Title search/insurance- what is the difference?

Question

I'm looking at closing on my first rental properties and am pretty confused on the title search/insurance process.  My closing estimate includes:

Title- Lender's Title Policy- $372

Title- Settlement Fee- $680

Title- Title endorsement fee- $87

Total is $1139 for title services!

This is in NY state (not NYC) and on a $~60k property with ~$45k loan.  This seems pretty outrageous.  So I've gotten quotes from title insurance companies for about $500 or so- does this include search, insurance, and everything I'll need for closing?

Ned Carey · Answer

@Russell Brazil said

I was going to mention something like that. While prices do vary, relative to the price of the property it is not that much.

This is where I disagree with Russel. I have found many title companies offer poor service, slow and unresponsive. However there are many that are just pain incompetent. When I have to explain to a title company how to do a transaction and they still get it wrong there is a problem.

When you are doing investor deals it is important to have a good title company, that understands investor deals. I am not just talking about someone that will do an assignment or double close. I am talking about people who have experience with tax sales, estates, and clearing up various clouds on title. I don't think saving money on a title company is important at all. Getting the deal done is important.

Ned Carey · Answer

It is common for settlements to include all kinds of fees that can add up significantly. The actual title insurance rate is probably set by the state insurance commission and will be the same at all title companies.

The quotes you get will not be all inclusive prices unless they draw up a proposed Hud-1.

There are at least three different things you are likely to get charged for at a settlement by the title company

• Title search - this is often outsourced to a title Abstractor, who goes to the land records to do a a search of public records about the title of the property
• Title review - this is where the title agent reviews the information given to them by the abstractor. This may be included in a general "Settlement charge" or may be a separate charge. 
• Title insurance - this is insurance in case the title is not good the title company will fight to correct it.

In addition to those you will have redecoration costs and prorations.

Russell Brazil · Answer

@Ned Carey Almost all of the transactions Im doing are pretty straight forward, so nothing too complicated for someone to screw up. My biggest complaint is usually dealing with the agent on the other side of the deal.

Russell Brazil · Answer

@Ned Carey is right that in many places the state actually regulates the price of the title insurance.  So shopping around for that portion of the fee will not make much difference.  Also the title companies are buying these policies from the same few companies anyways...so if you go with Title Company X, instead of Title Company Y....well they are just the go between to the same Insurance Company Z.

Ive worked with a number of title companies, and to be honest all the fees are generally pretty similar amongst them. The service is generally pretty similar as well. There are a couple of title companies I dont like, and there is one that I like quite a bit where I try to go most of the time...but thats really just based on having a working relationship with them.

One thing you should consider is you can often get a reissue rate discount on the title insurance if you can either get a copy of the previous sellers title insurance, or use the same title company that previous closed that house.

Steve Vaughan · Answer

Traditional closing with banks and title co's are very expensive.

The lender's policy is probably to make sure the lender is guaranteed a first position.  Helps you zilch.

Settlement fee is for the title co to handle all the settlements.  Taxes, insurance, lien pay-offs.  How do you think their office got so fancy?

Surprised not to see an owner's policy premium.  That insures the title for you.  Maybe others will chime in with better help.  I've been self-closing seller-carries for so long I've probably forgotten!

Ned Carey · Answer

@Tatiana Walker Ask around at investor meeting who to use. The players in the area will know the good ones. If you go to an auction public or foreclosure they buyers there will often be serious buyers and know who to use. Also the auctioneer will have some suggestions.

Tatiana Walker · Answer

Russel, what would be your recommendations for newbies to find right title company for helping with investor deals?  I seams, stumbled on non-competent one. thanks

Ned Carey · Answer

@Russell Brazil I figured that was the case. (laughed at the agent comment) In Baltimore The titles can get pretty scrambled especially with investor/distressed properties.

Title search/insurance- what is the difference?

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