Saturday, July 26, 2008

REOs - Contract to Close Pt1

It's taken you months, learning the market, looking for homes, perhaps putting in offers and being rejected, nervously signing the bank addendum, and, after all this time you finally have a ratified contract. Congratulations. So long as you know what to expect from this point, you're on easy street. If it's not already done (or even if it is), the first thing to do is select a title company (in Virginia, this is also known as the settlement company or closing company). This small post is on the title insurance company. Most banks want you to use their title company. Sometimes they try bullying you into it, sometimes they attempt to entice you into it by offering free owners title insurance. If you are scraping pennies together to settle, you might decide to take their offer. Otherwise, in general, I encourage you to hire your own title insurance agent. Why? Several reasons... In general, when your agent selects a title company (or if you do enough real estate business you know one you like), the company is being chosen based on performance, timeliness, honesty, communication, fairness of fees, and service. Sometimes brokerages have an affiliated business relationship with a title company (if so, they must disclose this to the consumer). True, the brokerage (occaisionally the agent, but usually just the brokerage office) gets some financial benefit from referring business to a particular title company. However, that brokerage could have formed that relationship with anyone - they picked this title company for a reason. If the title company was not performing well, your agent would not take you to that title company. Of this, I feel certain. The bank owners of REOs form relationships with title companies, too. But, it is not based on service. It is based on price, and some internal grading scale, and sometimes just a fluke. They flood these title companies with work, way more than most can handle. However, in order to make a profit, they must do it with volume of work. So, they are, quite honestly, too busy to pay attention to your little case, and they certainly do not care if they please you or your agent throughout the process. When you choose your own settlement agent/title company, you won't completely avoid being impacted by the seller's title company, however, you'll have one more agency in your corner, working to see to it that the deal closes, per the contract, as it should. Read this memo from a local attorney. He'll tell you the legalities behind your ability to choose your own agent, and he's offering to sue, on your behalf, if you've been bullied or coaxed into using a title company of the sellers choosing... It's worth a read.
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