111 »

A of of real estate transactions seem to involve local customs. Here in MN, with the exception of some auction and new construction sales, the sellers pick their Title Person (Closer) and the buyer's pick theirs.
With Covid the sellers pre-sign and the final paperwork and key transfer is done at the buyer's title company.
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Eagle33
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Re: Do we have to use seller's title company? Possible to shop around?

Post by Eagle33 »

In our state the buyer's agent writes the offer that becomes the contract. So the title company in this contract is the buyers choice, though sellers can negotiate a different title company during the negotiation phase to final contract agreement. Personally I would rather spend a couple extra bucks now to know the title company did a deep dive into title search and has a great reputation for no future problems with title.

Of course the buyer's may have a financial incentive to use a specific title company, so ask your agent what financial gain he may receive from using this title company. The agent may not be paid as part of this specific house closing, but an annual benefit based on number and volume of transactions when using this company.
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