Many buying clients (and first-time homebuyers, in particular) don’t fully understand how title insurance works and the many protections it affords them. And rightfully so – title insurance operates a lot differently than most other types of insurance and the process can feel a little murky, especially as clients are juggling the many other elements of purchasing a new property. But as their agent, they’re counting on you to guide them and provide helpful information about every step in the process.
When reviewing the closing cost worksheet with a client, it’s a good time to check-in with your buyers and gauge a sense of their familiarity with title insurance. Some seasoned buyers might be total pros and already understand its value, but it’s likely that the majority of your clients will have a few questions – like how it’s paid for, what it covers, or if it’s even necessary! Read on for a quick guide of how you can easily help with the most commonly asked questions.
Client’s Question: “What is title insurance?”
Agent Response: “Title insurance protects owners and lenders from financial loss or damages in the event of a dispute over the property’s rightful owner. It ensures “clear” title on a property and provides a guarantee against things like outstanding liens or lawsuits, conflicting ownership claims, fraud, forgery, or errors in public record.”
Client’s Question: “How much does title insurance cost?”
Agent Response: “It’s based on the sale price of the home, and it’s a one-time fee paid on settlement day. You won’t see much of a difference in prices between title companies because the rates are regulated by the Title Insurance Ratings Bureau of Pennsylvania. Let’s take a look at a rate calculator so we have a better sense of what the premium will cost.” (Visit securityabstract.com/rate-estimate for a detailed rate guide)
Client’s Question: “Do I need title insurance?”
Agent Response: “If you’re getting a mortgage, a Lender’s Policy will be required, although this coverage only protects the lender. The additional premium for an Owner’s Policy (to cover you as the homeowner) is typically nominal in these cases. Rarely do buyers waive their right to obtain an Owner’s Policy.”
Client’s Question: “Do I have a choice in which title company I use?”
Agent Response: “Absolutely. In Pennsylvania, the buyer chooses the title company. I’m happy to provide you with a recommendation if you’d like, but it is up to you.”
Client’s Question: “What’s an enhanced policy? Do I need that, too?”
Agent Response: “Most buyers have the option of choosing between a Standard Policy or an Enhanced Policy, if this will be their primary residence. The Enhanced Policy is an additional 10% premium, and provides many additional protections. I’ll get you a sheet so that you can compare the two, and let’s talk to the settlement agent about any questions that you may have.”
If we can ever be of assistance, or if your team is interested in scheduling an informative title insurance seminar with one of our licensed agents, please don’t hesitate to reach out to us at (610) 584-6890 or via email at titleservices@securityabstract.com.