The process of buying a home is a complicated one even in the simplest of exchanges. Many moving parts across multiple companies and professionals can make it difficult to keep track of what is going on, and a title company is one of the many actors at work during a real estate purchase.
You may feel leery about paying money for services you do not understand, such as title insurance and checking a home’s title. In order to understand where your money is going, it is helpful to understand how a title company makes money and what they do for you during the real estate purchase process.
How Does A Title Company Make Money?
A title company performs many tasks, all related to the title of a home. A home’s title documents potential issues such as outstanding liens, as well as information about previous owners and how the home has changed hands over the years. A title company makes money by facilitating this process, participating in a home’s sale, acquisition or transfer.
These services are charged to the client as fees, which can come in the form of a set number or as a percentage of the total value of the home. Thus, you are likely to pay fees to a title company for a variety of services as the real estate changes hands during the purchase. A title company may also make money by offering you title insurance; however, title insurance is optional, and you are not required to purchase such insurance.
If you do elect to purchase title insurance, it will generally be for a lump sum up front, in contrast to many other types of insurance that you pay for in monthly installments. Title companies are not all the same, and some may only provide these basic home purchase services such as title transfer.
However, others offer insurance, which is a vehicle for one-time fees, as well as additional services depending on the expertise of the staff who work there. You may expect to pay slightly more for professionals who have taken the time to become experts in their field, in addition to acquiring their licensed, bonded and insured certifications.
The Risks Of Home Purchase Without A Reputable Title Company
One of the most valuable jobs a title company can perform is offering protection in the event that an issue arises with the home’s title later. If a previously undiscovered heir makes a claim of ownership on the home, if the home has liens that were not previously uncovered, if the deed to the property was previously forged or if other such issues are present, the person who bought the home may be on the hook for any of the financial burden associated with responding to these issues.
This may mean paying off unexpected liens or even forfeiting the home entirely, which can have a significant detrimental impact on a person’s financial health and security. A reputable title company will search diligently for these issues and offer comprehensive insurance that can protect you against the fallout from these problems.
How A Title Company Protects The Consumer
Title insurance offered by a trustworthy title company will shield the homeowner from significant financial turmoil as a result of an issue with the property’s title. If a title issue must be fought in court, title insurance comes into play to help cover legal fees. When a buyer chooses to purchase title insurance, they typically pay a fee of a few thousand dollars or a percentage of the home’s value up front and are then protected for the future.
Some title companies may also offer additional services, such as inspections or specialists on staff to mediate deed or ownership disputes. This can be another area where title companies make money.
Work With The Title Insurance Professionals To Avoid Trouble Later
If you are considering buying a home and are wondering how a title company can help you achieve your goals, do not hesitate to reach out. A title company can do so much more than the baseline title transfer that is part of buying a home. To protect yourself against significant financial consequences later, consider title companies that offer title insurance to shield you from the repercussions of deed issues.
Mathis Title Company would be happy to help you understand how a title company can make your home buying experience smoother and more protected. Reach out to schedule an appointment to discuss any questions and determine what types of title services would be best for you, as well as how much you can expect to pay.