I recently read an article in the newspaper, talking about the new forms that are arriving soon from the Consumer Financial Protection Bureau, advising both buyers and sellers in real estate of their right to shop for title insurance. The article talked about how important it was for Realtors and Lenders to notify consumers about their right to choose their Title Company, to shop for competitive rates, and to watch out for shady arrangements between the Title Companies and Realtors or Lenders. Past that, the article didn’t get much of anything else correct about the title business and failed to mention what consumers really should be paying attention to.
What you really need to know.
1) Not all title companies are created equal. Get a bad title company and they can screw up a real estate transaction in a New York minute. I had a deal just like that because the sellers chose their own title company against our advice. That Title Company was the worst I had ever seen in all the years I had been in real estate. It would take too long to list all the problems and errors that they had made. Yes the deal got nasty with yelling, screaming, accusations, lawsuits threatened, and earnest monies put in jeopardy. I tell the story to my clients all the time because it’s important to pick the RIGHT Title Company. NOT THE CHEAPEST Title Company, but the BEST Title Company.
2) The article talked about how title rates and closing fees varied wildly. That’s just a bunch of bunk. If you look at the top three most reputable title companies in Colorado, their title rates will all be within a few hundred dollars of each other. Do you really want to haggle over 200 or 300 dollars when it comes to closing the largest monetary transaction of your adult life? Yes, you can hire ACME title services to close your sale and issue your title policy because they were the cheapest in town, but don’t be surprised when something bad happens to the deal. You really do get what you pay for.
3) Last time I checked, Service was a big deal with consumers such as closing a loan in another state, needing a notary to bring closing documents to your out-of-town hotel, and needing someone to prepare documents that are fairly work intensive or a complicated transaction. Let’s see if cheap ACME title services do all of that or better yet, do it as well as the big boys in the title insurance space.
4) How about peace of mind? The article was warning consumers about Realtors or Lenders getting kickbacks from title companies. I have been in the business a long time and I can’t name a company, Realtor or Lender that was accused of doing that in Colorado. I am not saying it hasn’t happened, but I am sure it was few and far between. What consumers really need to worry about are title companies embezzling consumers’ money. If you subscribe to Google alerts, you can see that headline in your inbox about twice a month. Another reason not to pick the cheapest Title Company, but the best.
I could go on and on with more examples of how the article missed the boat, but I’ll finish with this. The last thing this country, the real estate industry, or the average consumer needs is more regulation or yet another disclosure. The pendulum has swung too far in the other direction. We don’t need more regulations for everyone to succeed; we need less. No reputable Realtors that I know of are trying to steer consumers to a particular title company to get rich. Realtors are recommending a particular title company because they know that Title Company is good, reputable, and will serve their clients well. Consumers have always had the right to choose their own title company and will continue to do so in the future with or without yet another disclosure.