Not all title companies hate technology
I came across an article in Forbes today entitled "Why Title Companies Hate Technology."
At Federal Title, we love technology! We worked pretty hard around here to develop our consumer-friendly automatic quote software and then dove head-first into the world of Web 2.0 when we re-launched the Federal Title website earlier this year, so seeing a headline like that was certainly alarming.
Author Lee Gomes asks if a homebuyer can immediately access his credit score online, then why isn't there an online database where he can access land records and research his own title? Well, Mr. Gomes, if I can access my credit score online, why isn't there a database where I can access and interpret my own X-rays?
It's a conspiracy, according to him, where title companies are deliberately blocking the progress of technology because they stand to profit more from the current, "antiquated" system. His theory is that title companies have "enormous political clout in state capitals," and consequently the consumer is trapped into paying upward of $1,100 in closing costs. (It should be noted the bulk of the costs go toward the policy premium, not title services.)
Personally, I don't see how a credit score and a title search is an apples-to-apples comparison, as Todd likes to say. A credit score involves no legal interpretation whatsoever. Meanwhile, there's a whole glossary of terms that relate to the title search and settlement process.
Sure the title claims rate may be 1 out of 100 annually, but how does that support the opinion that we no longer need title companies? What Gomes fails to recognize is that issues arise during the title search far more frequently than that – more like 1 out of every 3 title searches, according to ALTA.
If potential title clouds appear during 33% of title searches but title claims are only made 1% of the time, that's evidence to me the system is doing its job.
Furthermore, many title companies are embracing technology because they recognize its potential to cut operating costs, a savings that's passed along to the consumer. That was the whole reason Federal Title developed its custom quote software.
The Internet is a great resource for house hunters, but it's not a substitute for professional or legal advice. Foregoing legal assistance to save a couple thousand in the homebuying process could actually wind up costing a whole lot more should a claim arise.
It may not be rocket science, but there is more to a title search than the eHow article suggests.