1. In a real estate transaction, who picks the title and escrow companies? If it depends on the area, how do we find out who "traditionally" picks the title and escrow companies? Can title company and escrow company be the same company?
[FONT="]Normally you find out what is customary in your area from a real estate agent. In some states using a real estate agent also means you can use standard contract documents that were developed by that state’s Realtors Association. I was impressed with the ones they have in Washington State. Anyway, yes, the title company and escrow company can be the same. Some time ago the big title companies saw how much easy money was going to lawyers for doing the escrowing, and decided they wanted a piece of that action. Now they dominate the escrow function in many states. It's a separate part of the company from the insurance side.[/FONT]
2. If seller picked, will title and escrow companies truly be neutral and unbiased, especially escrow company if - for whatever reason - the purchase does not go through and return our earnest money?
Yes, in my experience the escrow side of the title companies is very professional (and neutral). The title insurance guy was a little sloppy for my most recent purchase, so it’s good to read everything you get and make sure it’s what you asked for. Do you know the difference between owner’s title insurance and lender’s title insurance? Beware if it’s called a “Standard” policy, maybe it has changed but that used to mean it was just a lender’s policy.
3. What % of the purchase price is a "normal" / reasonable earnest money deposit?
[FONT="]I don’t know/remember.[/FONT]
4. What are the things that can go wrong in this transaction and what should we look out for?
[FONT="]I have heard horror stories about lenders taking too long to approve a mortgage, causing the sale to fall through in rising markets where the seller isn’t willing to sign any time extensions. I am also seeing articles now about home insurers refusing to insure properties due to various risks like wildfire. Mortgage lenders require you to carry home insurance, so if you can’t get a policy your transaction will fall through. Home inspectors don’t always catch everything (and usually make you sign away any right to sue them for the things they miss). Regarding home inspectors, I would recommend choosing your own, not whoever the real estate agent recommends. Real estate agents really want to close sales, after all, so a truly conscientious home inspector won't tend to be their favorite. Maybe try a retired homebuilder or remodeling contractor turned inspector.[/FONT]
5. We asked the mortgage loan officer for recommendations on a title and escrow company and she responded that she's "worked with many of them and not had a problem" but wouldn't specify any particular company. Is there a reason why she wouldn't?
[FONT="]It’s not usual for loan officers to get involved in choosing title and escrow companies. And my info might be out of date, but I believe the title insurance biz is dominated by a small handful of big companies that aren’t terribly different from one another.[/FONT]