The title company is a neutral party paid to provide a closing, title insurance, prepare closing docs, calculate closing costs according to lender instructions and distribute funds. I would say it doesn't get much safer than that. They are scrutinized by "the powers that be" and they are not about to ruin big business for your earnest money
You can use a closing attorney that can hold the earnest money and close the transaction but, make sure you are getting a title policy. If you are getting financing, the lender will require it but without a lender it must be negotiated.
People often think that they can do better than the "conventional" methods normally used by the real estate industry but when it's over and you haven't had the t's crossed and i's dotted, you are in a mess that probably can't be undone without litigation and that's never cost effective or fun.
If the seller is unwilling to use a title company or a real estate attorney, I think you may need to move forward to the next property.
I too am not a tax advisor, but I am a foreign nationl! If you are a resident of the US and pay US taxes I believe there are no differences in the taxes paid on a home, If you are a non resident home owner I believe the only difference is that you can not claim homestead on you home so your property taxes will be higher than someone with homestead. The title company will also withhold funds at closing and report to the IRS.... more