Pros and Cons of using sellers title company?

Question

So I've noticed something while scouring through numerous amounts of listings online. I've seen quite a few properties that require the buyer to use the sellers title company? What are the pros and cons of this?

Steve Babiak · Answer

Maybe some of those sellers had a closing like one of my flips from a few years back. Buyer insisted on using closing agent they selected rather than one I suggested that was actually closer to where the buyer lived (and the one I suggested was also closer to the property being sold). It was January, snow and ice coming down, and we're rushing for a 9:00AM closing. So we're at the closing table and buyer's lender had not yet wired funds. We're on east coast, lender is on west coast, and nobody is going to wire funds until at least noon east coast time. Waste of half a day due to letting buyer pick closing agent; my closing agent would have scheduled for the afternoon or gotten the wire ahead of time.

Mindy Jensen · Answer

@Bryan Bacallao, I would ask the seller why they chose that title company. Perhaps they do have experience with them and know they will do a great job. Maybe their sister's best friend's boyfriend's brother's girlfriend works there, and they promised her they would use her.

After you have done this in the same area for a while, you get to know who is good and who is not. In my state of CO, the contract has the option to either use the seller's title company (and then gives a blank space for it to be written in) or use the buyer's title company that the buyer pays for. A way around this is to write into the Additional Provisions " Re: (appropriate section of contract) Seller will select XYZ Title Company to provide the title commitment, title policy and closing services. All other provisions of this (appropriate section of contract) remain the same." The buyer is effectively choosing the title company, but the seller still foots the bill.

Taking a note from @Joel Owens, no legal advice given.

Ned Carey · Answer

An experienced seller will know which is a good title company to use (see @Steve Babiaks post) I prefer to chose my own whether I am buyer or seller because I know reliable ones that I trust. If I am selling to an experienced buyer I will often let them chose because they will know good ones also.

Now the above applies to investor to investor deals. Many banks will require you use their title company. it may be worth having your own look over the work.

Charlie Fitzgerald · Answer

Most sellers feel like they can control the transaction better using the title company that they or their agent are familiar with. Often, this is not really true, and in some cases, their may be higher costs for both parties by doing so. Settlement Service providers are a negotiable item in all 50 states. I've never used a sellers title company on any purchases (personally made) if I can get the same services for less for both of us elsewhere. It's a control issue, primarily.

Pros and Cons of using sellers title company?

Pros and Cons of using sellers title company?

Most Popular Reply

4 Replies