In some real estate markets, it's typical for the seller to provide a title insurance policy for the buyer. In others, the seller pays the cost of the title search and leaves the buyer responsible for his own title coverage. Whatever the custom in your community, the process of figuring out the cost of title insurance is usually the same -- ask your title insurer.
Calculating Title Insurance Costs
Title insurance policies are usually priced relative to the value of the property being insured. While less expensive properties are going to be cheaper to insure, the rate frequently goes down as the price of the property goes up. A $10 million property is almost never 100 times more expensive to insure than a $100,000 property. In addition, some title insurers will offer a discounted rate if your property was recently insured under a different policy. To find out what the title insurance will cost, contact the title provider and ask for its rate formula. In some states, it's a matter of public record, so you should be able to get it. Some companies put title fee calculators online so that you can estimate your own fees.
Calculating Title Search Costs
In some states, the title search or report is included as a part of the cost of a title policy. In others, you pay separately for the title report. Some states don't use title reports at all and instead use abstracts of title which are more detailed, and legally binding, documents. Title reports are typically priced relative to their complexity and don't necessarily carry a pricing formula.
Additional Title Fees
While a seller will generally pay for a basic title insurance policy, some buyers choose to buy policies that provide more coverage. A lender's policy protects the lender's interest in the property rather than the buyer's ownership in it. Extended policies can cover against additional title problems, like those that might show up on a survey. Those extra costs are usually borne by the buyer. As with the title policy, the title insurance agency frequently uses a formula that you can request to calculate the cost of the additional coverage.
Other Closing Costs
Title insurance is one of many closing costs. Whether an escrow company or an attorney handles it, there are usually fees to be paid for the closing. Many communities, counties and states also impose transfer taxes on the sale of real estate and some also tax the recordation of mortgages. Sellers are also usually responsible for the cost of their broker's commission. If you don't know what closing will cost, it's wise to talk to the closer a few days before the transaction and get an draft settlement statement, sometimes referred to as a HUD-1, that will show you how much you will net at the closing.
- Title Minnesota: Closing Costs - Who Pays and How Much?
- Douglas Elliman Real Estate: New York City Closing Costs
- Chicago Title: Northern California Closing Costs
- Old Republic National Title Insurance Company: Locations - Rate Calculator
- First American Title: Fee Calculator
- Fidelity National Financial: Fidelity National Title Rate Calculator
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.