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More Questions Than Answers

More Questions Than Answers

By: Curt Swearengin

www.icouldbeyours.com

www.amcapholdings.com

The burning question that I am asking is what are the advantages and disadvantages (if any) to split the title transaction on a purchase?

Question? What exactly is RESPA Section 2608?

Answer ? Although the choice of title company is often made by the listing agent, federal law provides that a purchaser utilizing a federally regulated lender may dictate this choice.

More and more I am seeing additional closing fees being charged to my borrowers by title companies that have a relationship with a Realtor. When we are executing a refinance for our clients, we have a set amount for title closing fees that have been predetermined by our title company and of course us. Yes we negotiated what fees that we will charge for this type of transaction. When one of our clients has chosen a home from a Realtor that is acting as a sellers agent, that Realtor chooses the title company for the seller. Usually this is a Title Company that they have a relationship with. Lately we are seeing fees that are outrages to what we are comfortable having our clients pay for. Examples: A title closing fee of $ 500.00. A doc prep fee of $75.00. A courier fee of $50.00. A overnight fee of $50.00. A fee to pay a fee of $$$ well you get the picture. We have had no control over what these fees might be. The end result is that our client ends up paying more costs for the transaction than they should.

I am not trying to start a fight with my friends at Re-Max offices. Have I mentioned that I love Realtors! But we have to inform our clients when they are going to enter into a contract with some not all Re-max offices that in the contract OUR client will have to pay a $295.00 transaction Fee. I will tell my clients to negotiate this fee. Well in reality what I tell them is to not agree to this fee.

Question? Why should my client pay the Sellers Agent A Fee at all??

Answer: They Shouldn't!!

If our title company can issue a simultaneous policy even if the transaction is split. The end result is that our client will not pay more for the policy than they would if the Sellers title company issues both policies. And we can control the costs that are charged to our client. A win win for our client.

Question? Does the agent get a piece of this transaction fee? Does it offset desk fees?

Answer: You tell me. After all the Title says more questions than answers

We are getting a lot of requests to split theses transactions. On the surface there seems to be alot of compelling reasons to split these tranactions.

The cost control
The fact that the parties are separated
The fact that schedules are easier to accommodate

Question? Ever had a conflict between the parties at the closing table?

Answer: I sure have unfortunately

Question? Can the closing agent take some additional time to explain some particular aspect of the deal without agitating the other parties?

Answer: Probably

Question? What are the Pitfalls?

Question? What is the down side for the buyer?

Question? What is the down side for the seller?

Question? What is the down side for the selling Realtor?

Question? What is the down side to the sellers title company? Other than the lost Fees?

Questions? What Do YOU Think????????????????

Curt Swearengin:

www.icouldbeyours.com

www.amcapholdings.com

www.cfic.com/1541

Posted by Curt Swearengin on 02/02/2007 09:15 PM

Comments (5)

title, transactions, buyers, sellers, closing costs, fees, closing, realtor, policy, question, answer, fee, agent, questions

Post is included in group: For Sale By Owner

5 Comments on More Questions Than Answers

I'm not following you but here's how it works for me.

Seller orders Title because he orders it before the home is listed to make sure there are no conveyance problems.

Buyer chooses closing agent, which does not have to be the same as the Title Company used for Title Insurance.

I find this system works best. Not sure what your rant is, but Title and closing agent are chosen at time of contract as the Earnest Money has to be at the Closing Agent within 48 hours of the contract. You appear to be a lender. The buyer does not have to choose a lender for 5 days, by then the Title and Escrow/Closing Agent is already in place. So I don't see your point.

02/05/2007 12:46 AM

by ARDELL DellaLoggia (Coldwell Banker Bain)

Ardel

I probably should have stated in the beginning that I am in a lien Theory State. You say that the seller orders title before the home is listed. This usually is NOT the case. As you state later in your comment you state that Title and closing agent are chosen at time of contract. In Michigan as a general rule title is not ordered until there is a contract. Until RESPA section 2608 was put into place the listing agent would order Title and closing agent and my client had no choice but to use the closing agent that the Realtor chose. This would lead to unfair charges to my client. And because I use several different marketing programs to get my clients we pre-approve our clients before they even start looking so they have chosen the lender before they start there home search. I hope this clears it up a little Thanks Curt

02/05/2007 01:34 AM

by Curt Swearengin ( American Capital Holdings)

This is an important issue that I have alot of questions on. Does No One have an opion or a sugesstion on this matter?

Thanks Curt

Curt Swearengin

02/08/2007 12:00 AM

by Curt Swearengin ( American Capital Holdings)

Curt

I have been a REALTOR in Michigan for 15 years and have also worked as a contract closer for several large title companies. I have conducted approx. 3500 closings, 90% purchases.

I have been involved in many split closings (Rock Fin. and Lasalle Bank come to mind,they close their own loans). I don't think there is much of a difference to buyers and sellers in these transactions. The title companies I worked for would discount their closing fee when they didn't have to handle the loan docs. You are correct, RESPA says you can't require a certain title company to be used. I know that a lot of REALTORs don't know this, but as time goes on that will change.

As a REALTOR I order a title commitment when I take a listing just to make sure there are no surprises and to have time for any problems to be taken care of. I rarely have a buyers agent challenge my choice of title company.

Most Real Estate companies charge some sort of transaction fee (but not all) ranging from the low 100s to the high 300s. Usually the agent will have to pay it if the buyer or seller wont.

Terry Lynch

02/28/2007 09:57 PM

by Terry Lynch (GMAC The Kee Group)

If the agent is getting a piece of that transaction fee, it better be disclosed to all parties in writing.

12/17/2007 02:08 AM

by Georgina M. Hunter R(S) e-Pro Maui Real Estate Sales (Jim Sanders Realty Inc. - Maui)