When I began selling homes in Los Altos 15 years ago, a consumer’s knowledge of the Title Insurance product was relatively low. Today, that level of knowledge isn’t much better. What I have found is that the consumer assumes that the cost of title insurance is somehow fixed and rather than investigate, they take the recommendation of their agent.
Taking the recommendation of your agent is not a bad thing. In fact, the consumer should rely on their agent. After-all, that is (in part) why Seller’s hire a real estate professional in the first place (because we have experience and knowledge related to buying and selling residential real estate). A problem can occur if the agent hasn’t investigated and compared the costs of title policies.
Picture courtesy of Title Insurance Panama
Since there are at least half a dozen title companies in Los Altos, how do agents choose a title company for their client? More often than not, the title company is picked based on the relationship between the agent and title representative. This can be good, but it also can be bad.
As a Realtor, I want a title company to be responsive. Having a good relationship with my title rep can make it easier to get things done for my client. Conversely, if the agent hasn’t checked the fee structure out, the client may pay more for title insurance than necessary.
In Santa Clara County, the Seller pays the title and escrow fees, the Buyer pays the lender’s policy. In San Mateo County, the buyer pays the title and escrow fees as well as the lender’s policy.
I recommend consumers go to the California Land Title Association web site to get a better understanding of title insurance, to understand what is covered in a title policy and lastly, to compare the costs between the different title insurance providers.
I did a quick comparison of title fees amongst Los Altos Title companies using using the CLTA’s Title Wizard. I wanted to get an estimate as if I was a Seller of a single family home in Los Altos. The other parameters that I used are below:
Purchase price - $1,750,000
Long term rate - Haven’t purchased or re-financed in last 5 years
ALTA/CLTA Homeowner’s policy
THE RESULTS:
Cornerstone Title and First American Title were the least expensive at $3,291.00
Stewart Title was next at $3,370.00
Old Republic Title was next at $3,487.00
Fidelity National Title and Chicago Title were next at $3,775.00
North American Title was next at $4,268.00
Several of the companies are within 3-4%, but if you compare the lowest with the highest, there is almost a 30% difference ($977.00). You can run this analysis as a buyer as well. However the fee difference for a lender’s policy is minor.
Note: In an effort to disclose fully (that whole transparency thing), I have my real estate license housed at Coldwell Banker which has a financial interest in Cornerstone Title. However, the analysis was done by a third party, the California Land Title Association which is not affiliated with Coldwell Banker (at least not that I’m aware of).
If you are buying and/or selling a home and want to save a little money on your title policy, a quick check online can help you understand the fees. If it were me, I would contact the title company and have them give you a written estimate of the fees up front. It could save you money in the long run.
2 responses so far ↓
1 Mary Pope-Handy // Aug 27, 2008 at 8:59 pm
Great post with excellent information! A few years back I did a spreadsheet that also included escrow fees. (in addition to the title insurance costs). I found that some companies were better for buyers and others for sellers because of the inclusion of that escrow fee.
I’ll check out your link. Sounds like it could save me some time in the future!
2 Frank // Aug 28, 2008 at 6:13 am
Listening to your Realtor is good advice but only if your agent is not getting something of value for the referral (or at least the agent should disclosure the fee arrangement.) While an ownership interest must be disclosed in Colorado it is not alway and then often in the ‘fine print.’ Also, in Colorado, it is unfortunate that some title companies pay ‘bonuses’ for referrals this too is illegal.
You should ask your Realtor straight if out what relationship they have with the recommended title company and why they are recommending them. As the seller, in Colorado, you are paying the majority of the title fees and have the choice of title companies. Do not be afraid to shop around if you are uncomfortable with the recommendation of your agent. As the Buyer you have rights under RESPA (the federal law governing real estate closings) to choose the title company.
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