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Independent vs. Affiliated: Home Buyers & Sellers Can Choose a Title Agent

Customers have choices when it comes to their title insurance and closing agency.

As a first choice, an Independent title agent’s primary focus is on the consumer’s needs and closing experience. Independent title agents have skilled employees who understand vesting requirements, tenancies, chain of title, and can read a legal description and map it out if needed. These individuals attend regular education seminars and volunteer in their industry associations. They invest in best practices, new products, enhanced services and look to create greater value for people just like you. In addition to their consumer-focus, these title professionals care about their industry and wish to provide a fulfilling customer experience, for all buyers and sellers.

Another choice is the real estate broker owned title agency, a/k/a affiliated business agreement. In this model, the real estate broker and title agent form a joint venture. Joint ventures do not have to earn title orders. It is presumed that you, the customer, will choose who the real estate broker advises, recommends or steers you to. Many of these agencies are understaffed, do not require experience, and are not personally vested in the outcome of your closing. They rely only on the broker-owner referrals to drive their business.

You see, it’s illegal for the title company to give money to the real estate broker in exchange for your title order referral. The state’s legal definition of that is referred to as a kickback. If a real estate broker is an owner in a title business, then the payment for referral is no longer classified as a kickback. It is now a dividend. It is a loophole and makes that which was intended to be illegal now legal. Not all real estate broker-owned shops are bad, badly run or badly managed, but are they operating in YOUR best interest? Is there an appropriate arms-length or proper checks-and-balances in a real estate transaction where your title company is controlled by your real estate agent? No.

Imagine: Your physician only prescribed medication for which he was incentivized to sell you or if he prescribed only one kind of medication regardless of the diagnosis?

Would you be suspicious of his motives? How would you be sure you are getting the best service, value and pricing? With all that control, is it possible that your physician’s focus could shift from what is best for you, to what is best for the bottom line of his practice? It is reasonable to equate those suspicions to any instance of a real estate broker pushing you to use a title agency he owns.

Home buyers and sellers, do yourself a favor: Research title providers. Take time to compare pricing, value, and service. Use an Independent Title Agency. You will almost always find that your local, independent title agent will offer better pricing, better value, additional services and greater quality of service over that of the real estate broker-affiliated model.

Dave Nichols – 9-19-2018

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