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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (15350)	12/7/2003 9:38:07 AM
From: Tradelite	Respond to of 306849

<<why the hell would the title co pay for a brochure without such understanding? >> Darfot, real estate offices and busy agents are haunted on a regular basis by loan officers and title companies seeking business. In the office I worked in, whenever a loan officer was on the premises and saw me working on a brochure for a house, he would offer to do a loan profile sheet (listing different types of financing alternatives for the particular house and price level), which he/she hoped I would place in the home, along with my brochure, for pickup by visiting homeseekers and their agents. Title companies do everything they can, as well, to ingratiate themselves to agents and buyers and sellers. It's a "service" the mortgage and title industries render in exchange for visibility and hopefully a call from a prospective buyer. Countrywide is one lender that tried to elevate this "service" to a high level by offering any agent the opportunity to have these loan profile sheets prepared and downloaded online automatically when listing a home. The existence of this type of advertising material does not necessarily imply endorsement of a particular lender or title company by the Realtor, but sometimes can be helpful to the buyer in learning about different payment methods available for the house he is looking at, or in comparison-shopping for loans. I personally didn't care much about having these loan sheets associated with my listings, but I never turned them down if lenders wanted to provide them. It's their paper, their ink, and their time and money. It doesn't mean they'll get the loan. Ultimately, the buyer's agent, not the seller's agent, gets the job of helping the buyer locate financing from an appropriate source, if the buyer doesn't locate this on his own. We always hope the buyer will find a lender on his own; if not, it's always a good idea to recommend several lenders for the buyer to contact, not just one favorite one. CYA....if you know what I mean. Buyers also normally are responsible for selecting the place of settlement/closing. If the title company can win their favor and get its name recognized by buyers, so be it. I often recommended a particular title company for settlements, but not because that company offered me anything of material value in exchange. Their location and price was convenient and they provided a good level of service to the transaction and all parties to the transaction. Parties were always told they had their choice of settlement agents and legal advice, however.

To: Wyätt Gwyön who wrote (15350)	12/7/2003 4:31:25 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Title Insurance is a peculiar business in many ways - bloated sales cost is just one aspect. In most regions title insurance companies share the same "back-office" where the chain of title is maintained and errors in the public record are discovered and corrected. In the event of litigation and claims, which cost less than 10% of the insurance premiums collected, the affected companies usually share legal fees as well. In most states, Title policies are standardized. So you have competing companies selling identical service with no way natural way to differentiate themselves. This means a few companies offer sharply lower prices for the price shopper while most spend huge amounts on their sales force to be the one company mentioned by your builder, real estate sales agent, or lender. kiplinger.com Using Florida as an example, 30% of the cost of Title Insurance goes to pay for the sales commission. fhba.com Additional marketing expenses are included in the SG&A of the remaining 70%. One could easily guess that 50% of the cost of this insurance is spent on sales cost. At any meeting of real estate agents the lunch will always be provided free by a title company. A typical home seller might pay $2,000 for Title Insurance, in effect paying $1000 for free lunches, doughnuts, and sales agents driving around in luxury automobiles. Home Builders need Title Insurance to cover the land they purchase, if for no other reason than to protect the lender providing the construction loan. Offering free marketing brochures to the builder, as an inducement to obtain his business, pays off in two ways. It can brings in additional sales and secondly when it does, they get to sell a second insurance policy on land where they have already insured the chain of title. Two premiums paid for the same risk! Larger builders often obtain steep discounts on their title insurance by offering to place a reference to a Title Insurance company on their sales literature. The most peculiar aspect of the Title Insurance business is that most Title Insurance companies became insolvent during the Depression of the 1930s, leaving property owners and lenders without coverage.