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>Title insurance when buying a house also seemed like a total “legally required” joke. Real estate agent checking in here... I agree with you, but there's alwa

>Title insurance when buying a house also seemed like a total “legally required” joke. Real estate agent checking in here... I agree with you, but there's always a but... the problem is that there really are situations where there's a cloud on title or where title is questionable. This doesn't mean there's anything nefarious going on, and it also often isn't a question of history (IE: title recorded on parchment or something). It also seems to me that some states are just better at maintaining good title records over others - and again, I'm not convinced this is directly related to the timespan of recorded history. So the problem then is an 80/20 or a 99/1 thing... 90+ % of properties the title insurance is going to be a waste of money. But in those few cases, it really could make a difference. Since the amount of money involved is usually quite small, especially relative to the size of the transaction, it becomes really hard to change the system.

derbOac 5y ago
Not to sound snarky, but this was my reaction as well. It's also the very nature of insurance: you get insurance to cover the rare but costly problems that arise. If they're not rare, you don't need insurance because you address the problems another way.
- poulsbohemian 5y ago
  Yeah, that's exactly it. I know I've certainly spent spare brain cycles considering it, and there seem to be a number of startups trying to create cheaper title insurance, but it's not clear to me how to really solve the issue. Basically it's a human behavior and record keeping problem. You have to have perfect records, and you hope some estranged cousin doesn't magically popup with a deed someday claiming to own your house. So, you fork over $1000 just in case. I'm actually in a transaction right now where the title history is weird and questionable. Will the insurance be a factor? Probably not, ironically, but it's exactly the kind of scenario for which this kind of thing exists.
  - d136o 5y ago
    When we bought our house, after our down payment and on our way to closing I asked a question to the escrow/title insurance person: * the disclosures show two slightly different figures for the dimensions of the lot, which one is it? (County mapped shows Width W and another owner provided map showed W-1ft or something like that) Instead of doing anything to try to figure it out, this title insurance company (also doing escrow) lowered the tier of title insurance they were willing to provide LOL Because this was a material change, once they saw we wouldn’t go through with the transaction without the best coverage they changed their minds about and said that they’d title insure at the highest level… but only once we pushed them on it… Nobody did any more work to settle the question than us, who went to the house and measured to determine which dimension was right…
    - poulsbohemian 5y ago
      Yes, there's plenty that could be discussed about how to improve the title / escrow process, in addition to the information collection process... for much of it, it comes down to being a better process than the alternatives, having been refined over decades (or longer).
    - ak217 5y ago
      The state of that industry is absolutely incredible to me. Throughout the whole home purchase process all I can see is people trying to cover their ass and do the absolute minimum amount of work possible. I understand that they want to avoid getting sued, but the whole process (sell side agency, brokerage, buy side agency, title, home insurance, financing, escrow, whatever) is just agonizing every step of the way. I see a great opportunity for a vertically integrated agency that could own as much of the process as possible and lower the fees, but only admit "easy" clients who don't have any custom needs.
      - poulsbohemian 5y ago
        It's actually a much "safer" process for buyers and sellers today...there actually used to be greater integration in the past, but a lot of that went away in order to protect consumers. Regarding fees - when you actually break down the cost of a home sale, the fees really aren't much. On the sell side in particular, that commission should be irrelevant if the listing agent was doing their job, IE: marketing your property in a way to get you a top dollar return. Likewise, from the perspective of the buyer - the NAR / DOJ lawsuit could result in a scenario where the buyer pays an agent commission directly, rather than via the closing settlement, but I guarantee we do not want to be living in that world - it's a case where the current system might seem bad, but it's better than the alternatives. Would love to chat sometime if you have thoughts on the industry. As much as I love my clients... there are very few who are "easy" in the same way that there are very few "normal" transactions - this is where Zillow et. al. just don't understand the realities of real estate.

derbOac 5y ago

Not to sound snarky, but this was my reaction as well. It's also the very nature of insurance: you get insurance to cover the rare but costly problems that arise. If they're not rare, you don't need insurance because you address the problems another way.

poulsbohemian 5y ago
Yeah, that's exactly it. I know I've certainly spent spare brain cycles considering it, and there seem to be a number of startups trying to create cheaper title insurance, but it's not clear to me how to really solve the issue. Basically it's a human behavior and record keeping problem. You have to have perfect records, and you hope some estranged cousin doesn't magically popup with a deed someday claiming to own your house. So, you fork over $1000 just in case. I'm actually in a transaction right now where the title history is weird and questionable. Will the insurance be a factor? Probably not, ironically, but it's exactly the kind of scenario for which this kind of thing exists.
- d136o 5y ago
  When we bought our house, after our down payment and on our way to closing I asked a question to the escrow/title insurance person: * the disclosures show two slightly different figures for the dimensions of the lot, which one is it? (County mapped shows Width W and another owner provided map showed W-1ft or something like that) Instead of doing anything to try to figure it out, this title insurance company (also doing escrow) lowered the tier of title insurance they were willing to provide LOL Because this was a material change, once they saw we wouldn’t go through with the transaction without the best coverage they changed their minds about and said that they’d title insure at the highest level… but only once we pushed them on it… Nobody did any more work to settle the question than us, who went to the house and measured to determine which dimension was right…
  - poulsbohemian 5y ago
    Yes, there's plenty that could be discussed about how to improve the title / escrow process, in addition to the information collection process... for much of it, it comes down to being a better process than the alternatives, having been refined over decades (or longer).
  - ak217 5y ago
    The state of that industry is absolutely incredible to me. Throughout the whole home purchase process all I can see is people trying to cover their ass and do the absolute minimum amount of work possible. I understand that they want to avoid getting sued, but the whole process (sell side agency, brokerage, buy side agency, title, home insurance, financing, escrow, whatever) is just agonizing every step of the way. I see a great opportunity for a vertically integrated agency that could own as much of the process as possible and lower the fees, but only admit "easy" clients who don't have any custom needs.
    - poulsbohemian 5y ago
      It's actually a much "safer" process for buyers and sellers today...there actually used to be greater integration in the past, but a lot of that went away in order to protect consumers. Regarding fees - when you actually break down the cost of a home sale, the fees really aren't much. On the sell side in particular, that commission should be irrelevant if the listing agent was doing their job, IE: marketing your property in a way to get you a top dollar return. Likewise, from the perspective of the buyer - the NAR / DOJ lawsuit could result in a scenario where the buyer pays an agent commission directly, rather than via the closing settlement, but I guarantee we do not want to be living in that world - it's a case where the current system might seem bad, but it's better than the alternatives. Would love to chat sometime if you have thoughts on the industry. As much as I love my clients... there are very few who are "easy" in the same way that there are very few "normal" transactions - this is where Zillow et. al. just don't understand the realities of real estate.