By Timothy Dwyer
Thanks to depreciated home values and historically low interest rates, potential homebuyers have a bargain-hunting mindset. As you prepare for the busy spring real estate season, you will need to differentiate yourself to these value-driven buyers in order to attract business and close more deals. You can do this by positioning yourself as the broker who can save clients the most money at the closing table.
An overlooked opportunity to save money is at the closing, particularly for title insurance. Many savvy buyers don’t understand that title rates vary. But you can educate them about how they can save hundreds or even thousands of dollars on title insurance.
Buyers often balk at the magnitude of closing costs. Some fees are fixed, but buyers are often unaware that they have the legal right to choose title insurance. Accordingly, most buyers are unaware of how much they can save by shopping around for title insurance the same way that they shop around for a low mortgage rate.
For example, in Chicago, an owner’s title insurance policy with a simultaneous loan title insurance policy for a home with a $250,000 purchase price and $200,000 home loan will typically cost $1,425. Title insurance for a $500,000 purchase with a $400,000 loan may approach $1,925. But if buyers shopped around, they would find, for example, that with another direct-to-consumer insurance company, they could potentially save a total of $499 on the $250,000 purchase, or $674 on the $500,000 purchase. Buyers who negotiated their purchase price and compared mortgage rates will appreciate that they can also take control of fees at the closing.
Simple research is the best way to find your clients the best rates. There are several resources on the web, like Closing.com, for instance. Simply fill out the form, including address, ZIP code and property type, and this website will give you the best possible quotes.
Your bottom line can benefit from a springtime sales boom if you demonstrate to potential clients that your competitive differentiator is that you know how to save them more money. Explaining to potential buyers that using direct-to-consumer title insurance can shave thousands of dollars off closing costs will reassure them that you are uniquely qualified to get them the best value for their money.
Use these talking points to demonstrate how you can help price-sensitive clients save money at the closing table:
In addition to the down payment, another upfront expense will be the closing costs, which includes title insurance. This insurance, which is required by every lender, can cost several hundred to several thousand dollars.
Closing costs vary depending on the size of the loan, and can be 2 to 7 percent of the total cost of your purchase, with title insurance typically representing 60 percent of these costs.
Title insurance fees vary depending on the company you select. You are legally permitted to shop around for title insurance.
When working with bargain-hunters, explaining how you can save them more money on closing costs will give you a competitive sales weapon, and make it more likely that hunters will become satisfied homeowners and refer you to others.
Timothy Dwyer is CEO of Entitle Direct Group, Inc. based in Stamford, Conn. He is a native of River Forest and a graduate (MBA) of the University of Chicago.