When I started out as a Realtor, lo those many years ago, I had zero opinions about title companies. I was too busy learning the 10,000 other things I needed to know to be effective. With subpar experience in marketing, negotiating, and troubleshooting deals, I had much bigger fish to fry. At least, that’s what I thought.
When a deal came together, I did what everyone else does. I let the lender, the buyer, or the buyer’s agent choose the title company. One less thing for me to worry about. And, as far as I knew, all title companies are about the same, right? Turns out, that assumption was not only incorrect but costly. After reviewing my first few deals, it became clear that I needed to grab the reins of the title company choice. Either that or hang up my spurs.
Ever since I struck out on my own, my entire business model has revolved around three things: Unmatched service, unparalleled advice, and unbelievable savings. Lots of real estate companies have one or two of those qualities, but very few provide all three consistently. No–my little family firm is not perfect, but we do work our collective fannies off every day to deliver that standard. So why was I allowing other people to make choices that impacted my sellers and my reputation? Good question.
The startling moment came when I noticed that the fees each title company charged were not at all consistent. Some were charging several hundred dollars, while others were charging several thousand dollars. Additionally, there were huge swings in follow-through and communication. It was time for a new plan.
Welcome to “The Three S’s of Choosing a Title Company.”
I would copyright that name, but I don’t think people are lining up to steal it. I could be wrong, but I digress. If you’d like to check out the video for this topic, you can find it here.
There are three critical factors sellers need to consider when selecting a title company. They are, in no particular order, savings, service, and security. Here’s my take on these factors and why each one is important to any home seller.
Savings is easy to grasp.
Our firm handles home sales across every market in Ohio, so we see how things are done in every pocket of the state. Let me tell you–there are some crazy fluctuations in fees from town to town and among the various title companies. In our experience, people don’t usually question the title fees until the 11th hour, meaning the day or two before closing. By then, the train is almost at the station, and with the finish line in sight, they’re afraid to rock the boat, so they stay quiet.
Naturally, if there is a mistake, sellers will question it. A popular tactic is to push back on the title insurance policy cost and the property taxes. But those fees are not likely to change since title insurance rates are set by the State of Ohio and uniform for all title companies. And property taxes are a matter of public record. Often misunderstood and confusing, but the title companies are generally good at explaining these costs, and only rarely do we see a legitimate mistake, but it never hurts to ask.
But that’s not what I’m talking about. I’m talking about actual fees charged to the seller by the title company. These fees ordinarily show up as one of the following: title exam, deed prep, settlement process, notary, title commitment, and various recording and wiring fees. There may be others, and the names may differ, but these are the usual suspects. While the fee names may be pretty standard, the fee amounts tend to vary wildly. The secret is to investigate them before you choose a title company and do this before you list the house.
Since it’s entirely likely your house will sell, there’s no reason to wait to make this decision.
As you narrow your list of potential title companies to a few, ask each title company for their fees before your house hits the open market. Don’t wait until the clock is ticking on an offer. If you wait to decide on the title company while an offer is being negotiated, you might be too busy or too emotional to dig into this. But here’s the crazy thing. I’ve seen sellers go nine rounds with a buyer over a $500 piece of furniture. I’ve had sellers who were ready to burn the contract during inspections because the buyer asked for a cracked window to be fixed. We’ve watched numerous deals come apart over less than $100. I know–crazy.
Yet every day, sellers allow the title company selection to go unchecked and end up paying many times these amounts because they didn’t do their homework. But…not you–you’re smarter, and you’ll do the right thing. I won’t bother giving you examples or ranges for title fees here because A) I don’t know where you live or anything about your house, and B) I don’t know when you will read this. Just know that you can and should ask for ALL fees upfront. Seriously…ask, “Is this everything that will be on my settlement statement from you?”
Also, keep in mind that the title company selection is 100% negotiable–no matter what anyone else tells you later. Agents and others may tell you that “in the XYX market, the buyer always chooses the title company.” Everything that’s legal is negotiable, so just because it’s a tradition doesn’t mean you can renegotiate. If the buyer wants the house badly enough, they probably won’t care where the title work is done–but you should.
That being said, if you sign the offer before selecting the title company, changing that selection later becomes much more difficult. Normally, to get it changed after the deal is signed means you’re going to have to give up something the buyer wants. Better to nail this before you sign the purchase agreement.
Service is exactly what you think it is.
How is the title company when it comes to things like communication, accuracy, staffing, experience, technology, and the like? Here are some examples:
- Are they friendly, or are they cold robot people?
- Do they explain things and answer all of your questions, or do they make you feel dumb?
- Do they make tasks and document signing easy or hard for you?
- Do they care about your schedule, or do they insist you work around theirs?
- Do they make you come to the office, or will they come to you for closing?
- Do they return calls and emails promptly, or do they ignore you and only talk to your agent?
- Do they close deals on time, or are they known for “unexpected delays”?
- Are they working for you, or are they affiliated with the buyer’s agent?
Give them a call and see how they respond to your probing questions. If you don’t explore this ahead of time, you’re leaving this process to chance. I hate leaving things to chance unless I’m actually sitting in a casino with a cigar and a beverage. Otherwise, I prefer to know what’s around the corner. Do some research on service because bad service is nearly impossible to hide these days thanks to the interwebs.
Security is perhaps the most important and yet most ignored aspect of choosing a title company.
There are a handful of things that can go horribly wrong during a real estate closing. Lots of money and personal information is being batted around, which opens a very real door to fraud and other such shenanigans. Your mortgage, escrow, and taxes all have to be paid and certified. Your name, birth date, and social security number are all going to be requested by the title company. Most importantly, the proceeds of your sale will be wired to you at some point, so you’ll need to turn over your bank account information.
This should scare you. When it comes to security, I’m just going to say that if the title company is asking for all this information over the phone or in a standard email, you should be terrified because, year after year, people continue to get burned.
According to the FBI, roughly $1 Billion dollars in seller proceeds gets diverted to underworld criminals every year.
Title companies who take this seriously have highly secure information portals (fancy websites) that require you to log in through a secure link. Information is not only secure, but there are digital walls set up to keep sensitive information from falling into the wrong hands. For example, when you have to turn over your wiring instructions, that information is not accessible to the buyers or the buyer’s agent or, frankly, anyone who shouldn’t have it–even other people at the title company.
I’ve lost count of how many times I’ve been inadvertently copied on emails with very private information about clients (sometimes not mine). If I’m getting this data by accident, how often do you think other people get it? Food for thought. And these are just examples of innocent mistakes. This doesn’t begin to address the number of nefarious criminals out there who are actively trying to intercept your personal data.
The point is, before you select a title company, ask them about their processes, technology, and security. If the title company is any good, they will proudly explain how they address these matters. If they are not secure, you will get platitudes and cliches like, “Oh, we take security seriously” and “You can rest assured we will protect your information.” Yeah…that’s great, but HOW will they do that? What software and methods do they employ to guarantee security?
How about some free advice?
Alrighty…now that I’ve given you a dozen more reasons to lay awake worrying about selling your home, let me give you some very easy advice to follow. Ask your agent about the three Ss before you make your decision. Presumably, you chose your listing agent because you trust their advice. If not, you need to seriously reconsider your choice, but that’s a topic for another day. But either way, for the love of Pete, make your title company decision before you market your home. Investigate service and security and compare rates.
Look for competitive fees. They don’t have to be the cheapest – in fact, the best usually aren’t. But, as they say, don’t step over dollars to pick up dimes. Because if service and security are above the line, there’s no earthly reason to pay more than a competitive rate. Savings, service, and security are equally important when choosing a title company to close your home sale. Don’t sacrifice any of the three.
If you live in Ohio and you would like a detailed custom “Seller Net Sheet” and title company recommendation, head over here and ask for it. Knowing what your property will sell for is one thing–knowing what you’ll have when the dust settles after closing is another. Avoid closing-day surprises. Knowledge is power, amigos, and free knowledge is even better.
On the other hand, with the current market fluctuations, maybe you just want an update on what your property is worth. We can help you. For a free 10-20 page report specific to your property, grab yours here right now. Even if you think you already know how much your house is worth, you can’t possibly have too much information when pricing your property.
If you have questions about this topic or any others, raise your hand. Hit me up HERE anytime with your thoughts, questions, and comments. I read and respond to every email…eventually.
Broker / Realtor
Ohio Property Group, LLC
Author: “You Can Sell It”
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