What do title companies do?
Blake Outlaw, a Homeward Partner Lead, studied real estate finance at the University of Texas. Since then he’s had a number of industry jobs, from leading a home building operation to starting his own real estate brokerage, Outlaw Realty. As an agent, he helped more than 1,300 families buy homes. He even helped start a San Antonio-based title office. Blake stumbled upon Homeward in 2019, and after helping four clients win with a Homeward Cash Offer, he fell in love with our solutions and joined our team. Today, we’re sitting down with Blake to learn more about title and closing, and why he recommends using Homeward Title when you make a Homeward Cash Offer.
Let’s start with the basics. What is title?
Home title, contrary to what a lot of people think, is not a single document. It’s actually supported by several documents. It’s the concept that gives property owners their ownership rights. The title to a property changes hands with each new owner. And the property is transferred with a deed. Before that can happen, however, the title has to be verified to ensure the deed is effective.
Title also includes a physical description of the property and shows whether there are any liens or claims against the property from a creditor. Once you buy a home, for example, your mortgage will show up on the title as a lien.
Title companies and title insurance are hard to explain. How do you explain what a title company does?
Title companies manage the closing on your home. They make the purchase official. It’s really pretty exciting: the moment you become a homeowner is at closing. The words closing and settlement are often used interchangeably. That’s fine: they mean the same thing.
So, what specifically do title companies do for homebuyers?
Title companies provide a few services to the buyer. First, they collect the money and fees associated with buying a home and hold them in escrow — a special kind of holding account — and then they distribute the funds at closing. So they make sure everyone gets paid the right amount, right on time. They also ensure that you have a clear title — that no one else has a claim on the property you’re purchasing. And they provide title insurance, which protects you and your lender from any future claims against your ownership of the property. By the way, when a title isn’t clear, we refer to it as “cloudy.”
How often is a title cloudy?
Not often. But, mortgage companies require title insurance, so if you’re going to have a mortgage, you’re going to need title insurance to protect yourself and your lender.
What does the title company do for the seller?
The title company makes sure the seller and the seller’s lender receive the funds they’re owed as part of the transaction. The title company also coordinates the payment of fees to any vendors who provided services as part of the closing and payment of commissions to the agents.
There are a lot of closing companies out there. Why did Homeward create its own?
When you buy a house with our Buy with cash or Buy before you sell services, there are two closings instead of one. First, Homeward buys the home with cash. We call this the Homeward Purchase. Then, you buy it back from Homeward when you close on your mortgage. We call this the Customer Purchase. So there are two contracts and two closings. Traditional title companies aren’t designed to handle double closings efficiently, and that can lead to confusion and closing delays. Ultimately, that’s a bad customer experience.
We created Homeward Title so you can work with one integrated team, which means you’ll have a better, more seamless experience. Closing the purchase of a new home costs money, but states regulate most of the fees associated with closings so prices don’t vary much — if at all. In Texas, for instance, the Texas Department of Insurance regulates title premiums and endorsements, so these costs are the same regardless of where you close.
But when you settle both closings with Homeward Title, you won’t pay for two policies?
If you close a Buy with cash or Buy before you sell transaction with another title company, you will probably be required to obtain a new title policy and that additional policy could cost you near 1% of the home price. There’s one more major advantage to closing both transactions with Homeward Title. They get an underwriting exception, which means you won’t have to wait around for the deed to record for the Homeward Purchase before the underwriter can issue a new one for the buyback as part of the Customer Purchase. That means you’ll finalize your buyback sooner. When the Homeward Purchase closes at another title company, they can’t guarantee that.
You mentioned that these types of transactions involve two contracts and two closings. Does that mean double the fees?
No. When the seller and buyer both use Homeward Title— when Homeward Title closes both the Homeward Purchase and the Customer Purchase — we cover nearly all redundant fees.
How did the COVID-19 pandemic change the way you do closings at Homeward Title?
Homeward Title was already on the forefront of offering fully digital closings, but COVID accelerated that. Homeward Title now uses a cloud-based platform that makes it easier to communicate with the team, upload documents, and track the progress of the closing. It’s great.
Homeward Title also offers our clients a virtual settlement review. It’s basically a Zoom meeting. They review all the documentation and answer any questions.
And, finally, Homeward Title sends a mobile notary to you when you’re ready to make everything official. And they usually do this a few days before the scheduled closing date. They don’t like leaving things to the last minute. It’s really a concierge closing experience.
If anyone reading this has more questions about closing at Homeward Title, what should they do?
They should visit the Homeward Title website or reach out to our fabulous title team. They can email them at email@example.com or reach them by phone at (512) 598-6282.
Homeward Title LLC and Homeward Mortgage LLC are wholly owned subsidiaries of Homeward, Inc., either directly or through one or more subsidiaries. Because of these relationships, the referral of a customer by any of these companies to one of these other companies may provide the referring company, its affiliates, or any of its employees with a financial or other benefit. To view our Affiliated Business Arrangement Disclosure, please click here.