Foreclosure in California>Question Details

Tinga, Other/Just Looking in Chino Hills, CA

What does "Seller reserves all services" mean?

Asked by Tinga, Chino Hills, CA Fri Jul 13, 2007

While browsing listings, I'll occasionally see remarks like "Seller reserves all services" or "all services reserved" in the property description. What does this mean? As a buyer, should I be wary of such listings?

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9
Such a great question!

In reality it means that THE SELLERS AGENT insists on a particular title or escrow company. In all my days I've run across exactly zero sellers who even know what title insurance is, much less care who writes the policy. The same for escrows. Despite the fact that it is a RESPA violation (section 9(a)) many listing agents continue to expose their sellers to liability.

This is an issue that HUD dealt with extensively in the 90's and it will reemerge as the business gets tougher...title companies will be greasing agents to get the reduced book of business. I've had offers come back with ONLY title and escrow countered out...do you think that the seller really cared?

As a broker I have a rule that when a buyers agent brings me a deal THEY choose title (unless it's their inhouse CBA) because the BUYER is the one who will be making the claim on the title policy if there is one. Escrow is theirs too unless it's inconvenient to the sellers location (or an inhouse CBA). I've found all escrow holders to be pretty good and the only time i counter them out is if they are one of the very few I've had crummy sevice from. (CBA stands for Controlled Business Arrangement. Many brokerages have inhouse escrow departments and title insurance affilliates. The agents get some benefit for driving the business to their brokers profit center...apparently commissions are not enough).

Several exceptions to my general rules are if there is an open title order on a sale or if an escrow cancelled. If I have a service provider that has time and money in a file then i feel obligated to see to it that they get paid. I am always clear with the agent and tell them that they are free to choose another company but they all understand the concept of getting paid and it's never been an issue. Another case might be where a home is being flipped and the seller placed a binder on the title policy which will save them money...they are rare though.

I am very interested to see where this thread leads...it's a hot topic for agents but the clients seem to be disinterested in it...for obvious reasons.
5 votes Thank Flag Link Sat Aug 4, 2007
Hey J.B., thanks for bringing this up. You're question has already been answered well below. I was just thinking about this today....I can't believe that in today's market, agents are still putting this in listing remarks. How silly is that?? Like, if a qualified buyer wants to write a good offer, it would definitely not be acceptable to the seller unless they use a certain title company. Furthermore, I'm sure it really helps sell the house (sarcasm) to put this information in the listing...."Beautiful 4 bedroom Westwood Traditional. Seller Selects Services." "Honey, let's go see this one! Can't wait to find out which services they're gonna select!!!"
2 votes Thank Flag Link Thu Sep 20, 2007
That means that the Seller will choose the title and escrow company that will be used in the transaction.. Often this is because they have an open escrow with an escrow company or they used one in the past that they really liked. It can also be because the listing agent has a preference for a particular company. Usually this won't make a lot of difference as all fees are fairly similar but you might check to see if they will offer you a discount if you agree to use their services.. If I represent a buyer and an agent says we must use a particular company I will often compare the fee and ask that they meet the fee I can get from a particular title or escrow company if i find the fee on the high side.
Web Reference: http://kayethomas4homes.com
2 votes Thank Flag Link Fri Jul 13, 2007
Kaye Thomas, Real Estate Pro in Manhattan Beach, CA
MVP'08
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I believe that "Seller selects services or seller reserves services" are the same. It is not legal to say this in California. It is ALWAYS negotiable, BUT the seller (seller's agent) usually calls the shots. If you prefer a title or escrow company and the seller's agent won't give in, try comparing costs and see if the escrow and title companies will negotiate.
Web Reference: http://www.WendysHomes.com
1 vote Thank Flag Link Thu Sep 13, 2007
In California if it is an all cash transaction or seller carryback then both tile and escrow are negotiable. If the transaction involves a loan then it falls to RESPA (Federal) law and therefore title insurance is the choice of the buyer. Escrow is still negotiable no matter what.
0 votes Thank Flag Link Fri Sep 28, 2007
Many big companies have affliations with title and escrow companies, which is in violation with the law and require there agents to use those services. I worked for a big compnay where an agent was let go because she refused to use the compaines escrow services. In my area I can use most any escrow company and try to guide my clients towards price and service.
Web Reference: http://www.MichaelRicks.com
0 votes Thank Flag Link Fri Sep 28, 2007
I echo Wendy, below: depending on the situation, everything is negotiable, including which companies are used AND who pays for them. But then, you need to pick your battles.

I think the traditional reasoning goes that the seller is supposedly delivering clean title, so he is the one who usually buys the insurance, as substantiation, essentially in lieu of issuing a warranty. This is much the same as the reason, at least in my area, that the seller usually pays for a home warranty, to substantiate the condition of the home.
Web Reference: http://rd.la
0 votes Thank Flag Link Fri Sep 21, 2007
As you can see from my colleagues below, it's a silly statement and agents shouldn't use it.

But you should also know that RE-SPA guidelines actually give the buyer the right to chose the title service provider. http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm

However, this also generally means the buyer pays for the title policy (there is a lender's policy and an owner's policy and they can be simultaneously issued to save money) the lender's policy covers just the lender in the event of a claim. The owner's policy covers the purchaser if there are claims against the title.

The seller can generally control the choice of the title service provider - if they elect to pay for the policy.

I've never been able to understand, other than area protocol - why a seller pays for the buyer's insurance policy. (other than the agents/brokers steer the business at the expense of the sellers but that's a whole other thread.) But it's actually protocol in Florida and other than with new construction (the builder's almost never buy it for the buyer's - but still control the choice of title company because many generally share in a benefit of the policy sale.) Seller's in Florida pay it and control the selection of the title company for closing.

http://www.knowyourclosing.com/Index.html

The services to a certain degree are negotiable - if who's paying for it is negotiable. But just know that unless they are going to buy it for you - something for free - the legal position is, that a good number of the choices are the buyer's.

If the seller's don't know they aren't obligated to buy it for you, you might still be able to control the choice of title vendor by letting them know that by RE-SPA guidelines the buyer's choice prevails - the Seller's might still pay for them!

Good luck, hope this helps.
0 votes Thank Flag Link Fri Sep 21, 2007
I liked Ron's sarcastic remark. It goes along with Mike's "counter" comments and Wendy's statement that it is ALWAYS negotiable. (I gave everyone thumbs up on this post.) As Kaye said, it might be an open escrow. We are seeing a lot more of these than ever before. Just look at the number of questions on this forum about who gets the earnest money when a contract falls through or all the TV programs about "flipping" properties. So if a seller already owes a title company (or whoever) $200 - $2000, does the buyer really care? If the seller finds a buyer willing to pay full asking price who doesn't want to use their services, isn't it penny wise and pound foolish to turn that buyer away? It is just bad marketing to do this. I have the same problem with foreclosures all saying "no survey". It's bad marketing. These are things that should go in "agent remarks" to help them write up an offer to eliminate one step in the negotiations. Would you advertise a property as "time is of the essence, must close by Dec 31st or loose your earnest money?" The foreclosure auction could be scheduled for Dec 31 and this is a true statement; but is it in anyones best interest to advertise it this way (if you still have 3 months)? That's something that should be included with the disclosures. Maybe not the best example but hopefully you get the idea. Wait, here is a better example, "Basement leaks during flash floods."

"Oh, I want to run out and see that house right away!!!"

Where I live, this is so common that I am tempted to advertise, "This house had NO seepage during that last national news making storm."

Back to my pet peeve (obsession really) with the "no survey" advertising. I've never bought or sold a house where a NEW survey wasn't obtained prior to closing. If a survey was done 3 years ago when the sellers bought the property, I would still get a new one. If the sellers have been living there for 50 years and don't have a survey, they wouldn't advertise "no survey". I've bought "as-is" homes that said "no survey" and it just meant that I chose and paid for the new survey. It doesn't mean there is a dispute over easements or anything like that and that you are not allowed to obtain a survey. Why give that impression? Maybe "no survey" is really a euphemism for "foreclosure" or "bank owned" just as "TLC" means "needs work" or that "fixer-upper" will most likely have an "as-is" clause.

So, back to "What does 'Seller reserves all services' mean? It MEANS that the BUYER should NEGOTIATE a BETTER PRICE. As the saying goes, "You can be firm on price or terms but not both." This person is stating that they are not flexible on terms, so go after the price. Just my opinion, here.

Class dismissed for Marketing 101 and Philosophical Real Estate Negotiations 101.
Thank you for reading,
Ruth

P.S. I am not a tax adviser, accountant, attorney, real estate agent or any of those other professions that require you to have a license to give advice. This is just my personal experience that I am relaying - I am not giving PROFESSIONAL advice (just some common sense advice).

P.P.S. I'm I just passionate or do I need to attend some anger management classes?
Web Reference: http://www.oak-park-il.com
0 votes Thank Flag Link Fri Sep 21, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
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