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Commentary: One-stop shopping when buying a home

Steve Griffin | The Salt Lake Tribune Here a home in the Foxboro subdivision in North Salt Lake is for sale Tuesday, August 24, 2010.

Imagine purchasing a new vehicle from a dealership but not having the option of in-house financing, warranty or routine servicing and repairs. Or, what about booking a vacation online but not having the choice of purchasing hotel, airfare, travel insurance and rental car in one package?

Utahns face a similar scenario in real estate because the current law prevents them from purchasing all home-buying services under one roof. Senate Bill 121, the Controlled Business in Title Insurance Repeal, changes that by allowing more competition and choice in the marketplace for title insurance.

The Utah Legislature recently passed the bill so real estate companies can invest in affiliated businesses, such as title insurance. This allows Utahns to get all or most of their real estate services from one provider rather than having to shop for services from many providers.

Both the Utah Association of Realtors and the Utah Land Title Association, which represents more than 80 percent of title companies in Utah, worked on the consensus bill, which closely mirrors the laws in other states. For example, consumers in Colorado, New Mexico, Nevada, Idaho and more than 40 other states already have one-stop home-buying options. Thanks to SB121, Utahns will also have more choices for title services upon the governor signing the legislation.

In addition to providing a more convenient shopping experience, SB 121 safeguards the consumer by requiring brokerages to:

• Promptly disclose their relationship to the title company

• Not require use of their title company

• Only earn a proportionate return on investment

• Not pay real estate agents to make referrals to the title company

The new law also requires any new title company to fund and maintain a capital reserve cushion to ensure the strength of the company, providing even stronger protections for consumers than existed previously. Additionally, the new Utah law is in accordance with the federal Real Estate Settlement and Procedures Act.

As is the case in many other industries, affiliated companies are able to provide lower costs to consumers. This is evident in the states where brokerages are already permitted to have ownership in title companies. In the most recent Harris Survey of Homebuyers, 81 percent of homebuyers reported saving money and nearly three out of four homebuyers said one-stop shopping made the buying process more efficient.

Because real estate brokerages cannot require their clients to use a particular title company, the change in the law is all about increasing choice for consumers. Opponents of this bill fear competition and want to protect their monopoly. The Legislature, however, saw the need to remove a law that impeded consumer choice. We encourage the governor to sign this bill to end this anti-consumer way of doing business.

Grady Kohler

Grady Kohler is principal broker and owner of Windermere Real Estate Utah, Salt Lake City.