To an anxious homebuyer or seller, the idea of "one-stop shopping" - having your real estate agent, mortgage company and title company all under one roof - may sound appealing.
United States of America (Press Release) November 7, 2007 --
NORTH ROYALTON, Ohio - To an anxious homebuyer or seller, the idea of "one-stop shopping" - having your real estate agent, mortgage company and title company all under one roof - may sound appealing and convenient. But, according to Laurie Bellomo, vice president of FSBO Title Co., the consumer rarely wins by using a real estate agent's in-house mortgage and title companies.
"One-stop shopping is not for the benefit of the consumer," Bellomo said. "Consumers usually end up paying excessive fees to an affiliated title company and they don't even realize that they have a choice. People who are buying, selling or refinancing a home have the right to choose their own title company that is not affiliated with any other party in the transaction."
The U.S. Government Accountability Office (GAO) agrees.
GAO, in a recent report, recommended that the U.S. Department of Housing and Urban Development (HUD) take action to improve consumers' ability to comparison shop for title insurance.
As a result, buyers and sellers usually let the real estate agent or the mortgage lender decide which title company is used to settle the transaction. That's why most title companies don't market their services to the public, but rather to real estate agents and mortgage professionals, who in turn make the "referrals" to their clients. Under the law, compensation for the referrals is not allowed.
Traditionally, title companies are disinterested third parties that provide title insurance, settlement and escrow services for buyers and sellers during real estate transactions.
Today, most large real estate agencies own their own title, insurance, appraisal and mortgage services - a practice GAO calls an Affiliated Business Arrangement (ABA). When such an agency sells a home, their client often is steered toward using the company's in-house title and lending affiliates, sometimes in violation of the law.
"This can create conflicts of interest if those making the referrals have a financial interest in the agent," GAO reported. "These and other factors put consumers in a potentially vulnerable situation."
Under the Real Estate Settlement Procedures Act (RESPA), ABA representatives can not require that their clients use a particular title company. But the clients often don't realize that they have a choice. Prices charged by ABA-based title companies often are inflated - sometimes by hundreds of dollars - because the consumer is a captive to the process.
"Nobody is doing anything about steering," Bellomo said. "And when companies get caught doing it, the penalties are too light to be a deterrent.
FSBO Title is unique because it doesn't market its services to real estate agents and mortgage companies.
"Whether it's us or another title company, consumers should make their own choices. Don't let your Realtor or lender take control of your transaction. That's like letting your car salesman choose your automobile insurance."
More information: www.fsbotitleco.com.
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"One-stop shopping is not for the benefit of the consumer," Bellomo said. "Consumers usually end up paying excessive fees to an affiliated title company and they don't even realize that they have a choice. People who are buying, selling or refinancing a home have the right to choose their own title company that is not affiliated with any other party in the transaction."
The U.S. Government Accountability Office (GAO) agrees.
GAO, in a recent report, recommended that the U.S. Department of Housing and Urban Development (HUD) take action to improve consumers' ability to comparison shop for title insurance.
As a result, buyers and sellers usually let the real estate agent or the mortgage lender decide which title company is used to settle the transaction. That's why most title companies don't market their services to the public, but rather to real estate agents and mortgage professionals, who in turn make the "referrals" to their clients. Under the law, compensation for the referrals is not allowed.
Traditionally, title companies are disinterested third parties that provide title insurance, settlement and escrow services for buyers and sellers during real estate transactions.
Today, most large real estate agencies own their own title, insurance, appraisal and mortgage services - a practice GAO calls an Affiliated Business Arrangement (ABA). When such an agency sells a home, their client often is steered toward using the company's in-house title and lending affiliates, sometimes in violation of the law.
"This can create conflicts of interest if those making the referrals have a financial interest in the agent," GAO reported. "These and other factors put consumers in a potentially vulnerable situation."
Under the Real Estate Settlement Procedures Act (RESPA), ABA representatives can not require that their clients use a particular title company. But the clients often don't realize that they have a choice. Prices charged by ABA-based title companies often are inflated - sometimes by hundreds of dollars - because the consumer is a captive to the process.
"Nobody is doing anything about steering," Bellomo said. "And when companies get caught doing it, the penalties are too light to be a deterrent.
FSBO Title is unique because it doesn't market its services to real estate agents and mortgage companies.
"Whether it's us or another title company, consumers should make their own choices. Don't let your Realtor or lender take control of your transaction. That's like letting your car salesman choose your automobile insurance."
More information: www.fsbotitleco.com.
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