Buyer beware: How to avoid a home closing nightmare

January 27, 2014 by Michael Schroeder

Property titles: Be involved in selection

While no guarantees come with any home purchase, experts reiterate that hiring professional advocates who put buyers first from loan to title work remains the best bet for the smoothest close. “I’m the advocate for my clients, because I know this business inside and out,” says Tina Harrison, vice president of highly rated JDR Title in Tysons Corner, Va. “Buyers really need to have … somebody looking out for them.”

For title work, Harrison suggests getting quotes in writing. Lenders or real estate agents may provide lists of title companies, she says, but because affiliations sometimes exist between these parties, further evaluate these options before deciding to hire.

“The influence and pressure of profits can cause a company to miss the mark on advocating for the buyer,” she says, noting JDR is an independent title company. That could play out in a lender that tells the title company to gloss over terms a buyer may be uncomfortable with — such as an interest rate that ticked up, or a pre-payment penalty — and pressure the buyer to sign.

“There are behind-the-curtain incentives … literally some lenders who own their own title companies tell their employees that you have to refer to our title company,” she says. To evaluate title company options, ask if any affiliations exist when you receive a recommendation. Inquire, too, about licensure, required for title agents in all states, a full list of charges, and the title company’s hours.

Tapan Desai, a member in Leesburg, Va., used a loan officer at a California-based mortgage company that he declined to name, since it still holds his loan, who “was terrible to put it kindly,” he says. “We were 10 days overdue on the closing date and the seller of the house had decided that he was going to start accepting new offers.”

Fortunately, Desai says, JDR swooped in to help seal the deal. “They even sent a closing agent to our home at 10 p.m. with the finalized paperwork to sign,” he says, on a Friday before the Monday he closed.

Desai says he paid JDR about $1,000 for title work and his growing family moved from a 760-square-foot condo to a 3,800-square-foot suburban home with five bedrooms and a basement for about $500,000. “They understand home buying is a very emotional process and they work very, very closely with you,” he says.  “They just went above and beyond in all aspects to make sure we could secure the home we wanted.