Title Fees
How Much Are Title Fees When Selling a House?
If you’re selling your home, you typically don’t have to pay any title fees. The purpose of title checks, title insurance and all other title services is to protect the homebuyer (and their lender) – not the home seller. As a result, the homebuyer is expected to pay for these services (although the party who pays title fees could potentially be part of the home sale negotiations).
Title fees are not cheap. They often equate to between three and six percent of the purchase cost, which means tens of thousands of dollars in many real estate transactions.
Choosing a Title Company
While the “buyer” is technically responsible for title costs, the homebuyer is usually using the lender’s money. This means the mortgage lender often has the most money on the line in the real estate transaction.
Many lenders have an existing relationship with a preferred title company they trust. According to the Real Estate Settlement Procedures Act (RESPA), lenders can’t require buyers use the services of a specific title company. However, in many cases, buyers simply trust their lender to choose the title company and pay the necessary fees along with the other closing costs.
In other words, if you’re a homebuyer and don’t want to deal with the hassle of shopping around for a title company, your lender will be happy to handle it.
Title Searches
The fundamental purpose of a title search is to determine if there are any encumbrances on the title. Encumbrances usually manifest as liens – or legal claims against the property. In practical terms, this means the homeowner owes money, and the party they owe has a legal claim to the debtor’s property to guarantee payment. The lien is attached to the property, not the borrower – meaning if the property changes hands with a lien, the new owner would essentially be taking on the seller’s debt.
It’s the title company’s job to ensure no liens exist or that any liens that do exist are settled before the sale proceeds. Otherwise, the debt could wrongfully transfer to the homebuyer.
The process of title searches can be labor-intensive. The title company will have to research:
- Public records relating to the property, including court records, deeds, property indexes and any other records that establish historical ownership
- The chain of title, or the historical transfer of property ownership
- Liens and other encumbrances, like unpaid property taxes, mechanics’ liens (debts owed to unpaid contractors) or court judgments from civil or criminal cases
- Court records that may pertain to judgments or legal actions that may have impacted ownership or resulted in the creation of liens
Although not strictly lien-related, title companies also examine easements, survey issues and covenants, conditions and restrictions (CC&Rs).
An easement is a right of access or right to use a property for a specific purpose, like an access road or utilities.
Surveys are used to determine the legal boundaries of a property. Legal disputes regarding where those boundaries are or legal disputes regarding encroachment of those boundaries may impact the salability of the property.
CC&Rs are rules on what can be done to the property or how it can be used, most often in the sense of homeowners’ association regulations and rules.
If a title is clear, the title company can issue title insurance. Title insurance is intended to pay for any consequences of an unclean title. The policy would pay out if the title company made a mistake and didn’t discover something (like an outstanding lien) while doing their title search.
More Than Just Title Searches
Title companies do more than just issue title insurance and title searches. They often double as escrow companies, meaning they hold onto the buyer’s earnest money, the mortgage funds and the home’s deed during the transaction.
Their fulfillment of this necessary function is another reason why lenders are often involved with choosing the title company – they’re entrusting a lot of their own capital with this company, so they are particular about who they choose.
Title companies can play a large role in facilitating real estate transactions, ensuring all parties meet their obligations before funds are dispersed, the transaction is closed and the title is transferred.
Sell Your Home Fast for Top Dollar With 72SOLD
The good news about tile fees is home sellers don’t need to worry about them – in most cases. The exception may be in scenarios where a home seller is desperate to attract a buyer and is willing to throw in title fees to sweeten the deal.
The 72SOLD system is tailored to avoid those types of concessions. Our real estate professionals generate a sense of urgency and scarcity for your home, which is an effective way to attract multiple offers fast and puts you in a stronger negotiating position. We have studies that show the efficacy of our approach, with home sale prices that average between 8.4 and 12 percent higher than other home sales within their local MLS.
