Law statutes provide that when you buy or sell a home, an independent third party must perform the escrow and closing. Many homeowners and buyers let the Realtor and/or Lender choose the title company, however The Real Estate Settlement Procedures Act (RESPA) allows homebuyers to choose their own title company. Here are a few questions to ask before choosing a title company:
- In addition to the policy fee, what are your other fees/charges and are your rates filed with the Division of Insurance?
Title companies must use their filed rates and should not deviate from those rates. Be careful if a title company’s rates are much lower than the market rate as that may be an indicator to look more carefully at what the title company is providing and whether they are complying with The Real Estate Settlement Procedures Act (RESPA).
- Is a thorough title search done and are exceptions disclosed?
Make sure the title company has title experts that complete extensive public record searches and actually provide the recorded documents for each exception. You might ask to see a sample title commitment so you can see what the title company actually reports from its search.
- Is the title company locally owned?
Local employees typically will know the local real estate market better than companies that outsource overseas and will be able to perform a more thorough title search since they are familiar with the area. In addition you will usually get excellent customer service and will be supporting a locally owned business in your community.
- Is my money safe?
People can lose money because of dishonest and incompetent title and escrow companies. Ask your realtor and others in the real estate industry who they would trust to handle their money. Talk to the title company. A reputable company will typically be glad to discuss how your funds would be handled.