Everyone below gave you the correct information about the necessity and benefits of selling a house using a Title Company. No reasonable or competent buyer would buy a house without title insurance. And yes, in Santa Clara County those fees are usually paid for by the seller.
If you have heartache about paying for these fees then here's an idea. You will notice that everyone said, "customarily"... well that's different than "mandatory." You could offer your house at a competitive price to obtain multiple offers and then request that the buyer pay the title & escrow fees.
There is always a solution to your wants and needs. It's just a matter of your Realtor being flexible, creative and knowledgable.
If you'd like to discuss your plans to sell your home with me, I'd be delighted to listen. :-)
(408) 420-8270 Cell
You do not "have" to use a title company. However, that is not a recommended way of selling a house. Please see below list of items where it impacts you (This is not an all inclusive list):
1. Generally, when people talk about title, they are talking about title and escrow charges. These are two seperate functions. Here in California, generally speaking, both of these functions are carried out by a title company. Escrow portion can be handled by an attorney, but you will need to pay the attorney also.
2. Title insurance "insures" the title of the property. This makes your house more marketable. Most buyers will not buy a house without title being insured. This protects you as well as the buyer. (No, this cost is not included in the commissions)
3. In Santa Clara county, it is customary for the seller to pay for the title insurance (Buyer buys lender's policy and pays for that)
4. In Santa Clara County, it is also customary for the seller to pay for the escrow (or attorney) fee (Essentially seller pays for the closing agent).
5. Listing agent should have provided you with an estimated seller's proceeds (basically a breakdown of all estimated costs). In addition to commissions and Title/escrow fee's, you also have to pay for county transfer tax and 1/2 of city transfer tax in San Jose. If your agent did not provide this, you may want to call his/her broker.
6. If you do not pay for the title insurance, you can ask the buyer to pay for it. However, you risk the chance of losing the buyer. This also limits the number of prospective buyers.
7. If there is no title insurance, it is unlikely that any lender will lend money on the house. This limits the number of prospective buyers for your house.
Please note that all of these fee's that we are talking about are negotiable during contract negotiations. It is advised that you pay for the fees that are normally paid for by the sellers in local county to improve the marketability of the house.
By limiting the buyer pool, you will most likely not get the best possible price for your home. Providing and paying for title insurance is a smart and prudent choice that will help you get the top dollars for your house and will also provide you with protection against any issues with title down the road.
1. insure clear title to buyer (most common that seller agrees to provide this in an offer) - can be hundreds or even thousands depending on value of property.
2. document preparation (which an attorney could also do for you) - typically a few hundred dollars, varies in any market.
No buyers want to take the chance of inheriting problems in the title (clouded title) and will require this step, even if they are not geting financing. When a lender is involved, the buyer typically will pay the extra cost to provide title insurance that covers the lender's risk in a transaction.
The title company charges are rarely if ever included in the commission, but are an essential step in any real estate sale. If problems with clear title ever come up down the road, the buyer will look to the title company instead of the seller or broker which is a definite plus for you both.
ESCROW is the neutral party who handles the money and changing of title. They are paid to make sure that the Seller gets paid, the liens are paid, and deliver clean title to the Buyer.
TITLE is an insurance policy. There are two. The first is the CLTA this is provided by the Seller to the Buyer to give the Buyer Insurance that the Buyer gets clean title. The second is the ALTA typically this is paid for by the Buyer for their Lender to give the Lender Insurance on clean title as well.
In Santa Clara County there are typical division of the fees. Seller usually pays for Commission, Title to the Buyer and Escrow, plus County Transfer Taxes and then Buyer and Seller split City Transfer Tax (if any) 50%/50%. As Bart said everything is negotiable. So you can make adjustments in the Marketing Price to reflect certain fees. Understand that a Buyer's offer is going to reflect what they feel is fair and reasonable in their offer price and factor their cost into it as well.
California is the most litigious state in the union. We have a stack load of required disclosures which a Seller must provide to the Buyer. The Seller Broker will be able to assist you with all that, as well as, explain to you the purchase contract, marketing, negotiating, risk management and more.
If I can help drop me a note.
All the best to you.
It is not possible for the buyer to get financing without Title Insurance.
As a seller, the Title and Escrow Company protects you as well. the Title and Escrow Company makes absolutely certain that the buyer has performed all of the duties of the buyer and has deposited all of the required funds into escrow before Title is transferred.
Title And Escrow Companies protect both the interests of the buyer and seller.
In Santa Clara County it is customary that the seller pays for the Escrow Fee and for the title Insurance Policy that protects the buyer.
There is also a separate title insurance policy that protects the interests of the lender that provides the financing for the buyer. In Santa Clara County, it is customary that the buyer pays for that title insurance policy.
for more information, please call me at my cell phone: (408)509-6218
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: firstname.lastname@example.org
Intero Real Estate
When you sell a house you need to provide the buyer a free and clear title to the property. Title Insurance investigates the history of the title and insures that should any undiscovered lien appear, they are responsible. There are a number of other benefits to the buyer, but it is required under most, if not all circumstances I can think of.
The buyer, if they are financing, will also buy a Title Insurance policy for the balance of their loan. This tells the lender that they will remain in first priority should the buyer default. There are exceptions for property taxes, but little else.
Commissions should appear on a separate line item. In California you can close with an Attorney or an Escrow Company. You will pay 1/2 the total escrow costs with the buyer paying the other half. My understanding is that the vast majority of closings are done with Escrow companies, but talk to your own agent for recommendations and options.
When you select an agent ask them for detailed breakdown of your closing costs. We call this an estimated net proceeds worksheet. The figures will be based on some assumptions such as when you close, amount of taxes you have paid, what the final price will be, etc. This is a reasonable request that most agents can do fairly easily.