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Using the Builder's Title Company - (for "production" builders)

In a recent post I wrote, I commented on an upcoming ruling that will be implemented on January 16, 2009 that will affect incentives a New Home builder gives the buyer of one of their homes if that buyer using the builder's "in house" lender, and/or the builder's preferred or in-house title company.  

In my first post a few days ago... all the discussion concerned using either the builder's preferred lender, or their "in house" lender, or the buyer using an outside/buyer chosen lender.  

There were plenty of great comments, and a good discussion followed.  

This post will cover the use of the builder's "preferred" title company, or the builder's "in house" title company... chosen, and then required, by the builder... which in this case... I mean the "production" builder.

First of all, in Texas, the title fees charged do not matter very much because title insurance fees are regulated by the state... so it's the same fee/cost from title company to title company.  

If you are considering the difference in customer service, or the exact location of using the builder's title company (as far as driving time is concerned), or using your (The Realtor's) preferred title company... should you (the Realtor) or the buyer be allowed to use a different title company than the builder's preferred one ?  

If there really is no difference in fees because of Texas law... this question should not even come up.  

Here are some other reasons:

The (production) builder has closed hundreds of homes with their preferred or in-house title company.  If any title issue whatsoever comes up during the actually closing, the in-house title company is already prepared with necessary documents to handle the problem.  

The in-house title company also has a track record of handling other "glitches" that have happened at the last minute.  

Also... if this particular in-house title company closes all of the production builder's closings... the fees may actually be less than using an outside title company due to the volume of closings.

But... let us not forget one last thing.  The builder is "the seller..." and as such is probably paying for the title policy.  If that is the case... it is not only right... but it also makes sense... that the builder be able use their own in-house title company.

Comment balloon 4 commentsKaren Anne Stone • December 27 2008 05:32PM

Comments

Karen Anne--For the very reasons you outline is the norm for builders in MN to require a buyer to use their title company. Our fees are not regulated but the closing fees are competitive in most circumstances.

Posted by Teri Eckholm, REALTOR Serving Mpls/St Paul North & East Metro (Boardman Realty) over 9 years ago

We always use the builder's title company.  That title company has usually assisted the developer or builder in the original subdivision approval, site planning, etc.

Buyers can always bring a title attorney to closing if they wish. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 9 years ago

Teri:  Yes... when one slows down and actually thinks about it... it really does make sense to use the builder's title company.  There really is no reason not to.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 9 years ago

Lenn:  You bring up several great points that I did not mention.  That title company more assuredly will have the original subdivision approval, site planning, and just about anything else that could be asked for... at the closing.  If it were an outside title company... it could take so much time getting those docs that the closing deadlines could be missed.  Thanks once more for your well-informed additions to one of my posts.  I appreciate you.  Take care.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 9 years ago

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