Do You Own Part of Your Settlement Co?

By
Real Estate Agent with McEnearney Associates, Inc.

This question came to me after a settlement that was a little rougher than it needed to be.  Here in Virginia, the buyer selects the settlement company since the buyer pays for the title insurance, so the Buyer's Agent (who is with a national brand) put into the contract that they would use their in-house / affiliated settlement company.  Along with the offer, we received a generic disclaimer form acknowledging the affiliation between the companies and that some individual agents may a hold direct ownership position/share of the settlement company.

This is not my seller's first home sale and she would have preferred another company that she has used before and is known for their superior service.  So at settlement, she casually asked the BA is she held a direct ownership position in the firm being used.  After more than a pregnant pause, the BA stated that she was in fact a partial owner, but she selected them for their professionalism and price (they were definitely competitive on service charges, but not so sure on the title insurance).  I'm not sure how to describe the buyer's facial reaction, other than confused, as this was apparently the first time she had been made aware of it.  After some quiet discussion between the two, we completed settlement. 

My questions for your comment, even if the settlement company you hold an interest in is great at what they do and price competitive, isn't the appearance of this arrangement too self serving?  Also, if you engage in this practice, wouldn't you be better served to clearly disclose this early so that it doesn't come back to bite you later?

Posted by

 

AJ Heidmann ~ CRS,  ABR

Cell 703-474-1260 ~ Office 703-717-6324 ~ Fax 703-839-8283

AJ@AJHeidmann.com

www.AJHeidmann.com

McEnearney Associates, Inc.

4720 Lee Highway, Arlington, VA  22207

Licensed in Virginia

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Rainmaker
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Highland Beach Condos David Serle
RE/MAX Services - Highland Beach, FL
Boca Raton Agent David Serle

Good post.  This has always been a sort of contraversial subject.  We as realtors tend to like to use those people we have control of and feel more comfortable with.  Whether there is some kind of co-op ownership or what not I do not think that would make a huge difference.  I do however believe in early and full disclosure.  SO I would agree this should be disclosed. 

Jul 21, 2008 05:14 AM #1
Rainmaker
532,866
AJ Heidmann ~ CRS
McEnearney Associates, Inc. - Alexandria, VA
YOUR Alexandria & Arlington, VA Real Estate Expert

David - It was good to hear from you and nice to know someone agrees with me.  Disclosure is the key to this type of a set up.

Thanks for the compliment on the post, we're pretty new here on AR and really just getting the hang of it.

Jul 21, 2008 05:18 AM #2
Rainer
920
Fran E Orr
Coldwell Banker Residential Brokerage - Alexandria, VA

This is something I specifically stay out of.  There are enough issues in the real estate transaction as it is without introducing another relationship that could create a potential liability.

Aug 06, 2008 10:38 AM #3
Rainmaker
532,866
AJ Heidmann ~ CRS
McEnearney Associates, Inc. - Alexandria, VA
YOUR Alexandria & Arlington, VA Real Estate Expert

Fran - We agree completely and that's how we operate our business.  We know others choose to do this, which is fine, but not disclosing it rubs us wrong.

Aug 08, 2008 05:21 AM #4
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Rainmaker
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AJ Heidmann ~ CRS

YOUR Alexandria & Arlington, VA Real Estate Expert
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