Northern Virginia Buyers-Updated Addendum Spells Out Your Rights

Cindy, the buyer always the choice of settlement companies (or attorney as we do here in Pa). I don't believe the seller should be allowed to force any particular company or attorney on a buyer...

I am glad you posted this. We were having this discussion last month with agents.

Best to you in 2010

your friend in Charlottesville!

Cindy, good post. Thanks.

Cindy:  The buyer's right to chose was just a topic on local news stations....and it's about time!  Good post.

Cindy:  This is one that REO agents have a tough time swallowing the law.  I've heard them boil the choice of title company down to, "Do your clients want the house or not?"

Cindy - Love to know your thoughts on dealing with REOs.  I had a settlement attorney tell me to do this:  Agree (in the contract) to use the settlement company the bank "requires".  The fear is if you don't the bank won't accept your offer.  They can't - but they will.

Then after the contract is ratified - send "A Notice" (not an addendum, which would require acceptance) stating that the buyer is exercising their right via the RESPA law to retain their own settlement company.

I did it once.  The agent was &^%$! - but it worked just fine.

Hi Cindy...I've often wondered what these agents are thinking when they add that to the remarks.  They know, just as we have known for some time, buyers get to choose their own settlement company.

Kate

I also like James' solution. Buyers have to compete against cash investors for REO properties. There are so many instructions on the listing and if your buyers have a chance to get the house we have to follow. But, after ratification sending a unilateral notice about changing the title companies is a great idea. It's often a split settlement anyway with an REO. The only advantage usually for using their company is that they will offer free BASIC title insurance. Of course, I always advise my clients  to purchase the difference for enhanced title insurance which will cover mechanics liens, as well. 

Hey Cindy!  Long time!! Tell me, how are you handling this?  It is my absolute biggest pet peeve as a buyer's agent. I can't believe it is still going on!  I normally email the agent in advance (even before scheduling an appointment to show) and explain how this is a RESPA violation and my purchaser will not consider seeing any property to which he is not entitled to select his own settlement agent.  I also go a step further and suggest a split settlement.  

My last short sale, the listing agent (a broker, by the way) went as far as to say we could use another title company ONLY if they were cheaper.  We got the contract ratified, used our own settlement company and as it turned out, the "seller's" title company was charging bogus fees to the short sale bank....$2500 settlement fee and $2750 title insurance.  I immediately jumped on this when I saw the negotiation sheet the listing agent was trying to squeeze through and told him if the seller is paying the buyer's title insurance, then we certainly could renegotiate the closing costs (as the bank wasn't going to give the buyer as much in closing costs).  

Our title company would not allow that fee and when they got the short sale banks approval on the final HUD-1, the seller's title company nearly had a FIT!  They tried to tell our title company that they had no right to contact the short sale lender!  Can you imagine?  HA!  They even went as far as to tell my company (a REPUTABLE) company, that all the title companies were doing this!  I am dumbfounded by the amount of fraud out there.  My clients don't understand the implication but I don't want to be ANY part of a fraudulent transaction - even if my client and I are not participating!