If you’re buying or selling a home, you might have noticed there are many players involved in the process, one of which is your title company. In this post, we’ll go over exactly what a title company does to support your home purchase or sale.
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1. Transfer ownership
As the name suggests, a title company’s primary role is to transfer title in a real estate transaction. “Title” is essentially the legal way of saying you own a right to your house. In a home sale, the title needs to be moved from the seller to the buyer to establish their ownership of the property. A title company takes care of this task from start to finish, handling everything from completing legal documents to researching the property through a title search.
The goal of a title search is to confirm that the current owners have a right to sell the property. If they don’t, the future home buyer could run into legal issues if someone else later claims to be the owner of the property.
A title search involves reviewing property and land records to make sure there are no liens, unpaid taxes, or other restrictions on the home. At the end of the process, you’ll get a title report and opinion letter detailing the current ownership details of the property and any issues that need to be resolved for the sale.
2. Issue title insurance
While title searches are quite extensive, there’s always a small chance that an ownership claim pops up down the road, which is why your title company offers title insurance. If you’re buying a home with a mortgage, you’ll need lender’s title insurance to protect the lender’s investment in the house. The vast majority of homebuyers also get owner’s title insurance to secure their personal stake in the property. In many areas, the owner’s title insurance is arranged by the seller on behalf of their buyer.
3. Coordinate the closing
Many title companies also help facilitate the home sale by providing real estate settlement services, acting as a neutral mediator between the buyer and seller. The title company will typically pair you with a dedicated closing agent/escrow officer who will be your point person from the day you sign the sale contract, all the way to your closing date.
Your closing agent will prepare any necessary paperwork, arrange your closing date logistics, and handle communication with third parties like your HOA. About a day before closing, they’ll give you a Closing Statement with a final breakdown of your costs.
On your official closing date, your closing agent will manage the escrow account by collecting and distributing sale funds among the parties involved including the buyer, seller, real estate agents, mortgage lender, etc. They will also record any final transaction documents required by your county.
How much does a title company charge?
Typically, the bulk of a title company’s fee is the one-time title insurance premium. The exact cost of your premium will depend on the price and location of your home. In Texas, the state government sets the pricing structure for title insurance, so your premium will cost the same at every title company.
Tip: Most title companies offer a significant discount if you get both your lender’s and owner’s title insurance from the same company.
Your title fee will also include tax certificate charges, escrow fees, recording fees, and delivery expenses. These fees vary between agents, so it’s often a good idea to review them in case there’s anything out of the ordinary.
How to find a title company near you
Whether the seller or buyer is responsible for selecting the title company depends on your specific market. You can ask your real estate agent to understand what’s the norm in your neighborhood. If someone involved in the transaction already has a particular title agent in mind, make sure that the agent is licensed and has significant title experience.
If you have no leads and need to find a title company yourself, consider doing some price comparison shopping or asking your real estate agent and friends and family for any recommendations. Again, always do your own research to ensure that the company is reliable and qualified. If you’re working with Orchard to buy or sell a home, we recommend our preferred title partner, Orchard Title. They offer a convenient and personalized closing process that’s powered by superior technology and customer support.
Have other questions about what a title company does and how to find the perfect one? We’re always here to help. Send us a note at email@example.com.