Title Company 101

What a Title Company Does and What You Can Expect From the Process

Imagine if you bought a home with a big back yard and found out years later that most of that yard belonged to your neighbor. Youíve been paying property taxes, so you challenge your neighborís claim in court, but the land is proven to be his and now youíre left with nothing but empty pockets and a suddenly-smaller lot.

This is a nightmare, and any homeowner understands why. Luckily, a good title company and title insurance exist to make sure nothing like this can ever happen to you. Hereís what home buyers need to know about the subject.

Title Company 101

Title Company & Title Insurance

The job of a title company is to make sure the piece of real estate you think you are buying is, in fact, what you are really buying. They sort through all the documents to make sure the person selling the land has the legal rights to what they are selling, and that said title is successfully passed on to you.

The title company will also sell title insurance. This is a way to make sure that if somehow something was overlooked and your purchased property is revoked in anyway, they will pay you back for it to make up for their oversight.

The title company is a neutral third party. Usually the buying party will pick the company, but the agency itself is disinterested on anyoneís behalf. The title company will often maintain escrow accounts, so that funds are handled by a neutral third party just like the title and deed.

How Do I Go About Working With Them?

Your real estate agent will help you find a title company that works for you! (More on that below.) S/he should put you two in contact initially. Other than that, you will work with your title company when funding goes into escrow and then again on the day that the title for the property is signed over.

Other than those three basic points of contact, you should only ever hear from your title company if something goes wrong (which isnít often). Title companies are a relatively stress-free part of the often exhausting real estate process.

What Does a Title Company Charge?

This number varies greatly from state to state. The way the cost is calculated is based largely on the size of the loan taken out for the home. A single transaction could range from $200 to a few thousand. Again, your real estate agent will give you the best estimate so that you can budget accordingly.

The good news is that no matter what the title company fee, itís something that is paid once at closing. It is not an ongoing expense.

Pro Tip: If the property was sold with five years before your purchase, you can get a discount on your title insurance. Ask your agent to make sure such a discount is applied.

Help with the Title Company

Your real estate agent will help you find a title company. S/he probably has one preferred company, and will encourage you to work with it, as well. You should also consult any of your friends/family who recently purchased a home, and then do your homework by researching options online. Although a good agent would never lead you astray with a bad title company, the choice is always ultimately yours.

If youíre confused by any of this, itís okay! Thatís what the real estate agent is there for. The agent will address most of the concerns regarding your title. You should be able to relax and simply be at the ready to sign a bunch of papers.