How To Choose a Title Company in PA?
By Marc Shaw
How Do I Choose A Pennsylvania Title Company? Most consumers don’t even realize what Title Insurance really is. Many consumers don’t know they even need a title company until they were told so by their bank or realtor. The fact you are actually conducting due diligence in your search for a title insurance company is an important step. First off you are on the right path to guarantee your transaction goes smoothly and you have the adequate 3rd party protection and security that you as a consumer deserve.
How Do I Choose A Pennsylvania Title Company?
Before exploring how to make such a choice lets first make sure you understand what a title company is or even does, let’s review.
Here is a link to an old blog post, “What Is Title Insurance?” Or check out this video for more explanation of what title insurance actually is.
So now, how do you choose the right title company? First off, you as the buyer or borrower have the right to choose your title insurance company. The decision is not up to the Seller, Realtor or Bank. Section 9 of the Real Estate Settlement and Procedures Act or RESPA “prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.”
So there are most likely several PA title companies that come up as local agencies to your neighborhood. A lot to choose from right! But while Pennsylvania title insurance is state regulated and is equal from company to company it’s important to know many Pennsylvania title companies charge much more then just the state regulated amounts. Consider these key factors when deciding on a PA title company to handle what is often the largest financial transaction in one’s life.
1) Company. There are many “in house” or “joint venture” title companies that possibly work exclusively with 1 real estate company, one lender or one home builder. While this obviously leads to higher efficiency within the parent company, it also creates the opportunity for price gauging. Often times a consumer will pay higher fees to such an entity and even more so get less in service.
2) Services. Closing in your home at a convenient time for you? E-Recording? The importance to these items is easy to explain. 1- Convenience to you; 2- Electronic Recording guarantees that your deed will be recorded right away as to avoid any potential discrepancies or potential fraud by past owners.
3) Fees. As mentioned previously, title insurance premiums are regulated by the Pennsylvania Rating Bureau and are essentially state mandated. However, ancillary fees charged by title companies often times can create a significant difference from one company to the next. In addition to title and endorsement fees, there are recording, reconveyance, release tracking, courier, overnight delivery fees, wire fees, electronic document fees, mobile notary fees, document prep fees, etc. Additional work fees are also not uncommon. Shopping around can save you anywhere from 200-1,000 in ancillary fees depending on the County and State the transaction is in.
4) Experience: Has your escrow officer or title agent worked in the industry for 10 years or 10 days? Is the title agent an Attorney Title Company or a non-attorney title company? Some inexperienced title agents or non-attorney based firms may not be well versed in all forms of real estate transactions. Whether it’s a commercial deal, short sale, refinance, 1031 exchange, bank owned, REO, Seller Financed, Installment Sale, assumptions and wraps? Or do they have one specialty, more importantly; is it the specialty you are hiring them for?
5) Communication: Believe it or not, one of the biggest issues in the industry is lack of communication. In a business that requires communication many people are poor at communicating. How does your escrow officer or title agent communicate? Phone, email, face to face, text, fax, or all the above? It doesn’t really help to have an escrow officer that only communicates via phone if you prefer email or even text.
6) Financial Strength: Remember the title company is going to essentially place the transaction with an actual Insurer. In Pennsylvania the title company is just an “agent” for the larger Insurer. While many licensed PA title insurers have been around for over a hundred years, not all have. The purpose of a PA title company is to facilitate your escrow and provide title insurance for your most valuable asset. But will the underlying title insurer be around in a few years to pay a claim that an escrow officer with no experience and poor communication skills messed up? Ask the question, who is this being placed with? Then look up the companies rating http://www.demotech.com/01_pages/fsr/companies.aspx?t=1.
Choosing the right PA title insurance company is imperative to a successful closing. Many things can go wrong in a real estate transaction, it is vital that your title company be well versed in all aspects of the closing process. After all, the mark of a good company is how they respond when things go wrong.
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