Title insurance comparison Web site draws fire

The "Expedia.com" of title insurance has arrived, propelling one of the country's oldest industries into the Internet generation. But the industry doesn't appear ready to sign on and support the venture.

Gary Wolff's site, www.MyTitleIns.com, is designed to enable users to determine exactly how much the buyer, seller or refinancing owner will be charged for title insurance -- and what individual title companies charge for their services.

"The difference in what title companies offer can be dramatic," Wolff said.

In Denver, prices for title insurance can vary by as much as $1,200 for the same coverage. Colorado Springs prices are a little lower but can vary by as much as $800 for the same policy, he said.

Real estate brokers typically refer a preferred title company to their clients, but because they're not paying for the policy, they might not take the time to research price and service variations between companies, Wolff said.

Tepid interest

So far, however, Colorado's title insurers have expressed little interest in sharing their fees and services listings on the site. Instead, they continue to rely primarily on relationships built with real estate brokers, said Brian Hamilton, vice president of sales for Colorado-based Land Title Guarantee Co., which operates four offices in Colorado Springs and more than 40 statewide.

But relationship-based referrals have not always benefited the consumer.

Industry bribes and kick backs to agents and homebuilders were the driving force behind the Real Estate Settlement and Protection Act, passed by Congress in 2004. The law limits high pressure "relationship building" techniques used by some companies and provides strict penalties for unlawful practices.

No referral fees

As a result, title insurance companies must be careful when marketing their services, said Jonathan Goodman, an attorney with Frascona, Joiner, Goodman and Greenstein, P.C of Boulder.

One premise of the law is that if title companies can't give referral fees to brokers, then they will be more inclined to compete on price.

"A flaw of that premise is that people ordering title insurance are not typically the ones paying for it," he said, adding that Wolff's Web site could be useful to sellers and their agents.

But Hamilton said that it's difficult to reduce title insurance services to simply price.

"A lot of people just don't understand the complex range of services we offer," he said. "If you're a homebuyer in the middle of a closing, getting ready to wire $300,000 from your bank account to close, you're going to want to know a lot more about the reliability, the credibility of a title company. All decisions are not based on cost."

Expanded offerings

Hamilton said the Web site needs to expand beyond simply price comparisons.

"I told Garry that if he really looks to me to be a customer, he needs to add other dimensions such as range of services, longevity and customer satisfaction to his data," Hamilton said.

That view is echoed by Jim Maher, vice president of the industry's trade group, the American Land Title Association in Washington, D.C.

"Ninety percent or more of all home sales, refinances and home equity loans require issuance of a title policy," he said "I don't think consumers will rely on Web site because they don't really understand all we do. They'd rather rely on the professional expertise of someone who goes to multiple closings each week."

He also said the explosion of alternative real estate companies like HelpUSell or Seller's Choice, which offer varying levels of service to buyers and sellers, will change the prices some title companies charge. Some title insurers play a larger, more costly role, in "assisted" transactions than in those handled by full- service brokers, he said.

A Web site like MyTitleIns.com can be a touchstone in the home selling or financing process, but shouldn't be the only basis for the consumer's decision, Maher said.

Shifting liability

Rick Guthrie, team leader and operations manager for Keller- Williams Real Estate's south office sees the service as "a good idea," but warns that by shifting the recommendation of a title company to the consumer, liability for a sales contract shifts as well.

"As sellers' agents, we would be pulled out of the link and wouldn't be able to arrange for special requirements such as a buyer's request for 'overinsurance' to protect against possible mechanic's liens on the property," he said.

Wolff acknowledges that market acceptance and education has been a challenge. To date, 20 companies are listed on MyTitleIns.com, but only one is listed as a "subscriber," entitled to list its fees and services for comparison shoppers.

The others are listed as a gesture of goodwill, he said.

"We're kicking off a push to market our Web site to Realtors around the state this month and we'll be set up at CAR (the annual Colorado Association of Realtors convention at The Broadmoor in October)," Wolff said.