Title insurance? Really?
I made an offer on a house friday (yay!) but its only a $6K house. Its not a big or fancy house and its not in a nice neighborhood. But it can be *my* house. And that is a good thing indeed.
Since I don't need a loan, not only do I not have any requirement for title insurance, but about 80% of the complexity of the transaction doesn't exist, which should make it cheap.
But the other half thinks we should protect ourselves with title insurance.
So as part of that I looked for some title insurance quotes.
The first one came back in at a $1,095. What the hell?
First, the Owner's policy, with $6000 liability: $175.
say WHAAAAT?
Even with a 50% profit margin on that, that indicates there is a 1/70 chance that some incompetent blockhead can't properly do a title search?
That is WAY out of line with the risk factors. Tell you what, how about $20. The liability is only $6000, for crying out loud! And *only* until the next ownership transfer, no further. Better yet, how about we defenestrate the whole idea. The liability is small and its only going to last a few years anyway. I read that if the value of the property exceeds the liability of the title insurance, you can't even claim against the title insurance. Buying this at the bottom of the market does NOT indicate it is likely for this risk to *EVER* be covered.
Then, the title search fee: $275.
Alright. Alright. I can understand that. You need to go do a real title search, it might even take you a few hours (if its not all electronic already). I'll give you the benefit of the doubt on that, as I'm not a title search expert. People seem to think this is important.
Now this is where it goes south.
Settlement Services.
They'll charge me $35 to write a 'Closing Service Letter'. I'm not a lender, and I don't need any letters telling me what the title company is or isn't insuring. My Owner's Policy will have plenty of legalese on it indicating exactly what is going on.
Deed Preparation Fee. $75. Okay, you need to fill out a form and all. I'll pay you for the privilege of not doing it myself, it doesn't cost that much.
Settlement/Closing fee: $535
No fucking way. I already paid you to do the title search, so this doesn't cover the title search. I already paid you to prepare the deed so this doesn't cover the deed. Or even to write a letter I don't want or need. This doesn't even cover the owner's policy with its farcical 1/35th premium/liability ratio. What exactly does this cover?
Shuffling the paperwork between the insurance, search, and deed, filling out a few forms, and visiting the recorders office with the deed I paid you to prepare? Doing an accounting printout and dispersing the funds? This is a cash transaction. You mean to say it'll take twice as long for your office to fill out a cash title transfer paperwork and do escrow accounting than it will to search through the entirety of all of the filed liens through the entire history of the title back to the original land grant by John Adams?
And that brings the cost of the 'closing' to 1/6th the offer price. I believe that would be a ripoff indeed.
Since I don't need a loan, not only do I not have any requirement for title insurance, but about 80% of the complexity of the transaction doesn't exist, which should make it cheap.
But the other half thinks we should protect ourselves with title insurance.
So as part of that I looked for some title insurance quotes.
The first one came back in at a $1,095. What the hell?
First, the Owner's policy, with $6000 liability: $175.
say WHAAAAT?
Even with a 50% profit margin on that, that indicates there is a 1/70 chance that some incompetent blockhead can't properly do a title search?
That is WAY out of line with the risk factors. Tell you what, how about $20. The liability is only $6000, for crying out loud! And *only* until the next ownership transfer, no further. Better yet, how about we defenestrate the whole idea. The liability is small and its only going to last a few years anyway. I read that if the value of the property exceeds the liability of the title insurance, you can't even claim against the title insurance. Buying this at the bottom of the market does NOT indicate it is likely for this risk to *EVER* be covered.
Then, the title search fee: $275.
Alright. Alright. I can understand that. You need to go do a real title search, it might even take you a few hours (if its not all electronic already). I'll give you the benefit of the doubt on that, as I'm not a title search expert. People seem to think this is important.
Now this is where it goes south.
Settlement Services.
They'll charge me $35 to write a 'Closing Service Letter'. I'm not a lender, and I don't need any letters telling me what the title company is or isn't insuring. My Owner's Policy will have plenty of legalese on it indicating exactly what is going on.
Deed Preparation Fee. $75. Okay, you need to fill out a form and all. I'll pay you for the privilege of not doing it myself, it doesn't cost that much.
Settlement/Closing fee: $535
No fucking way. I already paid you to do the title search, so this doesn't cover the title search. I already paid you to prepare the deed so this doesn't cover the deed. Or even to write a letter I don't want or need. This doesn't even cover the owner's policy with its farcical 1/35th premium/liability ratio. What exactly does this cover?
Shuffling the paperwork between the insurance, search, and deed, filling out a few forms, and visiting the recorders office with the deed I paid you to prepare? Doing an accounting printout and dispersing the funds? This is a cash transaction. You mean to say it'll take twice as long for your office to fill out a cash title transfer paperwork and do escrow accounting than it will to search through the entirety of all of the filed liens through the entire history of the title back to the original land grant by John Adams?
And that brings the cost of the 'closing' to 1/6th the offer price. I believe that would be a ripoff indeed.