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We placed an offer on a short sale property which we expect an answer from the seller any day. My agent is telling me the seller's agent has indicated that a counter offer will be made but the seller's agent wants us to use their preferred title company.
It puzzles me why they would want us to use one over another, or why it's even relevant because the decision to accept an offer is the seller's, not his agent's. The seller is not his own agent in this case.
It puzzles me why they would want us to use one over another, or why it's even relevant because the decision to accept an offer is the seller's, not his agent's.
Because their title company will protect them as a first priority. So your instincts are correct to be concerned, imo.
I seem to remember that under the FHA rules, it was the buyer who had the right to select the closing agent, not the seller. You can agree otherwise, but my memory is that there had to be some sort of trade off. Sometimes they will offer a free title insurance policy, for example.
Now, having said that, I've seen short sales where they use two title companies -- your title company does the work and issues the title insurance policy and theirs "reviews" the work. But they charge them and not you, so it's no skin off your nose.
If you stand firm and insist on you selecting the title company, my opinion is that their agent will back off. Better that than lose a sale in this economy.
This happened to us on our first home. The seller worked at the title company and there were great savings involved for using her title company. In the end, we both saved on title fees. All worked out!
It's also usual in short sales that the listing agent and seller have opened a preliminary escrow account with a title company for working up documentation to be sent to the bank. It helps streamline the process if you continue to use the same account.
This happened to us on our first home. The seller worked at the title company and there were great savings involved for using her title company. In the end, we both saved on title fees. All worked out!
I hope this is true, but my impression is that they just say there are some great savings in these cases. Until very recently, there was really very little oversight on these title companies. (And that comes from personal experience.)
In any case, I'd definitely hold strong and see what they say. They may either back off or offer some additional discounts.
I might be willing to use their company if I were to get some concession on something else, but from what I understand the request is coming from the seller's agent, and it doesn't seem to me they are in a position to grant concessions on anything.
If their title company is looking out for the seller's interest only as someone suggested, in what way could our interests be neglected?
The title companies job is to transfer clean clear title and find documents recorded and supply pertinent doc. #'s so you know what you are getting. If they screw up, or hide something, or miss a relevant document that affects new owner it doesn't matter who payed for the policy closing a deal and getting a few hundred or even a couple thousand dollars to force a closing makes no sense, cause if a claim is made for any reason title co. is out much more than the policy/closing fees. The # 1 reason for seller requesting is as others have stated - a policy search has already been done with one so switching gears only adds costs, the 2nd reason that I have seen is that a specific one is requested is the other local one frankly stinks. Never heard of seller specifically using one cause they can convince their specific title co. to jerk someone around.
This has nothing to do with seller's interest but efficiency. With short sales, the listing agent has already ordered and paid for a preliminary title search. The title company they want to use has already done the title work and they will just run you as a buyer to add to the title policy.
It is the norm with short sales and foreclosures that you go with the title company that has already done the work. You are reading way too much into this.
Title Companies don't represent anyone except themselves so you should be good in that regard. They just want to make sure the work is 100% accurate which is good for you.
On a short sale, new construction or any home with a potential problem title they may have opened the title and done preliminary title work on this home to make sure they can deliver clear title or to clear up some issues such as a Tax Lien.
If this is the case I would stick with the existing title company. If it's because the agents buddies all work there then throw at them it is a RESPA violation to require a buyer to use a specific title company if that buyer is paying for any of the title policies. Even if the seller is paying for the main title policy for you, you are paying for a 2nd title policy for your lender.
Because of this it would be a RESPA violation to require you to use this company. (If I recall all correctly)
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