Monday, October 26, 2009

Has Your Agent Checked Thoroughly?

When a real estate agent represents a client, he does so through the very end of the transaction. Part of that representation is to make sure that ALL of the numbers on the HUD-1 Settlement Statement (the document that shows what is being received and paid out by the seller and buyer) are accurate.

Six weeks ago, I sold a listing where the contract stated, "Seller to pay $3500 toward buyer's closings costs, prepaids and points." The lender only charged $2900 to close the buyer's loan for this transaction, but when I received my copy of the HUD-1 to review, an "additional" $495 was charged to the seller. The charge? A home warranty.

While a home warranty is usually covered by a seller to benefit the buyer, this buyer specifically WAIVED a home warranty. So why was the additional charge on the statement? When I called the seller's title company and protested the charge, it was removed. Apparently the buyer's title company "wanted to try it to see if the seller would pay it." That is an actual quote from their representative.

Just recently one of my sellers asked why it was important for there to be a "split" closing, utilizing two title companies. This is the very reason why. In the real world, title companies are technically and legally supposed to be NEUTRAL parties to the transactions. However, in recent years, title companies have taken on the role of "representative" of either the buyer or seller. In this situation, the buyer's title company SHOULD have actually told the buyer, 'no' to the request to charge the seller for the warranty. After all, the warranty was not agreed to by either party.

Representation took on it's current state several years ago when foreclosing banks started contracting with title companies to handle their sale transactions. By contracting with them, they received a reduced rate in their fees in exchange for giving the title company all of their business. Unfortunately, this 'representation' mentality has seeped into mainstream title companies as well because buyers and sellers would have battles at the closing table. Voila - split closings.

If you are buying and/or selling a home, make sure you ask your real estate agent to review the HUD-1 Settlement Statement very closely. A good agent will pull the contract out while reviewing it to make sure everything is followed precisely.
Looking for a qualified agent to help you buy or sell your home? Give me a shout. You can reach me by email ( or by phone (615-373-3513 - office). I'd love to help you with all of your real estate needs.

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