If you've ever purchased title insurance, chances are you went with the company recommended by your real estate agent. But by shopping around, you might have been able to save yourself hundreds of dollars.
Don't be surprised, however, if you feel pressured to go with a specific title company. State authorities have repeatedly sanctioned title insurers for giving illegal gifts and kickbacks to real estate agents, lenders and builders to steer business their way.
You are the one paying for title insurance, and federal law guarantees your right to pick your own provider. Here are some tips to help you get a good deal.
Compare prices online: Last October, the California Land Title Assn. launched TitleWizard, www.clta.title wizard.com, which allows consumers to compare rates from 83 title companies. A recent search showed a $512 difference between the highest and lowest prices for an owner's policy on a $500,000 home, plus a $491 difference on a policy to cover refinancing a $400,000 loan.
The rates are listed by default in less-than-useful random order, but you can rank them from lowest to highest by clicking on the "title policy rate" column heading.
Shop early: By the time most people even think about title insurance -- when signing a home purchase contract -- it's too late to shop around. The title insurer needs to be named in the contract. So start shopping for title insurance as soon as you begin shopping for a home, or as you're preparing to put your home on the market.
Know what you are buying: There are two types of title insurance policies: one to protect lenders and one for owners. If you need a loan to buy a home -- and who doesn't? -- the lender will insist that you pay for title insurance to protect its investment.
The owner's policy covers the buyer for the amount of the purchase price. In Southern California, the seller customarily pays for this policy.
If you refinance, you must get a new lender's policy but not a new owner's policy.
To get a lender's rate on the TitleWizard site, select "purchase." To get an owner's policy rate, select "sale."
Ask about discounts: If the property has been sold or refinanced within the last five years, you are probably eligible for a "short-term rate" -- typically a 20% discount -- since it is unlikely new problems have arisen in the short time since the last title policy was issued. On TitleWizard, check the box that asks about recent sales or purchases.
