Settlement fee/title insurnance - Pennsylvania

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Settlement fee/title insurnance - Pennsylvania

Mark Dante
Germantown, MD · Member since 2016 · 25 posts · 8 votes

Question:  My cousin and I are looking at a few properties in western Pennsylvania (just outside of Pittsburgh) .  I've called around and I've got a few prices from settlement companies, but I don't know if I've been quoted a higher amount because I am out of town.  For those who have purchased multiple properties and have used the same settlement company, what kind of settlement fee do you typically pay?  I'm seeing about $325 to $350 (PLUS title insurance).  Any recommendations for settlement companies in Pennsylvania?

Also, a separate question.  For those who purchase foreclosed properties with cash, do you always purchase title insurance?  I'm looking at some properties that are cheap (and its for a good reason - they need a LOT of work).  It appears that in Pennsylvania there is a minimum cost for title insurance.  For example, I looked at a portfolio of rehab properties  with an average price of $15K each.  Title insurance looks to be about $550 for each property.   If I purchase 10 of these houses, I'm looking at $5500 in title insurance on houses which I hope to only have for a year.  So for those who purchase cash for foreclosed houses, do you always get title insurance?  

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
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Originally posted by @Charles McCabe:

@Tom Gimer And that would save some money?  Because you'd only pay the "base price" for the title policy once, instead of once for each property?

Yes, add up the total purchase price for all the parcels and base the premium off that total risk. But again this has to be from the same seller as part of the same transaction. 

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  • Charles McCabe
    Investor · Lansdowne, PA · Member since 2016 · 161 posts · 62 votes
    8y

    PA regulates the title insurance rates:  http://www.anytimeestimate.com/PA_TITLE_INSURANCE/...

    Thank you, @Ray Peslar, for making me aware of that.

    Thanks,

    Chaz

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  • Mark Dante
    OP
    Germantown, MD · Member since 2016 · 25 posts · 8 votes
    8y

    Charles - Thanks for the reply.  My question, however, is:

    a.  What kind of settlement fee (closing fee to the settlement company, NOT including title insurance) is to be expected, and

    b.  Do those (on this site) who purchase foreclosed properties typically purchase title insurance.  (I hate to pay $5000 for title insurance for properties that I plan only holding for a year..hopefully shorter.)

    thanks

    Mark

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    8y

    Sounds like you are buying REO properties rather than at the sheriff sale. So why wouldn't you want to get title insurance? It is a small percentage of the purchase price, and it will give you the assurance that when you are ready to sell down the road that you will have no title issues to clear up. REO properties do tend to have title issues - if that were not the case, then it might make some sense to forego title insurance.

    @Tom Gimer recently posted some info on attorney title insurance rates; see link:

    https://www.biggerpockets.com/forums/580/topics/51...

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
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    @Steve Babiak Thanks for the reminder to respond here.

    @Mark Dante Always buy owners title insurance. Who knows what the foreclosed owners tried to do to get out of their mess before losing the property... or any prior owner for that matter. One title problem and the legal bills alone will far eclipse the premiums paid for an entire portfolio of properties. Sounds like you're getting a bargain on the settlement fees. By now you've discovered that in PA there is a minimum title policy cost up to $30,000 pp.

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  • Jay Belcher
    Investor · Canonsburg, PA · Member since 2016 · 132 posts · 59 votes
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    I say get the title insurance.

    You need a title search or you don't really know what you're buying. A lot of foreclosure work is done fast and furious and it's not unheard of that a lien holder was not properly served in the foreclosure process and can later assert a claim. The cost of the search is included in the insurance - if you pay for a search alone you have a chunk of the policy paid for. If you go it without a search you're putting yourself at risk.

    Also you're probably getting a special warranty deed when you buy, so be careful to sell on a special warranty deed, particularly if you forego the title insurance. Otherwise your guaranteeing a clear title beyond the time you owned it. (Disclosure:  I've been doing this a while but I'm no title attorney - contact one for real answers to your questions!)

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  • Mark Dante
    OP
    Germantown, MD · Member since 2016 · 25 posts · 8 votes
    8y

    Thanks for all the replies.  I'm getting the title insurance.  When running the #'s, I was just looking at 4% of my investment going towards an owners insurance policy on a properties that I hope to have for only a very short period.  When you add that to settlement fees, you are looking at a good % going towards closing.  

    If anybody here knows a good settlement company (one that would work a deal with approx. 10 properties), let me know.

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  • Account Closed
    Lender · South Plainfield, NJ · Member since 2016 · 37 posts · 6 votes
    8y

    Try Providence Abstract, LLC. Thank you.

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  • Charles McCabe
    Investor · Lansdowne, PA · Member since 2016 · 161 posts · 62 votes
    8y

    @Mark Dante Yup, I'm aware.  I was just commenting on "It appears that in Pennsylvania there is a minimum cost for title insurance. For example, I looked at a portfolio of rehab properties with an average price of $15K each. Title insurance looks to be about $550 for each property. If I purchase 10 of these houses, I'm looking at $5500 in title insurance on houses which I hope to only have for a year.?" 

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
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    Originally posted by @Charles McCabe:

    @Mark Dante Yup, I'm aware.  I was just commenting on "It appears that in Pennsylvania there is a minimum cost for title insurance. For example, I looked at a portfolio of rehab properties with an average price of $15K each. Title insurance looks to be about $550 for each property. If I purchase 10 of these houses, I'm looking at $5500 in title insurance on houses which I hope to only have for a year.?" 

    If you bought multiple properties from the same seller you could obtain a title policy for the total purchase price but covering multiple parcels.

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  • Charles McCabe
    Investor · Lansdowne, PA · Member since 2016 · 161 posts · 62 votes
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    @Tom Gimer And that would save some money?  Because you'd only pay the "base price" for the title policy once, instead of once for each property?

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y
    Originally posted by @Charles McCabe:

    @Tom Gimer And that would save some money?  Because you'd only pay the "base price" for the title policy once, instead of once for each property?

    Yes, add up the total purchase price for all the parcels and base the premium off that total risk. But again this has to be from the same seller as part of the same transaction. 

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