Saving on Closing Costs for Title Insurance

Closings costs are typically a necessary evil when it comes to investing in real estate. Everyone wants their own pound of flesh, so in addition to whatever purchase prive you agree to pay for a particular property, you’ll also get hit for additional money in closing costs, as far as paying for title insurance, loan origination fees, document preparation fees, escrow fees, fees for printing loan documents, yada yada yada.

Many of the closing costs are unavoidable, largely non-negotiable, and simply the price of doing business in the fun world of real estate. Some, though, you d have control over, and can actually save a few bucks on in some cases. Title insurance is likely the place where most buyers overpay when it comes to closing costs, and for pretty simple reasons.

Most real estate agencies steer their clients towards particular title companies that they use for closings. In a vacuum, there’s absolutely nothing wrong with that, and it can actually be beneficial for the buyer in many cases. If a bump in the road appears during the closing process, a close relationship between the title company and your real estate agency can go a long way towards quickly eradicating the bump. In the best of all worlds, your real estate agency has ties with the title company they steer you towards because the title company has the absolute best service and prices available, so it’s a win-win for everyone.

In the world we live in, that doesn’t always happen. Sometimes real estate agencies steer clients towards title companies with very high fees, and the steering occurs only because the real estate agency benefits financially, often at the buyer’s expense, who ends up paying far more for title insurance than they might with another title company.

Like anything, it pays to shop around for title insurance. If you’re working with an agent when buying, don’t be afraid to grill them as to their relationship with the title company they recommend, as they legally have to disclose any relationship they have with the title company (which is often buried in very fine print in the actual contract). You’re not at all out of line to go with another title company, especially if your check around and find that the savings could be substantial. (If you’re only going to save $25, though, you need to weigh whether it’s really worth rocking the boat, as there are definite advantages to going with a title company that your agent has ties and a good working relationship with).

More and more people are turning to online providers for title insurance, especially when looking for a baseline title company quote to compare with. The trend there is similar to things like health insurance, home loans, car purchases, you name it; in many cases you can get quotes and coverage from online providers at a substantial savings, for exactly the same coverage or service. Even if you decide not to go with an online vendor, you can often get lower quotes that help you negotiate with traditional brick-and-mortar companies.

The moral of the story here is don’t feel obligated to use the title company recommended by your agent. Shop around, as you very likely might be able to shave a few hundred dollars off your closing costs if you do a little legwork yourself.