Short answer
Title fees pay for searching public records for liens and ownership problems and, for the buyer, issuing title insurance. Settlement fees pay the title company or attorney who handles the closing. Who pays each charge is negotiable, so check the settlement statement and the agreement of sale before closing.
What a title search does
A title search looks through public records to confirm who owns the house and whether anything is attached to it, such as mortgages, judgments, unpaid taxes or contractor claims. If something turns up, it needs to be paid or resolved before the buyer takes ownership. This is why a clean title is a prerequisite to a smooth closing.
The CFPB explains that title insurance can protect against later claims, such as a previous owner's unpaid taxes or contractors who say they were not paid for earlier work.
What the fees pay for
The CFPB says title service fees can include the title search fee and the premium for title insurance, plus other costs of issuing a policy. For a mortgage buyer, lender's title insurance is usually required, and owner's title insurance is typically optional. A cash buyer has no lender, so there is no lender's policy, but the buyer may still order an owner's policy.
Settlement fees pay the company or attorney who runs the closing, collects funds and records the deed.
What a seller should expect
As a seller, you will usually see charges tied to clearing your title and payoff, and possibly a share of settlement fees. The exact list varies by contract and by company. Contracts differ on this point, so do not assume.
Ask the title company for a written seller estimate before you accept an offer. Compare it across buyers. An offer that looks higher can have more costs attached.
Choose a settlement agent you trust
The settlement agent handles large sums. Use a title company or attorney you can verify. The FTC warns that scammers send emails posing as an agent with last-minute wire changes, so confirm instructions by calling a number you already have.
You can have your own attorney review the paperwork even if the buyer picks the title company. Kaizen Home Buyers makes a cash offer within 24 hours. Whoever you sell to, have your own attorney review the documents. Questions: 267-329-0084.
Ways to lower the bill
Pay off small liens early. Find the deed and old title papers if you have them. Order payoffs promptly so the agent does not have to chase them. Tell the title company about any estate, divorce or tenant issue right away, since those can require more work.
You can also ask the buyer to pay more of the title and settlement charges in exchange for something else. It is a negotiation like any other.
Finally, read the closing instructions. They should match your agreement on the price, the date and who pays which charge. If a fee shows up that you have not seen before, ask what it is for and who it is paid to. Legitimate charges have a name and a recipient.