As a realtor, it’s your job to guide clients through the entire home purchasing process. It’s easy for first-time homebuyers and seasoned homebuyers to become overwhelmed by piles of paperwork and closing fees. Title insurance is often misunderstood by buyers and realtors. Since you are a dedicated advocate for all of your homebuyers, you should fully understand the value of title insurance and the dangers of not utilizing it.
Title Insurance 101
Owner’s title insurance is an insurance policy that protects the property rights of the homebuyer. Just like every bank will require a lender’s title insurance policy to protect the investment it is making, every homebuyer should purchase an owner’s policy to protect the property.
How Does Title Insurance Protect a Realtor’s Clients?
Title insurance is appropriate for both old homes and new home constructions. For example, your homebuyer just purchased a new home from a local home builder. The builder failed to pay the contractor that poured the foundation. As a result, the contractor filed a lien against the property. Without the right title insurance on the property, the homebuyer would need to pay the outstanding debt. Even though the homebuyer already paid for the purchase of the home, because the builder did not pay the contractor, the homeowner would be responsible for removing the lien. Title insurance guards against a tremendous amount of financial liability in case the worst case scenario happens.
It’s a One-Time Fee
The great news is that title insurance is a one-time fee that will protect the homebuyer throughout the life of the home. The owner will be protected against unknown title defects for the indefinite future, as long as the owner or an heir owns the property. While homebuyers might be hesitant to put “yet another fee” on top of closing costs, explain the potential financial ramifications of a single clerical error, title defect or lien against the property. The one-time fee of title insurance could be worth millions to the client.
Tips for Discussing Titles with Homebuyers
- Keep it simple when explaining what title insurance is and why it matters.
- Work with your title company, Homeland Title & Escrow, to get resources to supplement your explanations.
- Emphasize that title insurance is a one-time fee that protects the homeowner for as long as the home is owned.
- If the title does not currently show any defects, explain to the homebuyer how, in some cases, issues in the title chain do not surface until years in the future.
- If the property is an investment property, remind the buyer that a title defect could drastically change their ability to resell the property if it is discovered during settlement
Realtors and Homebuyers Love Homeland Title & Escrow
Homeland Title & Escrow offers a broad range of title services, including complimentary consultations for first-time homebuyers. To learn more about our services, give us a call at (410) 544-6700.