Saturday, September 06, 2008

wicked

Traditional title examination involves the judicial use of technology while not replacing human expertise. That said, it takes a bit of time and a bit of money and that's where we're caught in this crazy Catch 22. People want you to do all the work and pretty darn fast - almost never fast enough but if for some reason they change their mind, then they wonder WHY we processed it in the first place. HUH?

It only happens when the title order comes from a real estate agent or mortgage lender on behalf of a consumer. You see, consumers are pretty darn smart. They select our company for quality of service, expertise and fair price. Consumers understand that the ordering of those services is a hiring decision. I explain Choose and Save and the value of placing a deposit up front versus being billed for cancellation should the transaction not close. Consumers make their choice - deposit up front or not - but either way they get it and if the deal falls thru, they understand they owe us for services rendered and always pay.

In the case of real estate agents and mortgage lenders, they don't always get it - many do, but many don't.

Here's the case on my mind today. I received a call from a loan officer on August 20th - we had done business with him before but not for some time as he switched to working for a mortgage lender that is owned by a real estate company who also owns a title agency and he normally routes his business to the affiliated companies. In this case, he needed a speedy and efficient title agent, this client was a family friend, and so he chose our office. That's very nice and we are happy to help. So.....

I ordered the abstract - a full 60 year search from a qualified expert abstractor with whom we have worked for years. [cost $130] I assigned the file to one of our closing coordinators, MC.

On 8/21, MC called the buyer and left a voice mail explaining who she was and giving him a courtesy heads up and a 48 hour window to opt into the Choose and Save Program. MC also created letters to the seller and buyer and to all municipal agencies. She created a file and faxed title confirmation sheets to the loan officer and real estate agents asking if they had preference for closing time, location or closer. MC cut checks payable to the various municipal agencies and sent them out with the lien letter requests. [cost for lien letters $165]

BTW - The "hello letter" MC created and mailed to the buyer on 8/21 contains - in bold - a heads up that we are processing a title order on their behalf and that if we are NOT to be doing so that they need to contact our office immediately as we have advanced money for abstract and lien letters and there will be a title cancellation fee for services rendered. There is an extremely small window in which we can cancel these things if there has been some kind of mistake.

After completing a full traditional title examination, we produced a title insurance commitment and mailed it to the buyer on 8/29 including copies of maps found at the courthouse and our plotting and a letter which reiterated that there would be a title cancellation fee should the transaction not close.

Yesterday we received a call that the transaction was being cancelled due to property inspection issues. MC informed the buyer that we would be sending an invoice for $300 for title cancellation and he went crazy. Why had we done all of this work when he hadn't decided fully to buy the property. I suggested he should have that conversation with the professionals who handled his transaction as they ordered the title work on his behalf with full authority pursuant to the terms of the sales agreement he had signed.

The loan officer called and wanted to know why we were charging a fee, and I gave him all of the info I have just given to you. We had the pleasure of dolling out $295 to process the file, did a heck of a lot of work in the 7 to 10 day period following receipt of the order so that they would have their title commitment in time to meet their needs. We were only asking for $300.

The loan officer said he would be paying the invoice and I said that's fine.

There are a few difficult issues here but the big one really is setting expectations. The buyer had conflicting expectations. On the one hand the buyer had a fast timeline expectation and that's why the loan officer called upon us because he knew we could perform. On the other hand, the buyer had reservations about the structure and had a property inspection contingency. What the professionals in his transaction failed to do was to explain that in order to stay on target with his fast timeline expectation, it would be necessary to more forward and order services from a title agent while awaiting results of a home inspection. I feel certain that the buyer understood completely that he needed to pay the home inspector. He simply did not understand that he would also have to pay for title work - even though he had signed an agreement to do so.

If the consumer had placed the title order himself directly with our office, I would have had the chance to set the expectations in reality. I do it all the time and it works. We get loads of calls from consumers whose lender or real estate agent suggested they call us to place the order. That's the smart way to do it. It recognizes the relationship between the buyer of services and the provider of services.

So, I'm tossing this post up here for the benefit of real estate agents and loan officers and consumers. Please understand that the ordering of title is the purchase of services. You wouldn't go to a restaurant and order a meal, then cancel it after it was already prepared and placed on the table before you, would you?

2 comments:

Robb White said...

Amen! Great article. I own a title business in Knoxville, TN and we have the same policy. I'm so glad to know that someone else is sticking to their "title guns"! It has become a horrid habit and expectation with Realtors and lenders here in Knoxville for title companies to eat our hard earned fees should a closing cancel. Regardless you made smile with pride today. Thanks for all your hard work. I'm a first time visitor to your site at the suggestion of one of my underwriters, Southern Title - I will be back to read more! You have a true gift for writing and a wealth of knowledge on title. My Best, Robb

PS - any prior bloggs on title companies giving 'kick-backs'? It is getting out of hand here in town. Drives me insane title companies "giving their money" to Realtors for business. Absurd. Can you imagine asking a Realtor to give you some of their commission?? Regardless, would love to read your thoughts on that topic.

Diane Cipa said...

Thanks, Robb. Oh, I wrote a whole lot about kickbacks, but I'm pretty sure most of that was on Radical Title Talk, the "insider" sister blog to Title Insurance Talk. After ranting for so long I blew my blog brains out and deleted the whole thing. LOL - So those really juicy posts are probably gone.

I welcome all comments and feedback here so please join the conversation!