Pinocchio is known for his long nose, which grows when he lies.
Question: How can companies sell nationwide title searches for as little as $10? Answer: They can’t.
My company, Real Title Services (RTS), sells title searches. Not title insurance. Not car titles. Real estate title searches, admittedly and ancillary business to title insurance. The way I explain it to people not in the know is, if you take out a $500,000 loan from the bank to buy John Smith’s house, the bank needs to make sure John Smith is actually the owner before they just give him $500,000. The process of verifying who owns the property starts with a title search (“title” just means “who owns it”), and it is basically a search of the public records for things like deeds and mortgages, and liens and judgements associated with a property and property owner. Copies of these docs are put into a PDF, and that PDF is a “title search.” There’s a bit more to it than that, but that’s the elevator pitch.
What makes Real Title Services helpful to people in need of title searches (title insurance companies, real estate investors, real estate lawyers, banks, etc.) is that after over 20 years in the industry, we have relationships with thousands of local “boots-on-the-ground” title searchers (at least one in every county in the US, and often more than one), people who get in their car, and drive to the county courthouse where real estate docs are filed, and perform the search. This is a pretty specialized skill. There are nuances and subtleties to searching real estate titles, and it can take years of apprenticing under a master searcher to really know all the ins and outs.
With the internet revolution, a lot of counties now grant access to these public records online. Many boots-on-the-ground searchers, who learned how to search by going into the courthouse in their county, will now perform the searches online when possible, and travel to the county just to get older docs and other things not online, only when needed. This is a fine enough system—it works.
But as a result of online availability of public records, many companies set up in-house search departments, both in the US and overseas, and a lot of people were trained overseas in how to use the online public records to perform a title search. And now it seems like everyday a new company opens up and promotes that they can do nationwide title searches for $10, and the like. And it can get a company like ours wondering—how are they doing that? Sure, some searches can be done from start-to-finish online, and if you can do the average search in about an hour, and you are willing to make $10-an-hour, you could perform that search online. For obvious reasons, that’s not practical for US-based title searchers. Title searching is a skilled profession—you don’t necessarily want to just “hire the cheapest” and hope for the best. Using a trained professional can cost or save you millions in the right circumstances. And there is no reason for a trained professional title searcher to undervalue their time and knowledge, and start discounting their work—you would never ask your accountant or lawyer to work for $10 an hour, nor should you expect that of a title searcher.
But let’s say you, as a buyer of title searches, have crunched the numbers, and you are willing to take the risk and use a cheap online-only title searcher—can they really complete most searches nationwide online? Not really. What happens is, they can do some online, and if they are using overseas labor, they can offer those searches at low rates. But often the search can only be partially done online. For example, as a test, I recently sent two orders to searchers promoting cheap nationwide searches, and the searches came back wildly incomplete. They didn’t search the liens and judgements. The deed copy could not be gotten online without a subscription, so they did not provide copies, etc. By no industry standard is this a “title search.” I explained this to them, and asked them, “Who is paying you for incomplete searches like this? What are they using these searches for?” I never got a satisfactory answer.
What we have observed at RTS is that Company A will pay Cheapo Online Company $10 for the online search, and then Company A will send the leftovers to a company like RTS to perform what is called a “Gap Search.” It’s basically like, “Just get me a copy of this deed, and do a lien and judgement search,” or whatever random things are missing from the search done by Cheapo Online Company. Theoretically this saves money for Company A because some searches will be able to be done totally online for the cheap fee, and for the others, they paid the cheap overseas company a few dollars, and then they only have to order a smaller search from RTS, which costs less. Maybe that works. But it sure seems like it adds on time. Or sometimes, the person who ordered the search, Company A, doesn’t even know this is happening, and the cheapo company will order the Gap Search from us, and then send both searches back to Company A at the same time, and it looks like Cheapo Online Company completed the search. When that happens, how does the cheapo company make money? As close as we can figure, they lose money on some, and make money on others, and as long as their volume is high enough, they can make a profit. Thus the constant marketing about “$10 title searches.” Additionally, there is possibly some bait-and-switch going on there, when their shiny new website, populated with Shutterstock images says, “The prices may vary for selected states and counties.”
Ultimately, you get what you pay for. In our experience, you save time using one company who can perform the complete search. And we offer the convenience of having actual walk-in searchers nationwide. We have errors and omissions insurance, and a strict Quality Control procedure. No, we can’t offer $10 title searches in all counties nationwide, but then again, no one can.
Angela
What are your thoughts? Are you buying these inexpensive searches? Are you selling them?
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All these comments strike me right in the heart. Our industry is being overrun with drive-through companies serving a product that is so bad it will literally kill your business. In my 30 years I have seen company after company open up using quality local abstractors to the benefit of all. The abstractors get work, the companies get a quality, timely product. Then after about year 3 the company is making record profits so they are either sold or they hire a consultant to look for ways to cut corners. Overseas companies look cheap but when I think about the difficulty of searching in my main county I laugh. It is one of the biggest and busiest in the country and there are so many little tricks to finding docs that there is no way you are doing it accurately if you’re not in the know. Yes it’s more of a sad laugh because I know that sooner or later they are going to get claimed right out of business. Would you pay the cheapest doctor to save your life? Nope. Not me. I’m good on that. But alas I can not help those that will not help themselves.
Hi Angela,
This is a great read, thank you for sharing this. I have recently lost one of my biggest clients to overseas. The client was willing to keep me on if I was willing to lower my fees to $10, I actually thought it was a joke. I of course turned them down. I know my 30 years of experience and knowledge is worth what I was charging. I explained to them, they better be careful because you get what you pay for. This may look good to them for now, later down the road mistakes will be caught. These companies are going to pay in the end. You can not do a title search completely online. When any company asks me to pull judgments or copies from the courthouse, I always check to see where they are located. I will not help anyone overseas. They also make up addresses in the U.S. for their businesses. For example I just looked a company up the other day and it was a Fed-Ex store in Delaware. I am hoping other abstractors realize helping them is only hurting us.
Thanks for your comment, and I understand. I’m sorry you lost one of your biggest clients. I agree that it is risky to accept incomplete title searches for the purposes of title insurance, and wonder what the fallout may be. At RTS we do work with a number of overseas companies, and we don’t mind doing that because when they need boots on the ground searchers, we send the work to local abstractors. And our back office staff are mostly in the Philippines, so we are not opposed to working with people around the world. But I do wish that companies promoting that they can do cheap searches from start to finish online nationwide, whether they are in the US or overseas, would be called to task, since there are very few counties in which a complete search can be done online.
Title searches are not merely administrative tasks but critical components of any real estate transaction. Undervaluing these services at the mere cost of $10 undermines the intricate nature of the process, the expertise required, and the potential consequences of incomplete or inaccurate searches. To ensure the integrity, credibility, and reliability of the real estate industry, it is essential to recognize and price title searches appropriately.
Absolutely not! Some counties offer free search online or via subscription. That is only for land records but when it comes to liens and judgments, you can’t. You have to physically visit the courts to get an accurate search. Title searches involve a comprehensive examination of property records, which require extensive research, analysis, and verification.
Hi Angela, An answer to one of your questions is ‘no, most title searches cannot be fully completed with any kind of accuracy online’. There may be some land records available online, but then there are no court records. Therefore a complete search for liens and judgments cannot be done. Many online “title searchers” believe that they have just checked for liens and judgments because they found none in the land records. Yikes! Real title searchers knows the US laws and know they have to go to the courthouse and search there for liens and judgments as well as searching for them at the recorder’s office. Most title searches are being done at the behest of the lender who insists a title insurance policy be issued. It is just rolling the dice with an online cheapo searcher. Years down the road when that property is sold a real title searcher could very well find a two hundred thousand dollar lien/judgment against the prior owner that will HAVE TO BE PAID before selling that property. But it was missed on the earlier quickie online search. I wonder how the ramifications of all this will shake out. Title Insurance costs skyrocketing?