Your offer on a home has been accepted, and you’re ready to start preparing for closing. Especially if this is your first home purchase, the list of things you need to do next may seem endless, from submitting the final paperwork for your mortgage application to scheduling the inspection. The bit that baffles you most may be getting title insurance, but it’s a necessary step in nearly every real estate transaction.
Here’s what you need to know about title insurance:
Title insurance is meant to protect a property owner or lender from financial loss when there are additional claims to the property. When a person intends to buy a home, for example, he or she will purchase a title insurance policy and pay for a title search. At this point, the title insurance company will conduct detailed searches of public record. This could turn up undisclosed liens on the house, a forged deed from a relative of a deceased owner or other issues that could pose a threat to your ability to buy the home without paying additional parties.
“When a title agent or underwriter uncovers a ‘defect’ on the title, the defect is disclosed and very often remedial action is taken to clear the problem,” Robert Treuber, executive vice president of the New York State Land Title Association, wrote in an email. “This may require further research in public records, contacting prior owners or the settling of liens and outstanding obligations.”
In many states, the title insurance representative will also oversee the settlement, or closing, of the real estate transaction, Treuber explains. In other cases, like in New York, a real estate attorney is often in charge of closing rather than the title company.
When you're buying a home, there are two types of title insurance policies:
- Owner’s policy. This protects the homebuyer from financial responsibility or related legal fees should there be another ownership claim on the property.
- Loan policy. This protects the lender that is providing financing for the buyer from financial responsibility or related legal fees should there be another ownership claim on the property.
In the case of a loan policy for title insurance, “it only protects the lender’s interest in the property should a problem with the title arise. It does not protect the buyer,” Treuber says.
Many lenders require borrowers to purchase a loan policy for title insurance as part of the conditions of the mortgage. To protect yourself as the homeowner, you’ll want to consider purchasing an owner’s policy separately (though you’re typically able to do so with the same title insurance company) to protect your own finances should an issue arise.
The cost you’ll pay for title insurance depends on where you live and price you’re paying for your new home. Realtor.com reports the average title insurance policy is about $1,000, though it’s easy to see that number climb significantly depending on the details of your home purchase. Title insurance company First American Financial Corporation has an online calculator for estimating your title fees – for example, it estimates that title fees for a $400,000 house in Denver County, Colorado, with a 10% down payment would total around $2,252.
The best part about title insurance, however, is that unlike homeowners insurance, you don't pay it monthly. “The policy is paid for one time and endures for as long as the policy holder has an interest in the property,” Treuber says.
Many real estate agents work closely with specific title insurance companies and should have recommendations once your offer on a home is accepted by the seller. Your agent may have the right connections, but it’s always a good idea to shop around and compare rates. Like First American, many title insurance companies offer online calculators, but you can also inquire further to get a more accurate quote for your situation.
When you receive your loan estimate – a required form that's issued to you by your lender and explains the details of your loan – you’re at the right point of the transaction to start shopping around for title insurance.
The Consumer Financial Protection Bureau advises you shop for title services much in the same way that you would a real estate agent or general contractor: Ask friends and family who have recently purchased a home for recommendations.
Contact more than one title insurance company to ask for a quote on the total price you’d be expected to pay, as well as for references that you can follow up with.
When you purchase title insurance, you’ll typically purchase the title search at the same time. In states where the title company also serves as the closing agent, this service will be purchased at the same time, often bundled together in what appears to you as a single price. You’ll also want to decide if you’ll be purchasing an owner’s policy in addition to the loan policy to protect you and your lender if there is a separate claim to the property at some point.
Move forward with the company that's the best fit and offers a price that works for you, a good reputation that doesn’t raise red flags and appears amenable to answering any questions you may have about the title search and closing process.
In selecting a title insurance company, consider factoring in how the company has been able to adapt to changing circumstances, like the COVID-19 pandemic. While the global pandemic has altered how many industries have done business, real estate closings have had to adjust to ensure the health and safety of all parties involved.
Kathy Kwak, executive vice president of title and escrow operations and counsel for Proper Title LLC, a title insurance company based in the Chicago area, explains that in-person closings have largely become drive-thru closings. In some cases, remote online notarization is needed for people who cannot be in the same room together to sign a document.
“It’s been somewhat challenging, but we’ve definitely worked around it,” Kwak says.
Kwak expects the measures taken as a result of the COVID-19 pandemic to last at least through the end of the year, and likely beyond that.
Ensure a quick sale.
Selling your home quickly not only allows you to move on with your life, it also means fewer days of keeping your home in pristine condition and leaving every time your agent brings prospective buyers for a tour. According to real estate information company Zillow, the best time to list a home for sale is on a Saturday between May 1 and 15; homes listed during those times sell six days faster and for 0.7% more than the average annual home price. But how fast your home actually sells, and at what price, depends on factors beyond timing. Here are 10 secrets to selling your home faster, no matter when you list it.
Updated on March 20, 2020: This story was published at an earlier date and has been updated with new information.Pick a selling strategy.
Pick a selling strategy.
Before putting a for sale sign in your yard, it's important to pick the selling strategy that will work best for you. The for-sale-by-owner option may be best if you feel confident in your ability to market the home and negotiate. If your time is better spent on other details, a real estate agent could be best. If you need to sell the home quickly, you may want to inquire with an iBuyer, an entity that can make the deal close faster than the typical homebuyer. You should feel confident in the selling strategy you choose, and avoid switching from one to the other while your house is on the market. Buyers could be turned off by the constant changing of circumstances.Invest in a professional photographer.
Invest in a professional photographer.
According to NAR's 2019 Profile of Home Buyers and Sellers, 44% of recent buyers started their search online. Of those, 87% found photos very useful in their home search. If your listing photos don’t show off the features of your home, prospective buyers may reject it without even taking a tour or going to the open house. Hiring a professional photographer and posting at least 30 photos of your home, inside and out, is a good way to attract buyers. Photography is often free for home sellers, as shoots are often conducted at the expense of real estate brokers as part of marketing the property.Clean everything.
(People Images/ Getty Images)
Nothing turns off buyers like a dirty house. Hire a company to deep clean if you can’t do it yourself. “When the (home) is on the market, no matter what time of day or night, it should be clean and neat,” says Ellen Cohen, a licensed associate real estate broker with real estate brokerage Compass in New York City.
Key places to clean while your home is on the market include:
- Kitchen countertops.
- Inside cabinets and appliances.
- Floors and room corners where dust collects.
- Bathroom counters, toilets, tubs and showers.
- Inside closets.
- Windows, inside and out.
- Scuffed walls, baseboards and doors.
- Basement and garage.
Depersonalize the home.
Remove all your family photos and memorabilia. You want buyers to see the house as a home for their family, not yours. Remove political and religious items, your children’s artwork (and everything else) from the refrigerator and anything that marks the house as your territory rather than neutral territory. The same goes for any collections such as figurines, sports memorabilia or kids' toys that can make a buyer think less about the house and more about you. Family photos can be replaced by neutral art or removed entirely – just be sure to remove any nails and repair nail holes where any hanging photos used to be.Let the light in.
Let the light in.
People love light and bright, and the best way to show off your house is to let the sunshine in. Open all the curtains, blinds and shades, and turn lights on in any dark rooms. If the natural light situation is lacking in any room, strategically place lamps or light sources throughout to set the mood. And while your house is on the market, open all curtains and turn on lights every time you leave your house for work or errands in case you get word that a buyer would like to tour the space before you get home.Be flexible with showings.
Be flexible with showings.
Buyers like to see homes on their schedule, which often means evenings and weekends. Plus, they want to be able to tour a home soon after they find it online, especially in a hot market where they're competing with other buyers. If your home can be shown with little or no notice, more prospective buyers will see it. If you require 24 hours’ notice, they may choose to skip your home altogether. "That's one less person who gets to see the property," Cohen says. Be ready to leave quickly as well – if you're still cleaning up or hanging around outside when the buyer arrives, it can make for an awkward interaction.Set the right price.
Set the right price.
No seller wants to leave money on the table, but the strategy of setting an unrealistically high price with the idea that you can come down later doesn’t work in real estate. Buyers and their agents have access to more information on comparable homes than ever, and they know what most homes are worth before viewing them. A home that’s overpriced in the beginning tends to stay on the market longer, even after the price is cut, because buyers think there must be something wrong with it. "Pricing correctly on the lower side tends to work much better," Cohen says.Remove excess furniture and clutter.
Remove excess furniture and clutter.
Nothing makes a home seem smaller than too much big furniture. Rent a self-storage container or a storage unit and remove as much furniture as you can. It will immediately make your home seem calmer and larger. Remove knickknacks from all surfaces, pack them away and store the pieces upon which you displayed them. Take a minimalist approach to books, throw rugs and draperies, and clear off your kitchen and bathroom countertops, even removing appliances you normally use. If you can scale down the contents of your closets, that’s even better, because it makes the home's storage space look more ample.Repaint in neutral colors.
Repaint in neutral colors.
A new coat of paint will do wonders to freshen up your home, both inside and out. This is the time to paint over your daughter’s purple bedroom, nix the quirky turquoise bathroom and cover up the red accent wall in your dining room. Busy wallpaper can also turn off potential buyers. Your goal is to create a neutral palette so buyers can envision incorporating their own personal touches in the home. "You just want people to see the space for what it is," Cohen says. Rather than a stark white, consider neutral shades of gray, taupe and cream on the walls.Spruce up the front of your home.
Spruce up the front of your home.
You’ve heard it 100 times before, and it’s still true: Curb appeal matters. You don’t get a second chance to make a first impression. A new or freshly painted front door, new house numbers and a new mailbox can breathe life into your entryway. Fresh landscaping and flowers in beds or in pots also enhance your home’s first impression. Trim trees and bushes, tidy up flower beds, remove dead leaves from plants, clear out cobwebs from nooks near the entrance and pressure-wash walkways, patios and decks. Leave the outdoor lights on, too, because prospective buyers may drive by at night.Here are 10 tips to sell your home faster:
Here are 10 tips to sell your home faster:
- Pick a selling strategy.
- Invest in a professional photographer.
- Clean everything.
- Depersonalize the home.
- Let the light in.
- Be flexible with showings.
- Set the right price.
- Remove excess furniture and clutter.
- Repaint in neutral colors.
- Spruce up the front of your home.
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She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at firstname.lastname@example.org.