The following is a true story. The names have been changed to protect the innocent (in this case, the real estate buyer). One day last week, a client of mine called me to let me know that her offer on her new house had been accepted and she wanted my office to order the title insurance. I asked her to have the realtor forward me the agreement of sale, so I could commence protecting her interests in purchasing her home. I informed her that our title company, Heartland Abstract, does not charge the $200 to $350 in “junk fees” (settlement fee, wire fees, UPS fees, document preparation, e-doc delivery, etc.), so she would be able to utilize the cost savings to purchase some personal items for the house, like perhaps a television or some window treatments. She was very excited and told me she would have the document sent to me.
Now here’s where it gets ugly. The next day, she called to inform me that her realtor (a small time local broker) told her that he had already turned over the file to his title company (remember we are talking a day here) and that to pull it away from “his” company would incur a cancellation fee since the process was started. Since this is a typical realtor’s trick to prey upon the lack of knowledge of the buyer for their own gain. I informed her that no cancellation fee should be paid, since the title search or the certifications could not have possibly have been received. She is sad, but she feels that she needs to stay with the realtor’s company, because of the threat of a cancellation fee. So, she stays with the “realtor’s company” and will pay several hundred dollars more than she would have had she settled with Heartland Abstract. Another buyer tricked into giving more money to the realtor.
And that’s how the realtor does it. Every time. They prey upon the lack of knowledge of the buyer to extract more fees for the title agency of which they likely have an ownership interest, unnecessarily filling their pockets with the buyer’s money. Once a respected part of the real estate process, title insurance has been hijacked by realtors into another revenue generator for them. The wise, respected title professional has been replaced by the slickster whose only real skill is writing checks to the brokers. There are precious few title agencies geared to protecting the consumer, the actual policy holder.
Realtors have no business referring buyers to in-house title companies. None. The choice of a title insurer is your choice as a buyer, and a choice that is federally mandated. But they prey upon the buyer’s lack of knowledge about title insurance to grab more of your money than is necessary. Did you know that some real estate brokers are actually counselled to “get into title?” I have been asked so many times to “partner up” with these people, that I actually enjoy telling them no, just to see the surprised look on their faces, incredulous that I would not jump at the opportunity to take money from unknowing buyers and put it in the realtors’ pockets.
Spread the word that you are entitled to choose your own title agent, so you don’t end up spending more, like my recent client. Contact an independent title agency for your title insurance needs, and ask them to detail the fees they charge. Be an educated consumer, and don’t spend money you don’t have to.
Andrew J. Monastra, Esquire is an associate in the law firm of Wolf, Baldwin and Associates, P.C., which has offices in Pottstown, West Chester, and Reading. He has represented consumers and businesses in real estate transactions for over 23 years, and he is the owner of Heartland Abstract, Inc., an independent title agency located in Pottstown which does not charge junk fees. Their website is www.heartlandabstract.com. Mr. Monastra may be reached by calling 610.323.7436, or by e-mail at email@example.com.