We’ve made our way to the D.C. side of Chevy Chase to see about a wonderful home filled with lots of light, charm and character. It’s listed for $935,000.Featuring 3 BR / 1.5 BA and a bonus room, this detached single family home also offers lots of room to grow: walk-up attic, unfinished basement and studio in the back yard. A lovely sunroom overlooks a terraced garden and deck for cookouts and entertaining. Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $213,782.36. Monthly payments will then be around $4,432.84. For a complete picture of cash-to-close, including the seller’s net proceeds from this home-sale scenario, check out the Close It! Web version or download the free Close It! iOS app.
Most homebuyers know by now that it’s their legal right to choose their own title company and that shopping for title services is one of the most effective ways to reduce costs at the closing table.
(For those who haven’t heard this, read our content on Marketing Service Agreements and Affiliated Business Arrangements and see for yourself how these common deals jack up closing costs for consumers.)
But what happens if a homebuyer doesn’t learn about this important right until after her sales contract has been drafted, accepted and signed by all parties? And is it possible to change title companies once a title company has been designated in the contract and an earnest money deposit has been delivered to that designated title company?
The short answer is you can change your mind with the consent of the seller, through a simple addendum to the sales contract. View our a settlement agent-change sample addendum.
Once the addendum is completed and signed by all parties, the homebuyer can then use the new title company listed on the addendum.
Even if the earnest money deposit was already delivered, with the addendum in place, the new title company would simply reach out to the old title company holding the funds and arrange for a wire transfer. That’s it!
How might a homebuyer find herself in a situation where she wishes to change her company after all parties have signed a sales contract with a designated and undesired title company?
First and foremost, we encourage every homebuyer to get closing cost quotes from several local title companies and compare costs and online reputations to avoid this situation. We also remind homebuyers that title companies don’t necessarily include all the same services in their settlement fee. Sometimes additional services, i.e., document fees, processing fees, amount to hidden costs, so it’s important to ask what services are included and what extra costs may be charged.
And while it’s technically illegal for real estate agents to fill in the name of a preferred title company if their brokerage has a professional affiliation with that title company, the practice persists. In these cases, homebuyers may not realize until after they have a ratified sales contract that they could have chosen their own title company.
It’s important to ask your agent if his company has a professional affiliation with the title company he’s listed in your sales contract and what benefits or incentives the real estate agent or brokerage may be receiving by recommending that title company. Sometimes the answer is there is no affiliation; the agent is familiar with a certain company and recommends that company from the perspective of good service and pricing.
There’s nothing inherently wrong with an agent directing their client to use their favorite title company, except that it may lead a homebuyer to falsely believe she does not have a choice, or once a title company’s name is written into the contract and that contract is ratified, the decision is set in stone and the title company can’t be changed.
A homebuyer maintains a right to choose her own title company and also has the right to change her mind and choose a different title company.
This isn’t an invitation to change title companies several times prior to closing or to change for no good reason. Keep in mind any addendum to a ratified sales contract must be signed by all parties, including the sellers. You may risk delaying closing, annoying your sellers or even causing your deal to fall through by abusing your right to change title companies after you have a ratified sales contract.
We put this post together specifically to help those who learned after the fact they could have chosen their own title company and would like to exercise that right. Two primary reasons a homebuyer may choose to change title companies might be she’s found a title company that charges lower prices and/or provides better customer service than the company initially listed on the sales contract.
Several real estate agents and lenders who work with Federal Title recently received an email purporting to be from a Federal Title employee with the same name as a local real estate professional and with a file attachment for download. The email is a scam, and we implore you to delete the email immediately.
If you ever have questions or concerns about an email you received from Federal Title, please do not hesitate to contact us to verify its authenticity. Also, know that we will never ask for or provide personal / financial information through unsecure channels.
Our technology team suspects the email sent last Thursday at approximately 6 pm was a malware attack. Malware is software that’s intended to damage or disable computers and computer systems.
A malware program might log keystrokes of a user to obtain sensitive login information. Malware can create a computer zombie, allowing a hacker to use that computer to conduct other malicious attacks usually without the owner’s knowledge. An estimated 50 to 80 percent of spam sent worldwide is attributable to zombie computers.
This is not the first time a hacker has impersonated a title company, real estate professional – even a consumer – in an attempt to install dangerous malware or gain access to sensitive information. We want our clients to be aware of another common scam we have observed, one that attempts to steal the consumer’s down payment funds via a fraudulent wire transfer. This kind of attack is unfortunately becoming commonplace, and once the funds have been wired to the scammer’s account they are gone.
The Federal Trade Commission posted a bulletin that explains how scammers phish for mortgage closing costs. They offer a few ideas to help real estate professionals and their clients avoid phishing scams.
- Don’t email financial information. It’s not secure.
- If you’re giving your financial information on the web, make sure the site is secure. Look for a URL that begins with https (the "s" stands for secure). And, instead of clicking a link in an email to go to an organization’s site, look up the real URL and type in the web address yourself.
- Be cautious about opening attachments and downloading files from emails, regardless of who sent them. These files can contain malware that can weaken your computer’s security.
- Keep your operating system, browser, and security software up to date
We also want to remind you that Federal Title takes Internet security very seriously. We use military-grade email encryption technology and adhere to the American Land Title Association’s Best Practices for the proper handling of each and every individual’s non-public personal information, i.e., social security and bank account numbers.
Unfortunately we anticipate malware and phishing scams will remain a threat to our industry for the foreseeable future. The best way to defend against such attacks is to be skeptical of any email that contains an attachment download or requests sensitive information – and always exercise extreme caution when providing sensitive information online.
We've said it before, and we want to make it absolutely clear because we continue to get questions about title insurance premiums. Title insurance premiums are NOT created equal.
While you no doubt have heard that title insurance underwriters are legally required to file their rates with the local insurance commission, underwriters do not file identical rate schedules.
It is true that title companies who are agents of the same underwriter must charge the same title insurance premium. But sometimes title companies become agents of multiple underwriters, using one title insurance underwriter for one jurisdiction and a second underwriter in another jurisdiction, etc.
Federal Title is a prime example of this. We use different underwriters depending on the jurisdiction, allowing us to pass extended savings on to our homebuyers.
We receive calls fairly regularly from confused agents, lenders and consumers who are wondering why our Quick Quote reflects a title insurance premium on a Maryland property that is hundreds of dollars less than the other quotes. It's not because our quote is incorrect, it's because our underwriter charges a lower premium.
That title insurance premiums are created equal is a common misconception we wish to clarify for our agents and lenders as well as consumers, because we believe they are our best ally when it comes to looking out for the best interest of our homebuyers.
Happy Pi Day! What better day than Pi Day to remind homebuyers about all the hands in their "pie" so to speak when it comes to real estate closings.
It's no surprise that everyone wants a piece of the proverbial pie, from the real estate agent's commission to the lender's fees to the government's taxes and, yes, even the title company's charges.
Having to share some of your pie is a fact of life. Having to give up all of your pie is a tragedy of life.
Just like homebuyers, we don't like having to give up our entire pie. That's why we have held firmly as an independent title company – we will not share our pie, or profits, with referral sources through Affiliated Business Arrangements or Marketing Service Agreements.
Not all title companies feel the way we do. They happily share their pie with their referral sources because they believe they can make it up by taking more pie from unassuming homebuyers. Unfortunately, they are often right.
Homebuyers who understand how much dough is at stake, however, are often surprised by the cost difference between one title company to the next. When made fully aware of these differences, most homebuyers choose to spend less.
With fewer hands in the pie, as our company founder Todd Ewing likes to say, there's more pie for everybody. In this case it means a cost savings of up to $750 for our clients.
The cost savings we extend to our homebuyers is part of our revolutionary REAL Credit™ program, which reflects costs passed through to consumers who close with other, affiliated title companies. To date, the cost savings hovers above $8 million.
That's a lot of pie.