Did I get ripped off by the title company?

Question

Last January my wife and I came into some money and we decided to pay cash for our first home. We negotiated a little with the former owners and settled on fair value for the property. (We offered to pay closing costs of which there would be none) and we agreed not to put any money in ESCROW as we would pay taxes and insurance separately which we did.

Being in the military I was on a training event during closing. I processed the necessary power of attorney for my wife to be able to close the sale. Which worked out fine.

The issue I have and I hope someone on BP can help me clarify is this. The Title company charged us somewhere in the region of $1200 (sorry don’t have the exact figure I’m serving overseas and don’t have access the documents). One of the line items on the Title company’s bill was for an ESCROW account for which they charged us $900. What gives? we didn’t open an ESCROW account. I called the Title company some time after the sale closed and inquired about it. They gave me a pretty vague answer about it being a standard service charge. Everything else was line itemed what they charged us for, so it’s still not clear what the charge was for.

As well as being excited about our first home, I was also preparing for a long deployment overseas, so the $900 I was out was not of a big concern at the time.
None the less I would like to hear from anyone with experience closing all cash deals with no ESCROW and what you typically pay the title company in fees and what those fees entail.

Did I get jacked or is this normal?

I plan on buying an investment property when I return and I don’t want to make rooky mistakes. Thanks to BP for sharing the knowledge.

Bill Walston · Answer

Marcello, I'd suggest that you request an explanation be given you in writing. I don't see how an escrow account fee can be "standard service charge" if no escrow service was used. Did you have them hold a downpayment or any other funds for you?

Dale Osborn · Answer

You always get ripped off in states that use Title Companies. We sold a 122 space MHP in NC which uses attorneys for closings. Total for closing the property was $550 and it included a Title Insurance Policy from Chicago Title. If it would have been a Title Company state the fees would have been around $5000 for the same property. Check with a Real Estate attorney in your state to see what they will charge for doing a closing & providing Title Insurance.

J Scott · Answer

Depending on whether the title company was the same entity who closed the deal, you'll likely find the following three charges for closing/title services on the HUD (among other junk fees):

- Title services/search - Title insurance - Closing/attorney fees

That $900 may have been for one or more of those services, or it may have been for additional services. If it was for all the three services above, that's not an unreasonable amount to pay (at least where I live); and keep in mind that title insurance cost will be proportionate to the value of the property.

Now, if the $900 was for just one of those services, or if it was for other services in addition to those above, you were likely ripped off.

A good lesson here is that the buyer has the right to choose the title company (per RESPA regulation), so you had the right to pick any title company you wanted, but also had the responsibility to make sure you knew their fees and were okay with them prior to getting the process started.

Did I get ripped off by the title company?

3 Replies