escrow/closing/title company and offer questions

[TinyTGO]

So I've run into quite a shady situation, and I have a few questions...

1.) if the buyer is paying closing, doesn't he/she have the right to choose the escrow/closing/title company?

2.) If you present an offer to a real estate agent, aren't they required to present it to the seller?

My issue is that this particular company is stating that I do not have the right to choose my escrow/title/closing company because the seller signed a contract with them. I'm not an atty, but I think this is illegal. It is at least in regular real estate transactions.

So I re-presented the same offer, the price to which we already previously agreed to. However, I changed my offer to include the e/t/c company of my choosing. Now the real estate agent is refusing to present my offer to the seller.

Lastly, after some cyber-stalking of this brokerage company, it looks like they also own the closing company. Don't they have to disclose there interest to me if it's anything over 1% or something like that?

 

[OKW Lover]

I am not an attorney, nor do I play one on the DIS Boards, but I'd agree that this sounds shady to me. I guess you just need to weigh how much its worth to you for this particular contract.

 

[Matty B13]

I've been told that some title companies will not work with some brokers and vise-versa. I bet a lot of the brokers have a pretty good working relationship with certain title companies and try to drive business their way.

Also, with our Fidelity resale, the documents were submitted and signed electronically which might cause a problem for some title companies.

We have bought 3 (3rd contract in ROFR right now) resale contracts with 3 different brokers and used 3 different tittle companies, so far with no problems. Can't list them all here on Disboards, but were all some of the big resale companies out there.

 

[MrInfinity]

I don't think it's shady. The agent doesn't have to present unreasonable offers, and insisting an agent work with someone they may not have business channels with is not really reasonable. The amount they quoted you to close the deal is based on using their relationships. You are tweaking the deal after it's agreed to be slightly better for you (lower cost title co?) and slightly worse for the agent. What is their incentive to present this worse offer after you've already agreed to the last one? You're not actually paying for the closing company, you're just reimbursing the seller a portion of his costs. Similarly if you were buying a house and you made a great offer but stipulated "seller agent must reduce commission from 3% to 1%" the agent has no obligation to present that junk.

I would just go with your original offer or walk, and if you want to use your title company in the future, mention that up front... not agree to the closing costs and title co, and bring it up later that you want to use yours. You may have a harder time getting deals accepted since the agent will always prefer a regular offer to yours.

How much are you talking about saving here... a few hundred? I think you're wasting your time and tainting the deal going down this path.

 

[TinyTGO]

I don't think it's shady. The agent doesn't have to present unreasonable offers, and insisting an agent work with someone they may not have business channels with is not really reasonable. The amount they quoted you to close the deal is based on using their relationships. You are tweaking the deal after it's agreed to be slightly better for you (lower cost title co?) and slightly worse for the agent. What is their incentive to present this worse offer after you've already agreed to the last one? You're not actually paying for the closing company, you're just reimbursing the seller a portion of his costs. Similarly if you were buying a house and you made a great offer but stipulated "seller agent must reduce commission from 3% to 1%" the agent has no obligation to present that junk.

I would just go with your original offer or walk, and if you want to use your title company in the future, mention that up front... not agree to the closing costs and title co, and bring it up later that you want to use yours. You may have a harder time getting deals accepted since the agent will always prefer a regular offer to yours.

How much are you talking about saving here... a few hundred? I think you're wasting your time and tainting the deal going down this path.

The offer is the same... except I use choose the title/closing company. I don't think that would be construed by the seller as unreasonable. The real estate agent has a fiduciary responsibility to the seller not to him/herself.

Also, I believe it is my legal right to choose e/t/c company as I am paying for the closing costs.

Comparing this to asking a Realtor to lower their commission on the sale of a house is not a good analogy. The buyer is entitled to choose his title company if he/she is paying for the service. That's a law.

A better analogy would be telling the seller's agent that you want to use your own home inspector, and not the seller's agent's cousin's company.

The quantity of savings is irrelevant. The trust of an escrow and title company is very relevant, and is not about savings.

 

[MrInfinity]

Well, alright, but you made the offer and agreed to pay some fixed closing costs based on using their company. They did not agree to have you engage and contract a closing company to close the deal. You agreed to pay them $600 or whatever to do this. Also remember the escrow company is there to protect the seller and guarantee your deposit to them in case you fail to finish the deal. If you want to do this in the future I'd mention it up front. But what seller is going to accept an offer from a buyer that wants to use his own company as the escrow company? I would not bother with that as a seller and I wouldn't entertain this revised offer. Too complicated. Like I said if it's a deal-breaker for you then walk. If you'd rather have the deal, and you can bear to have them close it, then move forward with your existing contract. I don't think you can be mad that they won't alter it after the fact in your favor. You can ask them to, but if their answer is no, then those are your options.

 

[TinyTGO]

Ah, but I did not agree to their company... only price. I only inquired about it after I saw the drafted contract stipulating $1500 for escrow/title/closing. After further digging on my own, the brokerage did not disclose up front, i found that the broker owns the title company.

So i requested my own. I'm not sure which company names you are allowed to say here, but if you think of the biggest DVC closing companies out there, I asked to use any one of the top 3.

I think it's shady for a few reasons: 1. they should have disclosed their interest in the closing, and the fact that they charge 2x everyone else. 2.) They are not presenting my offer, and 3.) they are telling me I do not have a right to choose. Now this may be permissible in timeshare transactions, but it's not in real estate transactions. It's also the first time ever in my experience with DVC that I've encountered this... so there's definitely a shock value.

I was walking away from this contract originally when they tried to convince me that escrow money is required in order to generate a contract. Then they reversed course. At this point, it's a learning experience that I will see through. I would like to get a definitive answer though as to the buyer and sellers rights.

 

[Matty B13]

How much is the contract worth? $1500 for closing seems pretty high, unless it is a contract over 300 points. Even then seems weird that it is the same company as the broker.

I liked Magical Title Company the best of the 2 that we have dealt with.

I believe that you do have right to insist on the closing company that you want to do the closing with, since it is "your" closing. This shouldn't affect the price of the points on the contract. The broker makes their money on the commission for selling the contract, and the money comes from the seller. This broker might be trying to double dip on this. I also just thought that this might be the broker try to sell one of their contracts, ie. flipping contracts.

I did ask after my price was accepted about closing companies, but just went with the one the broker suggested since the closing costs seemed okay.

 

[TinyTGO]

I have used that company in the past, and had a good experience. It was one of the 3 I suggested.

 

[Toreby]

Can I ask which resort you're buying and how many points? The closing costs seem quite high unless you're buying AUL.

 

[TinyTGO]

it's a regular 200 point contract at WDW. The closing costs are double what they normally would be

 

[supersnoop]

it's a regular 200 point contract at WDW. The closing costs are double what they normally would be

That's how they make their money. Sounds like you're dealing with one of the shady brokers. Sellmytimesharenow? Run away quickly.

Legally, they are brokers, not agents. I'm under the impression that they're required to present all offers unless they have some minimum threshold in writing and signed by the seller.

 

[Toreby]

it's a regular 200 point contract at WDW. The closing costs are double what they normally would be

Yeah I'd ask to either use another closing company or walk from the deal unless you're getting a really great deal.

 

[TinyTGO]

i try not to mention names. I've been put on the naughty list in the past for inadvertently using company names. My fault. I didn't read the rules very thoroughly at the time.

 

[MrInfinity]

1) Did you ask about the closing costs up front? Or make an offer stating you'll pay the closing costs w/o there being a listed amount or cap?
(any closing costs offers I've seen are worded "Buyer to pay closing costs of [$xxx]" or "Buyer to pay closing costs up to [$xxx]".)
2) Why should they? You're already under contract. They should not be presenting the seller more offers. Even if a better offer came thru, they should not be presenting that either. Else it creates a situation where the seller might dump one for a better offer.
Have you paid your deposit? If you walk you'd possibly lose part of that, especially if this company is aggressive. If you really agreed to pay closing costs w/o a listed amount, a cap, or a good faith estimate, then you're not in a great spot.

 

[disneynutz]

If you have an issue, file a complaint with the Florida Real Estate Commission.

Bill

 

[mustinjourney]

I don't think it's shady. The agent doesn't have to present unreasonable offers, and insisting an agent work with someone they may not have business channels with is not really reasonable. The amount they quoted you to close the deal is based on using their relationships. You are tweaking the deal after it's agreed to be slightly better for you (lower cost title co?) and slightly worse for the agent. What is their incentive to present this worse offer after you've already agreed to the last one? You're not actually paying for the closing company, you're just reimbursing the seller a portion of his costs. Similarly if you were buying a house and you made a great offer but stipulated "seller agent must reduce commission from 3% to 1%" the agent has no obligation to present that junk.

I would just go with your original offer or walk, and if you want to use your title company in the future, mention that up front... not agree to the closing costs and title co, and bring it up later that you want to use yours. You may have a harder time getting deals accepted since the agent will always prefer a regular offer to yours.

How much are you talking about saving here... a few hundred? I think you're wasting your time and tainting the deal going down this path.

I'm pretty sure you are dead wrong here.

• A real estate agent is under an obligation to submit all offers to their sellers (unless they were given instructions from the sellers to only send offers meeting certain conditions).
• Moreover, the buyer asking to use his own title/closing company is not an unreasonable stipulation.
• The buyer is not tweaking the deal after it was agreed to. There was no written contract signed by both parties in this case. The only thing agreed to were the initial terms of the deal (price per point and who pays closing costs and MFs). Presumably, the broker then sent the buyer the contract to sign, and that is when he noticed the exorbitant closing costs.
• The realtor having a financial interest in the closing company is a huge conflict of interest...and it should be disclosed up front to everyone involved.
• The fact that the realtor is refusing to submit the offer to the seller shows just why this is such a huge conflict of interest. They're focused on keeping more money for themselves at the expense of selling the property. They have a financial duty to their client, and they are clearly ignoring it in hopes they make more money. this is a serious issue and they could probably lose their license for acting in this manner.
• The buyer shouldn't give a damn about what's "best for the agent." And the agent should not be worrying about how they'll make more money. Again, their duty is to the two parties and acting in the best interest of the two parties....even if that means they don't maximize their profit.
• the seller usually does not pay any closing costs -- so if the buyer wants to choose his own, it should not matter one bit to the seller.

http://www.leg.state.fl.us/Statutes...ute&URL=0400-0499/0475/Sections/0475.278.html

475.278 Authorized brokerage relationships; presumption of transaction brokerage; required disclosures.—

(2) TRANSACTION BROKER RELATIONSHIP.—A transaction broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent. The duties of the real estate licensee in this limited form of representation include the following:
(a) Dealing honestly and fairly;
(b) Accounting for all funds;
(c) Using skill, care, and diligence in the transaction;
(d) Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer;
(e) Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing;

 

[MrInfinity]

I'm pretty sure you are dead wrong here.

Cool. That's productive.

Moreover, the buyer asking to use his own title/closing company is not an unreasonable stipulation.
I never said it was. I said the buyer should stipulate this up front. The issue here is that he didn't, and now is stuck.

Presumably, the broker then sent the buyer the contract to sign, and that is when he noticed the exorbitant closing costs.
There's a lot of presumptions in here. I asked some of these questions to get more info. Like... was the buyer told a closing cost. Did the buyer agree to pay closing costs without a cap. Did the seller mislead the buyer on the closing costs. Was there a verbal exchange on any of this. What did he agree to in writing. Did the seller sign too. These things matter.

The fact that the realtor is refusing to submit the offer to the seller shows just why this is a conflict of interest.
Let me try to show why you can't just keep re-submitting offers. Buyer offers seller $10k. Seller accepts. Done. Now buyer offers seller $9800 or he'll walk. Oh what? Agent has to present, even tho already under contract for $10k? Ok he does. Seller accepts $200 less. Buyer now offers $9600. What? Agent has to present? Ok he does. So you see, there is not a cycle of obligation here. Once a buyer and seller agree, that's a contract. There is nothing more for sale. Buyer cannot just keep sending new offers and expect they negate the previous one. You can offer changes. Changes require both parties. Or you can walk. You can always get out of this if you're willing to walk.

The seller usually does not pay any closing costs -- so if the buyer wants to choose his own, it should not matter one bit to the seller.
Ok, it shouldn't matter. Unless it does. Like if say, the buyer signed a contract agreeing to use their closer and pay their fee. Then it matters.

I'm not debating you for fun, these ?'s matter. There is a signed doc here, as you say, this person may have noticed something in it that he didn't like after he signed it. Isn't that why timeshare salespeople have the stereotype they do? Not being judgmental about it good or bad, just looking at the real options that the OP has. If it's two rational and cooperative people striking a deal, you can tweak the contract, add an addendum, or make changes and both initial. Done. This is how it usually works. But if one side doesn't want to give up their $1500 that the other side agreed to pay, then you've got yourself an impasse and an undesirable situation where you have to start to ask... Ok can I walk? Can I get my deposit back? Or am I just stuck?

If the buyer has paid a deposit and signed the deal, he's in a disadvantageous position when it comes to getting out of this. But there seem to be many details here we don't know, so most of it is moot.

 

[mustinjourney]

Moreover, the buyer asking to use his own title/closing company is not an unreasonable stipulation.
I never said it was. I said the buyer should stipulate this up front. The issue here is that he didn't, and now is stuck.

You did in fact say it was unreasonable.

"The agent doesn't have to present unreasonable offers, and insisting an agent work with someone they may not have business channels with is not really reasonable."

Presumably, the broker then sent the buyer the contract to sign, and that is when he noticed the exorbitant closing costs.
There's a lot of presumptions in here. I asked some of these questions to get more info. Like... was the buyer told a closing cost. Did the buyer agree to pay closing costs without a cap. Did the seller mislead the buyer on the closing costs. Was there a verbal exchange on any of this. What did he agree to in writing. Did the seller sign too. These things matter.

It's a pretty good presumption based on the OP saying that the only thing that was agreed upon was the price.

Ah, but I did not agree to their company... only price. I only inquired about it after I saw the drafted contract stipulating $1500 for escrow/title/closing.

The first time that I was informed of the cost of the closings in both of my resale contracts were when I was given the contracts to sign after we had agreed upon the pricing. Based on my personal experience, I'm assuming this is the same thing that happened to OP.

The fact that the realtor is refusing to submit the offer to the seller shows just why this is a conflict of interest.
Let me try to show why you can't just keep re-submitting offers. Buyer offers seller $10k. Seller accepts. Done. Now buyer offers seller $9800 or he'll walk. Oh what? Agent has to present, even tho already under contract for $10k? Ok he does. Seller accepts $200 less. Buyer now offers $9600. What? Agent has to present? Ok he does. So you see, there is not a cycle of obligation here. Once a buyer and seller agree, that's a contract. There is nothing more for sale. Buyer cannot just keep sending new offers and expect they negate the previous one. You can offer changes. Changes require both parties. Or you can walk. You can always get out of this if you're willing to walk.

That is not even close to the same thing. And by the way, a buyer could actually do that strategy. Sellers do it all the time. You seem to think that the contract is binding the second the seller accepts the "offer." This isn't the case with real estate. the only thing that is is a terms sheet -- but it is not an enforceable contract.

The seller usually does not pay any closing costs -- so if the buyer wants to choose his own, it should not matter one bit to the seller.
Ok, it shouldn't matter. Unless it does. Like if say, the buyer signed a contract agreeing to use their closer and pay their fee. Then it matters.

Where did OP say he signed a contract?

I'm not debating you for fun, these ?'s matter. There is a signed doc here, as you say, this person may have noticed something in it that he didn't like after he signed it.

Don't see where he said he signed anything.

If the buyer has paid a deposit and signed the deal, he's in a disadvantageous position when it comes to getting out of this. But there seem to be many details here we don't know, so most of it is moot.

Not really -- even if he had signed the contract, there is a 10 day right to cancel guaranteed by Florida statute. "Any attempt to obtain a waiver of your cancellation right is void and of no effect."

 

[MrInfinity]

You did in fact say it was unreasonable.

You seem to be mixing up posts. In one area, I said an agent has no incentive to present a new offer in which the only change is the agent / title co earn less money by cutting their rep out of the deal when another offer is already there. That is not reasonable to expect. "I'd like you to sign this new offer in which I don't use your guy and he doesn't make $1500"... On the other hand, I said that requesting to use your own title co is perfectly reasonable to do, if you do it up front instead of after you've agreed to use theirs. It all comes down to what you agreed to.

The first time that I was informed of the cost of the closings in both of my resale contracts were when I was given the contracts to sign.

I think in my cases the costs were stated online AND discussed with me beforehand, and I made sure they were clear on the contract.

Where did OP say he signed a contract?

If he hasn't, then that's great! Much better position to be in.

Not really -- even if he had signed the contract, there is a 10 day right to cancel guaranteed by Florida statute.

True. But this is the case of being an armchair lawyer or whatever. It's one thing to say someone on the web is legally entitled to something, it's another to make it happen in the real world with a company that is (I don't know - never worked with them, tho they seem to have a reputation) hard to work with and is practiced at manipulating the systems and likely knows the rules better than most. They may be pros at delaying the timing of things past the 10 days, etc.