Should I Compare Escrow Fees On-Line?
When you begin shopping for the best home price, mortgage rate, insurance premium, and lender closing costs, so to should you shop for the best escrow fees. Many buyers believe escrow fees are set by law and so they do not include escrow fees in their search for the most competitive closing costs. Escrow fees are not generally regulated by law or by state statue. Escrow fees may be set by each escrow company. In most states, independent escrow companies are regulated by the Department of Corporations, Escrow Division, and the department does not set limits on what an escrow company may charge. Title companies are regulated by the Department of Insurance.
A normal escrow fee may vary depending on your local area. Normally, escrow fees in larger areas are higher than an escrow fee in a smaller town. A usual escrow fee can run from $150 up to $500 or more, depending on the complexity of your transaction, the purchase price of the property, and the location of the property. Escrow fees can vary from state to state and even from county to county.
Shopping on-line is often an efficient and effective way to compare escrow fees in your area. While you could call several local escrow companies in your area to compare rates, you may find that you have to speak with several people before getting your answer, and then that person may tell you that the fee will vary depending on your individual circumstances. You may be asked several specific questions, such as if you have an open escrow, what services you will require, who the lender will be, or you may find that an escrow or closing agent is not available to quote you escrow rates. You could request that the escrow company send you a chart of their escrow fees, but that may take time. Shopping on-line for escrow rates can eliminate ambiguity and give you a speedy way to compare rates. You will be able to complete your search while on-line, with no waiting involved.
To begin your search on-line, you can start by finding the names of the local escrow companies in your area by using any one of several large search engines, typing in Escrow Companies as the keyword. You can access the local Chamber of Commerce, the on-line yellow page and phone directories, which will generally give you a good indication of the escrow companies which are on-line in your area. You may want to try two or three search engines, as each one indexes it's listings by different criteria. If independent escrow companies are not typically used in your area, type in Title Companies as the keyword. In many areas of the country, title companies handle the closing and their escrow fees will be posted on their website. You can try searching the American Land Title Association site, www.alta.org, which will give you a list of the member title companies in your area, or the American Escrow Association at www.a-e-a.org. Your state may have an escrow association, such as California, which has the California Escrow Association, which can be visited at www.ceaescrow.org. Washington state has an escrow association which is located at www.e-a-w.org. These associations will list their members for each city on their site. Your realtor may be able to give you a list of escrow companies with websites in your area.
If the escrow or title company does not post their escrow fees on-line, you can try sending the company an e-mail request, indicating the purchase price of the property, the time limit for closing, whether 15, 30, or 60 days, and any special requirements which you may have. You should receive an answer within 24 hrs. of your request. Write three or four escrow companies with your request for fees. Keep in mind that some miscellaneous escrow fees may be negotiable, such as the notary fee, doc prep fee, and power of attorney fee. You may find that an escrow fee can vary as much as $100 or more from company to company. Be wary of an escrow company charging significantly less than other companies in your search. You may not be getting the same services which may be included in the other companies' fees. Shop around for three good choices and then look for credibility and ask for references. You can post most all your questions on-line, via e-mail. In this way, you will have a record of the responses which you receive, and you can print out and compare the fees from company to company.
You may feel that all escrow companies should be offering comparable services, so shopping around isn't really that important. Most escrow and title companies do handle typical escrows efficiently, but there is always the chance of the unexpected circumstance, such as your needing a special "rush" order on your closing, or help with a dispute over items found in the title report, or help with hurrying your loan through the underwriting process. Selecting an experienced and reputable escrow company, one whose fees are clearly stated and understood, will be appreciated when it comes time to sign your closing documents and pay your closing fees.
When you are comparing different escrow companies and their rates, be sure to ask them what the circumstances would be which would make the rate change. For example, if you anticipate that you will require that your escrow be closed at another location other than at the escrow or title company, there may be an out-of-office fee of $25-$35, plus tolls and parking. Some escrow companies have been known to change their fee at the last moment, indicating that extra work was required. You may not be notified of these changes until you arrive to sign your closing documents. At that point, it may be too late to do anything about the revised escrow fees.
Comparing escrow fees could add up to a savings of $100 - $200 or more. These savings on escrow fees would cover the price of a home warranty policy or an inspection of one of the systems in the home which are in question. Closing costs are generally higher than anticipated by most buyers, so even a small savings can be significant. Many times, unexpected closing costs appear which the buyer has not provided for. Most buyers must calculate the amount needed to close escrow carefully. They must pull money from savings accounts, family and investments, to come up with the total closing costs.
If you are located in a state which does not use escrow or title companies to conduct the closing, you would begin your search by locating two or three attorneys who handle closings in your area. Many law firms have their own websites. You can then e-mail the attorney to request a list of closing fees. The escrow fee in an attorney-assisted closing may be called an attorney's fee or a settlement fee, but the services performed will be the same as with an escrow fee. An attorney's closing fee may include ordering the title, resolving any title issues, preparing deeds and other closing documents. There may be an extra charge for the title search if the attorney uses an outside title company to perform the search. That fee could run from $150 - $160 and would be listed separately. Other services performed by the attorney, such as reviewing your purchase agreement, may be an extra charge, s o be sure to ask the attorney what the hourly rate would be for special requests and help. If you are buying a condominium, for example, you may want the attorney to review the condominium documents for you. This may be an additional charge, and not included in the closing fee.
You may find that in some attorney-assisted states, the lender typically chooses the closing attorney. You could make a request for an attorney of your choice, and the lender would most probably agree to your request. Under RESPA law, a lender cannot require you to obtain title insurance from any particular company. You are allowed to choose which company will issue the title insurance. You may want to review RESPA law as it pertains to escrow and settlement fees and title insurance at http://www.hud.gov/ownahm.html. Go to "Topics," "Own a Home." Scroll down to "Settlement Costs and Helpful Information" and choose "RESPA Disclosures."
When requesting a quote for escrow fees, be sure to indicate any special circumstances of your transaction. Will you need a "rush" escrow or have trust or probate issues to deal with? Will one or more of the parties be out of town at the time of closing? Would there be any divorce issues which must be dealt with at the closing? The more information you can give your escrow agent, the less likely the stated escrow fee would vary from the fee initially quoted to you. Ask if you will be notified in advance in any change from the stated fee. Filing a complaint against an escrow company can be time consuming and frustrating. It could be months before you resolve the dispute and receive a refund. Although you could file your complaint with the Department of Corporations or the state Insurance Commissioner, depending on who regulates escrow or closing companies in your state, this may a tedious and complicated matter. In addition, you may have to hire an attorney to assist you.
Escrow fees do vary from state to state, county to county, and company to company. Shop on-line and ask for all the fees which you might incur at closing. Ask which services will be included in the escrow or closing fee, and which services will be an extra charge. Keep in mind that your lender will have a separate list of closing fees which they will disclose to you on a Good Faith Estimate form. These closing costs will be costs directly associated with your loan.
Copyright © 2000 Sandy Gadow. This column may not be resold, reprinted, resyndicated or redistributed without the written permission from Escrow Publishing Company.
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