Category Archives: Title Insurance

First Time Homebuyer’s Guide to Saving Money at the Settlement Table

Every spring the articles start popping up everywhere, “The five most important things you need to know about buying or selling a house.” As someone who started out twenty-five years ago selling real estate and has now been in the title industry for more than twenty years, I find that the information in the majority of these articles is not very informative and frankly, a waste of your time.

So many of these articles and blog posts give out easy information that falls into the category of common sense or simple enough to determine on your own.  You don’t need help answering fluffy questions like what kind of neighborhood do you want, or what’s the difference between an adjustable rate mortgage and a fixed rate mortgage?  Nobody seems to want to educate you about the process or give you enough insight for fear that you’ll start to ask questions that really matter like:

“Which monthly expenses affect the amount of money that I’ll be able to borrow?”
“Do I need a buyer’s agent and who pays them?”
“Are closing costs negotiable?”
“Who picks the settlement/title company and what do they do?”

The three primary players who will assist you with the purchase of your new home are your lender, your real estate agent/broker and your settlement company.  So it stands to reason that these are the three places to start asking questions in an effort to find potential savings on your home buying expenses.  As the buyer you get to choose who you work with and you can save yourself time, money and headaches by having a general understanding of the process before getting caught up in the emotion of finding the perfect house.

Let’s start with the lender. Everyone is looking for the lowest interest rate, but what will that rate ultimately cost you? Over the years the mortgage industry has become more and more competitive, to the point where most lenders quote rates within 18 to ¼ point of each other. If you’re paying $1,200 in additional fees to lower your mortgage payment by $7 per month, it might not be worth it. Conversely, if you’re short on cash you may be able to negotiate a slightly higher interest rate and receive a credit from the lender that covers your lender fees, title insurance and recording fees, reducing out-of-pocket expenses by a few thousand dollars. For the most part, application fees, processing fees and loan origination fees are all negotiable, but these fees vary from lender to lender.

When it comes to your real estate agent/broker, understand how the process and its related fees work. Typically the real estate professional that represents you as the buyer is paid a commission that actually is paid by the seller. However, if you’re being represented under the terms of a “buyer broker agreement,” under certain circumstances you could be responsible to pay all or part of the commission to your agent out of your pocket. Those situations are the exception rather than the rule, but it’s still important to know what you’re agreeing to before you sign a buyer broker agreement. In today’s market, especially on some larger transactions, we’ve seen the buyer’s agent credit a portion of their commission to be applied toward their client’s closing costs. It’s not common place in our market, but we’re seeing it more and more.

There are some fees that are negotiable with your real estate agent/broker.  Many real estate companies charge a broker’s services fee or flat fee commission to the buyer. We’ve seen this fee range anywhere from $150 to $700 depending upon the real estate agent/company. This is basically an administrative fee to process the transaction and this fee is negotiable as well. Our view has been that a modest administration fee may be appropriate, but if you hire a good settlement company they will perform the majority of the same administrative tasks at no additional fee, as this service is already included in the cost of your title insurance. If you’re using your real estate agent/broker’s in-house title and/or mortgage company, don’t even consider paying this additional fee. In addition to the commission, the profits they earn from their in-house mortgage/title business should be sufficient.

Understanding the role of your settlement company will also help you save on your closing costs and title insurance fees. The settlement company is paid out of the one-time premium that you pay for title insurance. In both PA & NJ, the buyer has the right to choose their own settlement company. The title insurance premium, lender endorsements and lender closing services letter are not negotiable, but there are hundreds of dollars in miscellaneous title fees that are. Some companies will even cover all or part of the county recording fees. When you factor in the savings that you might realize by hiring your own settlement company and have them process all of the paperwork on your behalf, the total savings could reach $500 to $700 easily.

Educating yourself as to the home buying process requires more than knowing your credit score, researching school districts and knowing how much homes are selling for in a certain neighborhood. It’s also about the little things that may not seem all that significant, but can cost you thousands of dollars in unnecessary fees.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Other posts by Frank Dowd:

Buying new construction? You’d better hire the right title company.

The value of having your own “Wrecking Crew.”

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Why Hiring the Right Real Estate Agent Matters

When you’re selling or buying real estate, whether residential or commercial, hiring the right agent can make the difference between sale or no sale.

Presently we’re involved in a commercial purchase transaction, with a purchase price of more than $3 million. Unfortunately the appraisal for the property came in $800,000 below the contract sale price, leaving both the buyer and seller scrambling, trying to figure out how to proceed.

There are circumstances in which real estate agents advise their clients that their expectations are too lofty and that comparable past sales figures don’t support their asking price. That, however, was not the case in this situation. Regardless of whether the agent misread the comparable sales figures or just wanted the listing and went along with whatever asking price the seller suggested, the agent has done a disservice to their client. On the other side, the buyer’s agent should have raised a “red flag” as well, alerting the buyer that the asking price seemed high based on the comps and current market conditions.

I won’t pretend that appraisal issues don’t pop up on a regular basis, but for the value to come in 25% below the contract sales price leaves the agents looking somewhat incompetent. If the parties in this transaction proceed based on the value established by the appraisal, the real estate agents will each receive a commission of $72,000. For many people, that’s more than a year’s salary and certainly not what you’d expect to pay someone who’s either giving you bad advice or no advice at all.

Regardless of whether you’re selling or buying a house, your real estate agent is most likely being paid a respectable commission. Even a bad real estate agent can open the front door to show you a property and fill in the blanks on a standard agreement of sale. If the job were that easy, it would probably pay $25 an hour. A real estate agent wears many hats during the course of a transaction; sales person, financial advisor, real estate expert and yes at times psychologist. If you find yourself interviewing an agent whose skill set and knowledge begin and end with sales person, keep looking. Settlement/title companies are a great resource for finding qualified real estate agents. When you’ve been involved in thousands of real estate closings, you get a feel for who the good agents are and who you would recommend staying away from.

Before you hire your mom’s boss’s daughter who just got her real estate license to earn some extra cash, understand that a real estate license alone does not make you a qualified real estate professional. You’re probably about to spend more money than you’ve ever spent in your life. Don’t get pressured into hiring the wrong person for all of the wrong reasons.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Other posts by Frank Dowd:

Why choosing the right settlement company matters

Settlement Nightmares…Tales of trouble around the closing table that could have been avoided.

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Trying to Flip Houses with No Money Down? Good Luck.

Whenever I start hearing these radio commercials or see the so-called brand new investor on television proudly displaying his check for thousands of dollars in profits, I know it won’t be long before we start receiving calls and emails from “wanna be” investors.

The question we get… Do you have experience settling “flipped” or as they now call them “wholesale” properties?

My response… Yes, do you?

I’m not trying to tell you that all of the investors who are willing to teach you the finer points of real estate investing are scam artists, but the reality is that they’re usually the only ones getting rich and it’s off of the money that you’re paying them to supposedly teach you the business.

When you enter into an agreement to buy real estate for the purpose of flipping it, here are your options:

  1.  Buy the property, fix it up and resell it.
  2.  Assign your right to buy the property to a third party, usually for a fee. If you assign your interest to a third party, you must notify the seller that you’ve done so and most reputable investors will tell the seller the amount of the fee they’re receiving from the person or entity that they’ve assigned it to. This courtesy helps avoid problems down the road.

Remember, ignorance may be bliss, but if someone is suggesting that you go out and find a settlement company that will offer a “creative” way for you to transfer title without paying transfer fees you might be fracturing a law or two. If you’re caught participating in an illegal transaction, you could be looking at tens of thousands of dollars in fines and possibly a little time in the slammer.

Before pulling out the credit card to order the course that’s going to make you rich beyond your wildest dreams, do a little homework. Read the online third party reviews for the program that you’re considering. In addition, speak with a local settlement company, real estate attorney, lender or real estate agent to get some perspective from professionals who are involved in these types of transactions on a daily basis.

Investing in real estate can be very lucrative and has created the overwhelming majority of wealth in our country’s history, but even the shrewdest of investors started out with some cash. I’m not going to tell you that no money down investor transactions never occur, but if there’s anyone making millions doing it they’re most likely not sharing their secrets with you.

~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ frank profilePrincipal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Need a copy of the deed to your property? Don’t fall for this scam.

Settlement Nightmares…Tales of trouble around the closing table that could have been avoided.

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Haven’t Refinanced Yet? You’re Not Alone.

According to Steve Deggendorf, a director in Fannie Mae’s economic and strategic research, between 40%-50% of Americans with a mortgage have never refinanced and have an average mortgage rate around 6%. Since there are roughly 50 million mortgages outstanding, that means 20 million-plus households could potentially refinance.

Fannie Mae’s national housing survey lists the top reasons why people don’t refinance:

  • Payments aren’t reduced enough.
  • Closing costs are too high.
  • Don’t want to extend term of loan.
  • Trust issues with lender.
  • Under water on mortgage or other qualification issues.

Alright, here are a few things to reconsider before you close the door completely on a refinance.

  • The Federal government has extended the H.A.R.P. program through 2015. H.A.R.P. stands for “Home Affordable Refinance Program.” Under the H.A.R.P. guidelines, even if you owe more money than your house is worth there’s a good chance that you can still refinance to a lower interest rate. You must, however, be current with your mortgage payments to qualify.
  • Let’s say you owe $200,000 on your current mortgage and have an interest rate of 6%, the principal and interest portion of your payment on a thirty year mortgage would be $1,199. If you were able to reduce that rate to 4.5% your payment would now drop to $1,013, saving you $186 each month.  In this scenario your title insurance would be about $1,450 (in PA) and let’s say the lender fees total $900 for a total of $2,350. Based on your monthly savings you would break even in just over 12 months. The rule of thumb suggests that if you can break even within 24 months, it’s worth considering.
  •  There’s a misconception out there that closing costs are not negotiable. While it’s true that some fees are standard many fees are negotiable, and you can find lenders that offer a slightly higher interest rate and pay all of the closing costs for you. For instance, your new lender will require title insurance on your new loan. In both Pennsylvania and New Jersey the title insurance premiums are a fixed amount based upon you loan amount, but the miscellaneous fees and recording fees add hundreds of extra dollars to your out-of-pocket costs. If you hire ALT to handle your settlement and provide the title insurance you won’t pay any miscellaneous fees, we waive them all.
  • It’s important to feel comfortable with the lender that you ultimately hire. If you think that the H.A.R.P. program might be a solution for you, we would suggest that you speak with your current lender first. In many cases, they will not require a new appraisal and the application process may be a bit easier. If you’re not comfortable with your current lender we would suggest getting references from friends, co-workers or family members. If you would like a good local lender, visit our website www.ALTtitle.com for a list of local lenders that we work with on a regular basis. The lenders listed on our site are there as a public service; they do not pay anything to be there and ALT does not receive compensation when you use them. When you’ve been involved in more than 10,000 real estate closings, you get a feel for who you would recommend to a friend and who to avoid. The lenders on our site are all local and some of the best that we’ve worked with.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Other posts by Frank Dowd:
Adjustable Rate Mortgages (ARMs), They’re Not All Bad

Refinancing and need to keep your second mortgage?

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Placing our client’s best interests above all else

As professionals working within the real estate industry, we are and should be held to the highest standards under the law when it comes to protecting the interests of our client. You’ll find many definitions of “fiduciary duty,” but this one seems to sum it up perfectly.

“A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person(s) to whom she/he owes the duty (her/his client); they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents.”

As a fiduciary your responsibilities include, but are not limited to…

  • Avoiding conflicts of interest
  • Acting in the interest of the client rather than one’s personal interest
  • Providing oversight to assure that all business is transacted legally
  • Making decisions to protect the assets of the client.

For this reason, I have been an advocate for higher standards when it comes to transparency within our industry so that the consumer can make more informed decisions and be sure that the professionals that they hire are being true to their fiduciary duty.

If you’re selling, buying or even refinancing real estate, you should not only expect but demand this level of service and care from the professionals that represent you. If you’re not sure how to identify the individuals and companies that are worth your time to consider, here are a few suggestions.

  1. Get referrals from trusted friends and family members.
  2. Ask for references or read through the testimonials on the individual’s or company’s website or social media. If there’s no one saying good things about them, there might not be anything good to say.
  3. Ninety percent of consumers begin their search for goods and services on the internet. If the individual or company that you’re considering doesn’t have a web presence that offers relevant information and clearly explains their services and the cost of those services, move on.
  4. Ask questions. A true professional will be more than happy to educate you, and would be reluctant to have you sign anything until they were sure you had a clear understanding as to what you are agreeing to.
  5. Most importantly, if you don’t have a good feeling about an individual or his/her company, trust your instincts. Thank them for their time and continue searching for the right situation.

The bottom line… as with all industries, you’ll come across so-called professionals who can’t spell fiduciary duty, let alone understand what it means. It’s not your job to explain it to them. Conversely, when you put the right team together it will be rather obvious as to who has your best interests in mind.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Other posts by Frank Dowd:
The truth about real estate’s Controlled Business Relationships

Did they really get a good deal on title insurance?

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Why choosing the right settlement company matters

I received a call last week from a mortgage broker with a question about a possible title insurance claim. He was contacted by a client who has a friend that refinanced in 2006. At closing the homeowners paid off their existing mortgage, a municipal utility lien for $15,000 and received a small amount of cash back to make some home improvements.

As rates continued to drop they refinanced again at the end of 2007. As part of the process the new lender required a new lender’s title insurance policy. When the title search was complete, the $15,000 municipal lien that was supposedly paid in full in 2006 was still showing as a lien against the property. The amount of the lien had increased another $500. The same title company who insured the transaction in 2006 was insuring the new transaction, and had assured the new lender that the lien was paid. The title company said the municipality never filed the appropriate satisfaction; unfortunately, the new lender took the title company’s word for it and never asked for proof of that payment.

Fast forward to January 2014 and the homeowners would like to refinance once again. The new lender orders the title search and, you guessed it, the lien is still there. This time the homeowners contact the municipal authority, who had no record of the lien being paid. Then they reach out to the title company, who assured everyone that they paid the lien in 2006, only to discover that their phone has been disconnected and they’re out of business.

I know what you’re thinking, how did the homeowners not know that the lien was never satisfied? Wouldn’t they be receiving past due notices? Unfortunately, there are some municipalities that do a very poor job when it comes to municipal lien collection. They place a lien against the property and forget about it. No past due notices, no collection letters etc. They know that when the homeowner goes to refinance or sell the property, the lien will appear and they’ll most likely get paid by someone.

In this circumstance the homeowners contacted the title agent’s underwriter to file a claim. But the underwriter denied the claim, taking the position that they were insuring the lender and not the homeowner. The way title insurance works is that you purchase an owner’s title policy when you buy the house. When you refinance, the lender is the only one being insured. Additionally, the underwriter claimed that the $15,000 was being held in escrow which, in their opinion, was not their responsibility, and said that their former agent claimed that a rogue employee stole the money from the escrow account.

All hope is not lost for these particular homeowners. We advised them to contact their current lender, who is the insured by the lender’s policy, and have the lender file a claim with the underwriter. The lender’s title policy insures the lender that their mortgage will be in first lien position. Since the municipal lien existed prior to the current mortgage, the municipal lien is currently in first position.  Once the lender files a claim the underwriter will most likely agree to satisfy the lien.

These homeowners most likely have more than a couple of hours of phone calls and emails in their future before this whole mess is cleared up. It turns out that the mortgage broker, who assisted them with their refinances in 2006 and 2007, referred them to this particular title company because he had an ownership interest in the company.

If you’ve been reading this blog for any length of time, you know that we are proponents of independent companies that don’t have their hands in someone else’s pocket. Real estate companies should sell real estate, lenders should originate mortgage loans and settlement companies should make certain that you get a free and clear title along with a drama-free closing. When the real estate agent/broker or lender has an ownership interest in the settlement company they’re referring you to, there’s absolutely no benefit to you as the consumer. To the contrary, you’ll most likely be paying more money and trying to figure out who’s representing your best interests.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a free title quote.

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Related Articles:

Buying new construction? You’d better hire the right title company.

Settlement Nightmares…Tales of trouble around the closing table that could have been avoided.

Need a copy of the deed to your property? Don’t fall for this scam.

We’re hearing from more and more people who are receiving letters in the mail from third-party companies that are offering to provide you with a certified copy of the deed to your property for a small fee of $89. The letters that I’ve seen would lead you to believe that if you don’t have the deed in your possession, then you have no proof that you’re the rightful owner of the property. I don’t know of any other way to put it, this is nothing but a scam to relieve you of some of your hard-earned money.

First of all, once your deed is recorded at your local county courthouse, it becomes part of the public record for the entire world to see. If the original deed is ever lost or destroyed after it’s been recorded, it really isn’t any big deal.

If you’d like a recorded copy of your deed, you can either contact the title/settlement company that handled your closing, or call the courthouse directly. Your title company will either mail or email you a copy for no charge, or you can receive a certified copy from your county recorder of deeds for $5 or $10.

If you’ve already fallen prey to this scam… chalk it up as a learning experience.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle

Visit http://www.ALTtitle.com for a free title quote.

Related Articles:
You know a good deal when you see one…or do you?

Settlement Nightmares…Tales of trouble around the closing table that could have been avoided.

You know a good deal when you see one…or do you?

Last week I came across a post on a social media site from a real estate agent in PA who was teaming up with their in-house mortgage company and a title insurance company, offering discounts on their services when you hired them to buy a house. The real estate company was offering a modest commission rebate, it wasn’t really clear what the lender was offering, and the title company would waive their settlement fee if you hired them.

As many of you already know, when it comes to offering the consumer exceptional customer service and saving them money, there’s no bigger proponent of that philosophy than me. However, honesty and transparency are two key ingredients to earning your clients’ loyalty and trust.

It wasn’t made clear as to what the lender was really offering and if I can’t get the gist of the offer in plain English, it’s probably not worth much.

As for the title company waiving the closing fee… it sounds good, but chances are that you wouldn’t have had to pay it anyway.  In PA, the cost of performing the closing is included in the title insurance premium.  When you refinance, a title insurance company may charge a closing fee to attend closing at your home or business, or attend closing after normal business hours.  Since 99.9% of real estate closings take place during normal business hours, and typically take place at the office of the title company, real estate agent or builder (for new construction), title companies are not permitted to charge a closing fee. So this particular title company wanted you to believe they were saving you money, when in reality the only thing they were doing was being dishonest.

I consistently come back to the same bottom line. When you buy, sell or refinance real estate, educate yourself on the process and when you come across individuals and companies that lack experience or seem to be dishonest, don’t hire them.

In this particular situation, the real estate agent, who posted this offer for friends, family and neighbors to see, was either purposely misleading those who read it or didn’t know that the offer was most likely a sham. Either way, you should expect more from the professionals that you hire.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle

Visit http://www.ALTtitle.com for a free title quote.

Related Articles:

You never know what you’ll read next on social media.

Settlement Nightmares…Tales of trouble around the closing table that could have been avoided.

Do you know where your property begins and ends?

Unless you’re purchasing new construction, you’re most likely taking someone else’s word for it when they tell you that the property line “goes all the way back to the tree line and over to the fence.” Unless you are able to locate the lot pins that were put in place the last time the property was surveyed, there’s really no way to know for sure the exact location of the boundary lines without a property survey.  And to be honest, I’ve heard stories about homeowners relocating stakes and lot pins after a survey was completed in an attempt to gain additional square footage. Of course, no one would ever admit to that.

If you’re buying a new home and are planning to put a fence, shed or flower bed right on the property line, you might want to consider having an engineer survey the property. Even if a fence is not in your future, but there seems to be varying opinions as to where the exact location of the property line is, a survey might still be a good idea. You can always ask the current property owner to cover the cost of the survey when negotiating your offer to buy the house.  A survey for the typical suburban single home will cost anywhere from $400 to $700, depending on the amount of work involved.

A standard title insurance policy does not insure the owner as to the accuracy of the legal description. This coverage is available by endorsement for an additional fee, but cannot be issued without a current property survey. For that reason, the overwhelming majority of homebuyers pass on the survey coverage. It’s hard to justify paying $500 for a survey and then another few hundred dollars to a title company to insure the accuracy of the survey.

Bottom line… not everyone needs a property survey, but it’s something to consider under certain circumstances. Although we’d all like to think that we have the “nicest neighbors that anyone could ask for,” it doesn’t always work out that way. Boundary disputes can sometimes bring out the stubbornness in someone who is otherwise rational and easy-going.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle

Visit http://www.ALTtitle.com for a free title quote.

Related Articles:

Rates still historically low, but how much you pay for the house still matters.

Why is my real estate agent so persistent about using her title company?

You never know what you’ll read next on social media.

I stumbled upon this Facebook post today from a local real estate broker. The names have been changed to protect the greedy.

“What a great office/business meeting today. We had 85 percent of all our agents in attendance.  Our title company XYZ Abstract released our quarterly profits. Our agents with one share got a check for $250 and our agents with two shares got a check for $500. Since we started title sharing with our agents over 8 years ago, agents have been receiving profits from titles every 3 months.”

As if earning a sales commission on each transaction isn’t enough, many real estate brokers set up profit-sharing arrangements with both mortgage and title insurance companies for additional income.

That is, additional income that comes directly out of your pocket in both increased and unnecessary additional fees.

As a licensed title insurance professional who built a business serving as an advocate for the consumer, I’m equally embarrassed by those in my industry who prostitute themselves by offering to split profits with any warm body that will refer them business at their mutual customer’s expense. This behavior isn’t right and should be illegal.

Such behavior is the reason we strongly suggest that you shop around for your mortgage, title insurance and related settlement services when you buy, sell or refinance real estate. If someone suggests that service and fees are the same regardless of which company you hire, your B.S. detector should sound an alarm.

Not only can you save hundreds of dollars on customary fees, but you might even save hundreds more on additional services that an independent lender and/or title insurance company can provide at no additional cost.

As always, if you’re looking for a local real estate or mortgage professional who puts your bottom line ahead of their own, our website www.alttitle.com is a great place to find them. The professional men and women that we work with on a regular basis forgo quarterly profit checks in return for great customer service and appreciate that we eliminate miscellaneous and unnecessary administration fees so that you leave the settlement table with money in your pocket. A novel approach to doing business or the way it should be? We’ll let you decide.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ
Principal at Associates Land Transfer Company, LLC
Visit http://www.ALTtitle.com for a free title quote.
(215) 699-1200
Twitter @ALTtitle

Related Articles:
Why is my real estate agent so persistent about using her title company?

The truth about real estate’s Controlled Business Relationships 

Settlement Nightmares…Tales of trouble around the closing table that could have been avoided.

Our goal at ALT has always been to offer you no-nonsense advice, and help you avoid unnecessary pitfalls during the process of buying or refinancing real estate.  In the spirit of the season, I thought I would share a few horror stories from around the closing table.  If you’re thinking about buying a home, don’t worry. Most trouble is avoidable as long as you surround yourself with the right team of professionals.

Several weeks ago we handled a closing for a young man in Philadelphia who was buying a house.  Our buyer was represented by a real estate agent, a friend of his. The seller, working without a real estate agent, was handling the sale of his home on his own.  In this case, the seller agreed to pay our buyer’s agent a commission for bringing a qualified buyer and preparing the agreement of sale.

This all sounds pretty ordinary so far but here’s where things got a little dicey. When preparing the agreement of sale, our client’s real estate agent designated the seller as the party responsible for holding the buyer’s $3,000 earnest money deposit. Typically, deposit money is held in an escrow account of a neutral party, such as the real estate broker, attorney or title company, until settlement when the funds are applied towards to the buyer/borrower’s cash needed to close.  Yet this real estate agent didn’t see any risk in handing over $3,000 to the seller.

Outside of the agreement of sale, more trouble was brewing.  Settlement was postponed over and over, because the buyer’s lender, TD Bank, was not able to have the loan underwritten and approved in the agreed upon time frame.  It’s not uncommon to have delays because a lender requires more time, but some lenders develop a reputation for regularly missing closing dates.  Meanwhile with nearly 4 weeks of delays, both the buyer and the seller are becoming somewhat irritable to say the least.

The transaction finally makes it to the settlement table.  We ask the seller for the $3,000 deposit and he refuses to hand it over, stating he was entitled to keep that money as compensation as a result of the delay caused by the buyer’s lender. The buyer objected, yet the seller stood his ground and refused to sign the deed or the settlement sheet if the deposit money was reduced from his seller proceeds.

The buyer, wanting the house badly enough, came up with another $3,000 to complete the transaction, but vowed to file a law suit against the seller.  This entire situation could have been avoided had it not been for the real estate agent’s lack of experience in preparing an agreement of sale. This agent put himself, his broker and his client in a very difficult situation, despite his best intentions.

The buyer has since hired an attorney and filed a complaint against the seller in small claims court and his real estate agent, a friend, has been unreachable. Had this particular real estate agent not been a close friend of the buyer, he and his broker most likely would have been sued as well. FYI… This wasn’t a little “mom and pop” real estate broker; conversely, it was one of the top five franchises in the nation with multiple offices throughout the Delaware Valley.

Bottom Line: We can’t stress enough the importance of finding a good settlement company before you start the home buying process.  Had we met this client earlier in the process, our on-staff real estate attorney could have either reviewed the agreement of sale, advising our buyer before he signed it, or prepared the agreement on his behalf.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ
Principal at Associates Land Transfer Company, LLC
Visit http://www.ALTtitle.com for a free title quote.
(215) 699-1200
Twitter @ALTtitle

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ALT’s Best Practices Manual

ALT Title Best PracticesOur Best Practices in full compliance with ALTA

To receive a printed copy of ALT’s Best Practices Manual, please contact our office by calling (215) 699-1200 or send an email to info@ALTtitle.com.

To view the document as a PDF, click on the following link:  ALT Best Practices Manual

Buying new construction? You’d better hire the right title company.

I’ve always said that an educated home buyer should start the process by finding the title/settlement company they would like to use before they get emotionally involved in negotiating for the new house.  This is especially important when buying new construction.   When you deal with a builder, you’ll need a good title company to assist you in leveling the playing field.

Your title company should act as an independent set of eyes reviewing the title to the property to ensure that any liens or judgments created by your builder have been satisfied.  And a good title insurance company will offer you the legal resources that you’ll need before you sign any/all of your rights away.

Your title company should be a neutral party, because you’ll rely on them to look out for your best interests.  Most builders do not use a standard agreement of sale. Typically, if you’ve looked at four different developments with four different builders, there will be four different agreements of sale. Rest assured that the builder had their legal team draft the agreement of sale to protect their best interests, not yours.

When you buy new construction, select a title company without any connection (or financial interest) to your builder or any real estate sales company that might be part of the transaction in order to avoid any conflicts of interest.  Also, knowing your agreement of sale is most likely written in the builder’s favor, make sure your title company will help you evaluate these documents.

A full service title company will have a real estate attorney on staff, and provide other services, in order to assist buyers with special circumstances like new construction.   In fact, a full service title company should be able to extend these additional services to clients at little to no additional charge.

For example, every ALT client has access to our in-house real estate and banking attorney, to review agreements and related disclosures, before signing them. We provide this service, and several others, at no additional charge.

When you hire a title company, the following list of services, which protect the interests of both you and your lender, should be included in the one-time title insurance premium that you’ll pay at settlement.  If you’re being referred to a title insurance company that doesn’t offer these services or that charges an additional fee for some or all of these services, you might want to reach out to us for a free consultation.

  • Our in-house attorney is available to review and explain your agreement of sale and all disclosures before you sign them.
  • We send a letter to all parties introducing our company, along with a pre-settlement checklist so that you know what needs to be accomplished prior to closing, and who to contact with questions.
  • We order your title commitment.
  • We distribute the title commitment to all parties, including real estate agents, lender & attorneys.
  • We provide your lender with information needed to issue a loan commitment.
  • We clear all outstanding issues on the title report.
  • We can assist the seller and/or their real estate agent with mortgage payoffs, tax and other necessary municipal certifications.
  • We coordinate the time and place of settlement and email settlement notices to all interested parties.
  • We review the preliminary settlement sheet with you and answer all questions.
  • We provide you with the amount of certified funds needed for settlement.
  • We attend settlement at the time and location of your choice.
  • We prepare the deed conveying the property to you.
  • We discuss your options for taking title to the property.
  • We notarize all pertinent legal and loan documents.
  • We ‘overnight’ loan documents to your lender.
  • We provide you with a secure electronic copy of all closing documents.
  • We store all of your closing documents electronically in a secure location for future reference.
  • We offer you 24 hour access to our entire staff via email at info@alttitle.com.
  • The owners of our company, along with our in-house real estate attorney, with a combined 75+ years of real estate experience are available via mobile phone, text and email 24/7.

frank profile

~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
Visit http://www.ALTtitle.com for a free title quote.
(215) 699-1200
Twitter @ALTtitle

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Why is my real estate agent so persistent about using her title company?

Our service doesn’t end at settlement.

I recently received a phone call at 9:42 am on a Sunday morning from a very nervous couple, clients of ours who had just settled on their new home the Friday before.

Over the weekend, they began the process of moving into the house when they discovered mold along the baseboards in two of the basement closets.  Not knowing where to turn, the couple called their real estate sales associate to ask if she remembered seeing anything in the seller’s disclosure regarding mold in the basement. Their sales associate confirmed that there had been no mention of any mold issue in the seller’s disclosure and after a brief discussion suggested that if they believed that this was a pre-existing condition that the seller tried to hide, they should contact an attorney on Monday. Because the couple had relocated from South Carolina, they asked their sales associate for the name of a local attorney.  She told them that she didn’t have anyone that she worked with on a regular basis, but if they went online she was certain that they would find an attorney in the Doylestown area, not far from their new home.

Mr. Buyer remembered me saying at closing that ALT has a real estate attorney on staff to deal with any issues that come up during the settlement process. So they called my mobile phone and by 10:00 am, I had them on the phone with our attorney.

I’m happy to report that our attorney had the issue resolved by Monday morning, and the buyers were relieved.  When I told them there would be no additional charge for his services, they were absolutely thrilled.

This is what good title companies do. They have the resources to help you manage your transaction from start to finish, and are prepared when the unexpected occurs. The in-house title affiliates offered by most real estate sales organizations and mortgage lenders are either not equipped or lack the experience to manage situations out of the ordinary.

The bottom line… Hire an experienced real estate agent familiar with the area in which you want to live to find you a house. Hire an experienced mortgage professional to explain your financing options and find the program that best fits your needs and financial goals. Finally, hire an experienced independent title insurance company to manage the settlement process on your behalf, with the resources available to handle any legal issues that might arise.

In my experience, the right team is very rarely found under the same roof.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
Visit http://www.ALTtitle.com for a free title quote.
(215) 699-1200
Twitter @ALTtitle

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Top 3 Reasons to Give Up Your Right to Choose

We’ve designed our website www.ALTtitle.com to be a resource for anyone who’s considering buying or refinancing real estate. From the more than one thousand people who visit our site every month, we list the top three reasons that they’ve been given as to why they shouldn’t shop around for title insurance and related settlement services.  And by the way, they’re all false.

“You’ll have no control over the transaction if you select a title company that I don’t work with.”

“There’s no guarantee that you’ll settle on time if you don’t use our (in-house) title company.”

And here’s my personal favorite…

“There’s no need to shop around for title insurance and settlement services because everyone charges the same amount.”

Most consumers in PA and NJ don’t realize that they have the right to shop around for title insurance and settlement services, and can reduce their closing costs by $300 to $500 or more by doing so. We would encourage you to take the “good faith estimate” (GFE) that your lender or real estate professional prepared for you and visit our website to compare.

If you’re looking to hire a local real estate professional or local mortgage lender, our website is a good place to begin your search. The professionals listed on our website are among the finest in the area and share our commitment to providing exceptional customer service and ensuring that you receive a fair deal.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ
Principal at Associates Land Transfer Company, LLC
Visit http://www.ALTtitle.com for a free title quote.
(215) 699-1200        Twitter @ALTtitle

 
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ALT’s 11th Anniversary

Associates Land Transfer Company recently celebrated its eleventh anniversary in business. I’m proud to say that the principles on which we founded the company eleven years ago continue to be the driving force when it comes to our success today.

Our goals were relatively simple.
1.    To provide the best customer service in the real estate industry
2.    To always provide a level of transparency with our clients, giving them open and honest insight into the industry and helping them identify the pitfalls to avoid
3.    To put our clients’ interests above our own personal interests and company revenue

Sounds pretty simple to me. Why wouldn’t someone buying or refinancing real estate demand this approach from all the professionals they hire? The answer, of course, is that they would demand it, unless they didn’t know any better.

I will tell you that while technology, specifically the internet, has made it much easier to find the perfect home, finding a real estate agent, mortgage lender and title insurance company that deliver a level of transparency and place your interests above their own is more difficult than ever.

To that end, ALT continues to be an advocate for the consumer.  We are committed to offering our clients exceptional service while reducing their overall settlement costs.  And to help you make informed decisions, we will continue to give you an insider’s perspective to the real estate industry through our website and this blog.

For ALT, placing our clients’ interests above personal interests and company profits isn’t a tag line or a slogan. It’s the way we choose to do business.

~posted by Frank Dowd, Title Insurance Agent, licensed in PA and NJ
Principal at Associates Land Transfer Company, LLC
Visit www.ALTtitle.com for a free title quote.
(215) 699-1200
@ALTtitle

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Did they really get a good deal on title insurance?

Why is my real estate agent so persistent about using her title company?

I just had a first time home buyer ask me the following question:

Why is my real estate agent so persistent that I use her title insurance company?

We would all like to assume that it’s because her title company delivers great service at a reasonable price, but unfortunately that is not the motivation in this particular situation. You see the real estate agent owns shares in the title company and receives a quarterly “bonus” based upon company profits.  All she has to do is steer her clients into doing business with the in-house title company, and she makes easy money.

At first this particular home buyer wasn’t going to shop around for title insurance because this agent assured him “that the price would be the same everywhere.” At the recommendation of a family friend who told him that was not true, he decided to look around and compare service and pricing. Fortunately for the buyer, he stumbled upon our website www.ALTtitle.com.

After comparing our quote to the one his real estate agent’s title company gave him, he realized he could save $318 by eliminating all of the miscellaneous and county recording fees by hiring ALT. He chose ALT, and had our real estate attorney review his settlement documents before he signed anything, at no extra charge. Then we saved him another $150 in administration fees that his real estate broker was going to charge him to process all of the paperwork.

This first time home buyer was able to save an additional $468 on closing costs thanks to a tip from a family friend and the services of ALT, an independent title company.   It’s so important for first time homebuyers in PA and NJ to understand that they have the right to shop around for title insurance services because fees are NOT the same everywhere.

For a list of real estate and mortgage professionals who support the consumer’s right to choose, visit the local real estate agents and local mortgage lenders pages on our website.

~posted by Frank Dowd, Title Insurance Agent, licensed in PA and NJ
Principal at Associates Land Transfer Company, LLC
Visit www.ALTtitle.com for a free title quote.
(215) 699-1200
@ALTtitle

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Thinking Outside the Box

I love hearing stories like this one and enjoy working with real estate professionals who can think outside the box.  It’s pretty common knowledge that real estate sales commissions are negotiable, but most consumers don’t realize that many top performing real estate agents are quick to reduce their commissions when it comes to making a deal happen. There are listing and selling agents who will agree to reduce their commission to resolve a repair issue or to make up the difference if a buyer or seller is short on funds.

Recently we participated in a closing where the listing agent wasn’t paid a commission at all. Being curious, I asked her if she was related to the seller and if that was the reason she wasn’t charging a commission.

She was not related to the sellers.  She explained that if she would have charged a commission, her sellers would not have had enough cash available to sell their house and purchase a new one.  So she suggested that the sellers offer a 2.5% commission to the agent that brought them a qualified buyer and she would forego a commission on the sale of their house, but earn a commission when she helped them find a new house.

These particular sellers had interviewed three other real estate agents, who told them that they’d either need to wait for the value of the house they needed to sell to increase or save more money to complete the transaction. The agent that they ultimately hired figured out a way to make it happen where it was a win-win situation for everyone.

The house sold for $293,000 and the sellers needed to bring a little more than $6,000 to closing to cover the shortfall between the sale price and their mortgage payoff plus closing costs. The listing agent, by waiving the commission, gave the sellers the flexibility to sell their house and in turn buy a new house for $475,000 where she earned a 3% commission.

I’m always amazed by those in our industry who walk away from an opportunity to earn a paycheck because they refuse to “leave money on the table.”  My philosophy has always been that a slice of the pie is always better than no pie at all.

This was not only a smart business decision, but the agent told me that the sellers had already referred three other clients as a result of her flexibility. By placing her clients best interests above her own, she not only earned a commission of $14,250, but she has a client for life who will continue referring her business that will earn her commissions that will far surpass what she supposedly “left on the table.”

~posted by Frank Dowd, Title Agent and Principal
Associates Land Transfer Company, LLC
www.ALTtitle.com
(215) 699-1200
@ALTtitle

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Should I Pay a Broker’s Service Fee?

If you’ve sold or purchased a house in the last ten years or so, you most likely paid your real estate broker/agent a conveyancing fee or flat fee commission.  This broker service fee ranges from $150 to $500, an amount due in addition to the base commission on the sale or purchase. With several different ways to refer to the service and the fee, it’s easy to be confused as to what you’re paying for, and if you’re obligated to pay it.

Typically, when you execute an agreement of sale, your real estate agent will have you sign a stack of miscellaneous disclosures, and one of those disclosures captures your consent to pay this fee to his or her company. Often times this fee is split between the real estate agent and her/his company. Like all real estate fees and commissions, this fee is negotiable and you are well within your rights to question the fee and shop around for a better value.

Some of the disclosures that I’ve seen over the years, sometimes referred to as settlement coordination agreements, list the services that the real estate company will be performing when you pay the fee. Here are a few examples of what they do and how it’s done.

  • Order title insurance  (email the agreement of sale to the title company)
  • Send out settlement notices  (included in the cost of title insurance)
  • Assist you in obtaining a mortgage commitment   (follow-up with the lender)
  • Making sure the title is clear  (included in the cost of title insurance)
  • Making sure the deposits are received in a timely manner

There are usually a few more items listed on the disclosure, but you get the picture.

Here’s the reality: if you’re buying a house and borrowing money, you will be required to purchase title insurance. Your title company, if they’re any good, will provide these same services at no additional charge. In fact, most of these tasks is the responsibility of an experienced title agent.

Whether or not the additional administration fee is reasonable, we’ll leave that judgment up to you. If you’re working with a real estate professional that has gone above and beyond the call of duty and has provided great service, then you may not mind paying the extra fee. Our goal is to simply provide you with the information necessary to make intelligent decisions on how to spend your money when you buy, sell or refinance real estate.  In the case of the broker’s service fee, it’s difficult to make that determination early on in the process when you’re signing an agreement of sale.  Before signing the disclosure, have an open discussion with your real estate agent to be clear on a list of services that you’ll need them to provide along with an appropriate fee if any.

~posted by Frank Dowd, Title Agent and Principal
Associates Land Transfer Company, LLC
www.ALTtitle.com
(215) 699-1200
@ALTtitle

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Apparently customers aren’t “part of the family”

I couldn’t help but have one of those feel good moments after our company helped this young couple save so much money at closing. This story is not exceptional; the scenario I’m sharing is fairly typical for a new construction settlement when we’re involved.

As the title agent hired by this Bucks County couple, we scheduled the settlement at the most convenient place for the buyers.  We don’t charge a closing fee in Pennsylvania, no matter where we hold the settlement.  In this case, we met at a Keller Williams office, where we were joined by the buyers’ real estate agent, the mortgage representative and the seller. In about an hour, all the paperwork was signed and there was nothing but smiles around the settlement table.

After the closing, the buyer’s agent confided that the couple was not smiling at all when she provided them with their first estimate of closing costs.  In-fact, Mrs. Buyer started to cry when she looked at the amount due from the borrower, which their agent prepared as if they were using the Keller Williams in-house mortgage and title companies.  The agent assured her buyers “not to worry, you’re not using my in-house providers so your costs will be significantly lower than the estimate.” And she was right, by a few thousand dollars.

It was the buyer’s mortgage representative (who was a relative of the buyer) that informed the buyers that they were free to use the title company of their choice and suggested they get a quote from us at www.ALTtitle.com.   Compared to the Keller Williams in-house title company, we saved the buyers over $400 in title fees.  And because they were buying new construction and the builder wasn’t using a standard agreement of sale, we had our real estate attorney review and revise the agreement, at no extra charge.  This saved them an additional $200, maybe more.

I replied by telling the agent that it would be our pleasure to offer all of her buyers the same service and savings that today’s buyers enjoyed. Unfortunately, her response didn’t surprise me at all. She told me that she would love to refer her customers to ALT, but (there’s usually a “but” at this part of the conversation) her broker has an ownership interest in the in-house title company and he would not be happy if she suggested that her customers use another title company. I kind of chuckled to myself because this is the same real estate company that refers to their annual meetings as “family reunions.”

Apparently the customers aren’t considered part of the family.  Would you tell your Aunt Martha that she should patronize your friend’s business, knowing that he’ll over charge her and give you a cut?  I highly doubt it.

If this agent’s response was the exception in the real estate world, that would be one thing, but it’s more like the standard.  It’s a standard that needs to changed, and we’re committed to changing it one satisfied customer at a time.

~posted by Frank Dowd, Title Agent and Principal, licensed in PA & NJ
Associates Land Transfer Company, LLC
www.ALTtitle.com
(215) 699-1200
Twitter  @ALTtitle

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