When is hiring a real estate attorney or second title company to represent a seller a good idea?

A closing already has several different parties involved; buyers, sellers, buyer’s agent, seller’s agent, the title company and the lender. Does adding another company/attorney to represent the seller make sense?

For a real estate closing in Florida, it just doesn’t make sense to complicate the transaction further by adding a superfluous second title company/attorney.

Superfluous? Yes, that’s right, because the “seller’s title company/attorney” is going to perform the exact same tasks that the “buyer’s title company” would have performed on behalf of the seller – and almost certainly at a higher cost.

Since the “buyer’s title company” is responsible for handling mortgage payoffs and consequently following up to make sure they are released, issuing a title insurance commitment to the buyer and lender on behalf of the seller, recording the deed, and administering the escrow functions, most of the seller requirements will be handled by the buyer’s title company anyway.

Really, all the seller’s title company/attorney will do is order a payoff (maybe), prepare the deed (maybe), and arrange for the seller to sign his/her documents, which is typically 10 pages or less.

Despite having such a small role, the seller’s title company/attorney many times will charge higher fees, because they are not issuing the title insurance policy. So if the seller is paying  more, it must mean that the seller is being provided with more value and better service, right?

By adding a second title company/attorney, you now have your classic “too many cooks in the kitchen” scenario. Think about it, when has hiring more attorneys made for a smoother outcome? Plus, much of the time an attorney doesn’t even prepare the documents. He has a legal assistant prepare them.

So if it costs more for the seller to hire a second title company/attorney to represent them at closing, and the service is not better (and often worse), why do people do it?

Many times it is the seller’s real estate agent who insists on the seller hiring a second title company/attorney without explaining to the seller that they are likely to pay more.

In many cases, the real estate agent’s broker may own or have an affiliation with another title company so there is a profit motive for the agent to refer the seller to another title company.

Another common reason why a real estate agent will refer the seller to another title company/attorney is simply because the location of the other title company is more convenient to the agent’s location.

Most of the time, sellers don’t realize how much more a split closing is costing them. That is why we strongly urge buyers and sellers to obtain title insurance quotes and ask questions to determine what makes sense for their specific scenario.

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