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Almost all closings are either handled by attorneys or title companies. We'll address which is the best choice between them in another issue of this blog. The question for today is "Who should pick the closing agent?"
More and more lenders and real estate sales people are directing their customers to the lender's or sales person's choice of closing agents. They do so because they have an ownership interest in the closing agent, they get 'kickbacks,' or because it is convenient to them.
The Wall Street Journal reports: "Yet people advising home buyers often have conflicts of interest. Some real-estate brokers, mortgage firms and builders own firms that act as agents for title insurers. Federal and state laws bar title insurers from giving kickbacks to real-state agents, mortgage firms or others for funneling business toward a particular title company, but enforcement is spotty. ... The inducements have included entertainment, trips and help with marketing."
Now who do you think that closing agent will be loyal to? Whose interests will they protect? I hope you didn't think they'd look out for you!
The need for you to be protected and represented has never been greater. It is highly likely that your lender has not completely explained the ramifications to you of the lending product you've selected. In recent times, there has been allegations that lenders have mislead their customers and put them into products that led to adverse consequences for the borrower.
Likewise, real estate sales people don't get paid unless you close. They rely upon their choice of closing agents to get your transaction closed and that motive sometimes outweighs protecting your interests.
You have a right to select the closing agent that you pay for. Write that down: You have the right to pick the closing agent you pay for. If the lender or salesperson wants to pay for them out of their pockets, then say "Thank you" and then consult with someone who will look over their shoulder on your behalf. But they normally want you to use their agent at your expense.
If you come to us to prepare your closing, or to have us review another closing agent's work, we will protect your interest. You will know what you are signing and the potential impact each document could have on you. For such a significant transaction, isn't having a pro there to help you?
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