Who chooses title/closing company? (agent, commission, contract, Realtor)

[pfdmd]

I've asked several questions on this forum and received good advice. Now I have another question that I hope someone can answer for me.

We're selling our home "as is". A neighbor approached us several months ago and were interested in purchasing. We got an appraisal (on advice of some here on the forum) and have finally agreed on a price. Basically, they are paying cash, do not want a title search or title insurance. They do want us to pay for "usual fees paid by seller at time of closing". They have also picked out someone to do the closing (attorney). My question is: do they choose who does closing or do we? Is there any advantage to us calling around and finding out about fees charged by various companies? The wording in the purchase contract about "fees usually paid by seller seems a bit ambiguous to us. Any suggestions or advice? Thanks.

[MikePRU]

Wow! That phrasing is incredibly ambiguous. Did either of you hire an attorney to review the contract before signing it? If you did, I'd ask for my money back.

Here's my question for you . . . it sounds like you're not paying for anything . . . so do you really care who gets hired to close the transaction? As long as the buyer hires someone capable it has no impact on you. I know around here typically the buyer chooses the closing firm because they're the ones paying the company's fee. If you can remind us where you live, someone local to you may be able to chime in with what's typical in your general area.

It really sounds like you don't have a lot of experience selling real estate. Did no one here offer advice to hire an attorney or a real estate agent to guide you through the transaction?

[pfdmd]

Well, we haven't actually signed anything yet. We just received a letter, (purchase contract) from them. Initially, during earlier negotiations, they were willing to pay all closing costs, including taxes etc. Now they want us to pay "normal closing costs associated with the seller". Problem is we don't know what those consist of. Should we run this past an attorney and find out exactly what those closing costs are? Should we call the closing company they want to deal with and just ask? And no, we're not experienced sellers. We've only sold one home and that was with a realtor.

[jackmichigan]

Originally Posted by pfdmd

They do want us to pay for "usual fees paid by seller at time of closing".

Yes, that is ambiguous. Around here a Seller would normally pay for a title policy and the transfer taxes; the actual closing fee would usually be split...so you really need to know what is typical for your area.

Since you haven't signed a contract yet, you should probably get an experienced real estate attorney to write one up for you, detailing the costs which will be covered by each party. Once you have the terms of the contract nailed down, it won't matter much who handles the closing--they'll simply need to abide by the terms of the contract.

(And don't be surprised if their attorney insists on a title insurance policy.)

[jackmichigan]

I just read your other threads and noticed that your purchaser is an investor (who already lied about wanting to buy it for a daughter--not that that would normally matter, but it shows that they'll say anything to get what they want). The "normal closing costs" issue may be a ploy on their part to sneak in costs which really aren't usual for a Seller to incur. That is more reason to work with an experienced real estate attorney who can protect your interests.

EDIT: Since you haven't signed a contract yet, you might be better off to check with a couple of local real estate brokers to see what they think the property is worth. You could go ahead and list it for sale--with a provision that a commission would not be owed if you sold it to this particular party. If this investor backs out, you're going to be at square one anyway.

[MikePRU]

Originally Posted by jackmichigan

Yes, that is ambiguous. Around here a Seller would normally pay for a title policy and the transfer taxes; the actual closing fee would usually be split...so you really need to know what is typical for your area.

Interesting! This is exactly why it's important to say in the OP where the transaction is occurring. Around here, the buyer pays for the title insurance and the fee from the closing attorney. Basically, the seller just pays transfer taxes, the cost of generating the deed, and the recording fee for the deed. Maybe a few other items that are escaping my memory right now as well but the big one is the transfer taxes.

Originally Posted by jackmichigan

Since you haven't signed a contract yet, you should probably get an experienced real estate attorney to write one up for you, detailing the costs which will be covered by each party. Once you have the terms of the contract nailed down, it won't matter much who handles the closing--they'll simply need to abide by the terms of the contract.

Absolutely, the OP needs to seek help and seek help immediately before they get themselves too far in the process to go back.

Originally Posted by jackmichigan

(And don't be surprised if their attorney insists on a title insurance policy.)

Of course he will. Attorneys make a ton of money off of the title insurance commission. Personally, I think it's ridiculous how the majority of the cost of buying the policy is actually the commission that goes to the attorney.

Originally Posted by jackmichigan

I just read your other threads and noticed that your purchaser is an investor (who already lied about wanting to buy it for a daughter--not that that would normally matter, but it shows that they'll say anything to get what they want). The "normal closing costs" issue may be a ploy on their part to sneak in costs which really aren't usual for a Seller to incur. That is more reason to work with an experienced real estate attorney who can protect your interests.

EDIT: Since you haven't signed a contract yet, you might be better off to check with a couple of local real estate brokers to see what they think the property is worth. You could go ahead and list it for sale--with a provision that a commission would not be owed if you sold it to this particular party. If this investor backs out, you're going to be at square one anyway.

Absolutely, the OP has showed up to a gun fight with a dull knife at best. They need help making sure they are at worst getting a fair price for their house and agreeing to a contract with fair terms.

[DMenscha]

I'd be highly suspicious of a buyer that didn't want to have a title insurance policy. Other than that local custom dictates who would be responsible for closing costs.

[bbronston]

Around here, whoever pays for the title policy picks the closing agent but it is negotiable. I agree with getting your own attorney involved but, if you want to go with the flow, just call around to get a few prices and tell the buyers you will pay $X toward the buyer's closing costs (based on your research) as long as you pick the closer. Be sure to include all of that in writing in the contract. If they don't want the protection of a title insurance policy, I'd want my own attorney to write the contract (or review and change where needed) to be sure I am covered against any future problems.

[jackmichigan]

Originally Posted by MikePRU

Of course he will. Attorneys make a ton of money off of the title insurance commission. Personally, I think it's ridiculous how the majority of the cost of buying the policy is actually the commission that goes to the attorney.

Hmm...that's interesting, too. I'm not aware of any of the attorneys that I've worked with getting a commission from a title insurance company. The title insurance premium rates in Michigan are set by the state, so I don't see much incentive for a title company to give up part of their take.

[NinaN]

Call a couple local title companies and ask them to run an estimate of closing costs based on customary split of closing fees. Then counter with a $$ amount and share the estimate with the investor.