Overpaying for Title Insurance?

Odds are, you’re most likely overpaying for title insurance, on every single real estate deal, and you didn’t even realize it. You’re about to uncover a simple tip for saving hundreds on title insurance that most investors are certainly not told. Title insurance is typically a necessity of any buyer of real estate because it makes sure that the buyer will not be held liable if another party has a claim on the house in the future. If somewhere down the line, someone claims that they have an interest in the home, your title insurer will handle it. Title insurance is one of the greatest expenses in closing costs in a real estate deal. As a real estate investor, you can pay for title insurance when you are purchasing a property but also, if you are selling a property, the new buyer might negotiate that you pay for their title policy also. Consequently, title insurance is a substantial closing cost that most investors are buying on nearly every closing and regrettably, too many are overpaying for it.

I spend a considerable amount of time each week studying the closing statements of deals of the people I mentor. In most cases, I find places where my mentee is being overcharged for closing costs I’ve factually adjusted hundreds of closing statements over the past 1o years, saving the peoples I mentor a lot of money. The reason why the buyer, the seller, or both, are frequently overpaying in closing fees is because there is very little education and information on the topic and those adding the fees to the closing statements (brokers, loan officers, title companies, and attorneys) have little in the way of financial incentives to help teach buyers and sellers. Even worse, what typically occurs is that the buyer, the seller, or both, grow fatigued by the end of the deal and they take on the attitude of, “I don’t care anymore, I just want this thing closed.” When you combine an absence of knowledge with just wanting to get things over with, it’s a formula for over-paying. At the closing, what then typically occurs is the buyers and sellers sign the closing documents and accept whatever is written on the HUD1 Settlement Statement as carved in stone. Then they end up being overcharged fees of hundreds or even thousands of dollars.

All title companies should tell the party buying the title insurance what I’m about to disclose. Unfortunately, far too many don’t. This simple tip can cut the cost of title insurance by hundreds of dollars. Here’s how to stop paying too much for title insurance…

Give the title company a copy of the current title insurance policy on the house. By providing this policy, they will decrease the cost of the new title insurance policy they are going to issue. Since almost every property has a present title insurance policy, this means that you should get this reduction on just about every transaction you do.

It’s that easy? Isn’t that the way it works with real estate? The truth is oftentimes concealed but when you get to it, you make smarter choices and make money with more ease.

Where do you get the current title insurance policy? The best place to find it is in the large, bulky folder of closing paperwork the property owner got when they bought the property. If it isn’t in there, find the phone number for the title company from that closing paperwork and call them. Sure, this job may take some additional time to complete, but it’s worth hundreds in savings to you and all discounts in closing costs is typically untainted profit in your pocket.

If you’re a veteran real estate investor, you may be rationally calculating all the deals you’ve closed whereas you didn’t use this easy method. Ouch! Better late than never, though. If you’re just getting started, the good news is that you don’t have to learn this lesson the hard way. You’re learning from the knowledge of others. Well done.

Share your story. Where have you been hit with excessive closing fees? Have you been paying too much for title insurance?