Get what you pay for with national 'bargain' title service providers
Some are opting for a national title company to handle their real estate closing as opposed to a local title company, being led to believe they can receive the same settlement services at bargain prices.
This is simply not true. It's just another example of that old adage "you get what you pay for" and there are couple flaws in this thinking that I'd like to point out.
What you get for these bargain prices is a title service provider that is unfamiliar with local customs of the subject property. The bargain title service provider is not accountable to its community for the purpose of business referrals either – because the provider is located hundreds of miles away, usually in another state.
Can a homebuyer really rely on a national settlement service provider to possess the same knowledge of the ever-changing local customs as a local title company? In some cases, such as DC Homestead Deduction, the forms and requirements have changed more than once in a single year!
What's more, our office frequently discovers failed recordings and unreleased mortgages/liens among the local land records that were the responsibility of said bargain title service provider, which leads to hardship for the new property owner(s).
Chances are the homebuyer who originally hired them may either never know of the created problem or, like many homebuyers, they will not need to title services again so why worry about repeat business.
When issues have arisen in many of these cases, our office or the property owner will make a request that requires remedial action – the response is highly delayed, if there's any response at all.
A national company doesn't have the same local market pressure to take immediate action.
It's true you may save some upfront costs since the bargain provider's rates often exclude a portion of the commission that otherwise is typically paid by an underwriter to the local title company. But I'd like to highlight a few reasons why the local title company receives this commission. But I'd like to highlight a few reasons why the local title company receives this commission.
1) Time – It typically takes 2 hours to order and review title & survey (when applicable)
2) Expertise in local laws – A local title agent possesses the knowledge and know-how to clear title issues prior to closing (i.e., unreleased mortgages/liens, gaining proper signature authority from sellers of entities/estates/trusts, and proper compliance with local recording requirements and affidavit filings)
3) Expertise in local customs – A local title agent understands local/regional sales contract requirements in relation to title matters.
4) Shared liability for Errors & Omissions – Responsible for failures or defects of title caused by negligent title examination/review, meaning if something goes awry the title company is on the hook for the losses.
At Federal Title we're practically blue in the face from all the preaching we do about shopping for title insurance. And for the homebuyer, part of the process includes understanding exactly what services she is paying for (and just as importantly what services she is not paying for).
- DC zoning changes in the works
- How changes to FHA loans could impact you
- Round-up of recent changes to DC metro area transfer, recordation taxes
- Changes in store for GCAAR Regional Sales Contract
- How VA funding fee changes may impact you
- DC Homestead Application changes ... again!
- What do TILA changes mean for lenders, title agents?