Am I crazy not to buy Title Insurance
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Anonymous
| I posted about this recently—you might want to search. Despite the responses you are getting here, it is a bit of a scam and it’s very expensive for what it is. It’s also something people rarely shop around for, so title insurance companies don’t have an incentive to price it competitiveoh. Title issues do come up occasionally but whether you need the insurance is a different question and depends on your tolerance and ability to handle risk. |
Anonymous
It’s really not! I’m being quoted $5k for the tiny risk that I’ll have a title issue. On top of the $3k I’m paying for the lender policy! |
Anonymous
| How come closing office is not responsible for missing this important info? What the heck they are getting paid for? Isn't it negligence or malpractice on their end? |
Anonymous
Often too late to sue them when you find out. These things come up 10 or 20 years down the road. |
Anonymous
It protects you forever for an unlimited amount of money to fix the situation, though. |
Anonymous
The closing office is checking what's recorded. An unrecorded claim can cloud the title. |
Anonymous
The title insurance companies are very small and some of them are run by a small and medium size attorney's office. What if they go out of business? |
Anonymous
The policies are all underwritten by giant companies like North American Title, Old Republic, Fidelity National Title. The attorneys are insurance salesmen. |
Anonymous
|
No buying it is extremely stupid. And the rates are regulated in most states (not Virginia). The policy terms and premiums are standardized by state.
Literally no lender will make a loan without it and no commercial buyer would ever buy without it. Think about that for a minute. Parties with way more knowledge than you buying in bulk with ability to incur the loss have decided it is worth the cost. FYI, the premium is once per house. So $5k if you sell in 6 months is a rip off. If you hold for 25 years, it’s dirt cheap. And one last comment about suing the title company. Are you an idiot. Do you really think that for the hundreds of dollars in fees (maybe $1200 tops) a title company is going to risk a $1M liability. Do the math on that. 1,000 closings a year. Average price $800K. Title company makes $1.2M gross and pays staff, overhead etc. maybe nets $200k. And they have $800M in liability. To make zero they would be allowed one mistake every 4 years. To make $100K per year, one mistake every 8. Come on. |
Anonymous
Fixed your typo in first line. Otherwise, great post. Esp the bolded part. |
Anonymous
They’re not buying it at your cost. |
Anonymous
Shop around. |
Anonymous
| Large mortgage lenders are not buying it with their own dime. They are compelling Buyers to buy it. |
Anonymous
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5k + 3k for lender policy? What is this a 10 million dollar estate?
Even my friend who bought half an acre near langley only paid ~$2k for the lender policy and then they piggy backed their policy on top of that one for less than 2k. I have never found "shopping around" for a policy on my own to be cheaper than going with the same company the lender is getting theirs from because all the work is already done for that title insurance company so they will sell you a buyer's policy at a discount. |
Anonymous
It is a cartel/regulatory capture system. They have gross margins in the 300-400% range. But of a racket. Also the cost to clear titles is often less than you think. There is a reason they are so hyper profitable. |