In my article on surveys and ILCs, I explained how buyers might think through whether to obtain a survey, an ILC, or neither. Here, we’ll look at how title insurance, Owner’s Extended Coverage (OEC), and Survey Matters fit into that same risk-management discussion.

What Is Title Insurance?

Most forms of insurance protect against future events. Homeowners’ insurance may help protect against future losses such as fire, hail, or wind damage. Auto insurance may help protect against future accidents. Health insurance helps cover future medical expenses.

Unlike most insurance, title insurance protects against certain problems that existed before or at the time you purchased the property, even if those problems are not discovered until years later.

For example, there could be an undiscovered lien, an error in a legal description, a recording mistake, a previously unknown ownership issue, or another title-related defect that was not identified before the transaction closed. The title company researches public records and investigates the property’s history before issuing a policy, but no investigation is perfect. Title insurance exists because there is always the possibility that an issue exists that was not discovered beforehand.

The Two Title Insurance Policies You May See at Closing

When you close on a home, if you are getting a loan, there will be two different title insurance policies involved: an “Owner’s” title insurance policy and a “Lender’s” title insurance policy.

The “Owner’s” title insurance policy helps protect the buyer’s ownership interest in the property, subject to the terms, conditions, exclusions, and exceptions set forth in the policy. In most residential transactions in Colorado, the seller pays for the “Owner’s” policy.

If you are getting a loan, your lender will also typically require a “Lender’s” title insurance policy. The “Lender’s” policy protects the lender’s interest in the property, not the buyer’s ownership interest. In most Colorado transactions, the buyer usually pays for the Lender’s policy.

Title insurance is a one-time purchase. Unlike homeowners’ insurance, there are no annual premiums. The Owner’s policy is issued at closing and generally remains in effect for as long as the insured owner or their heirs retain an interest in the property. If the loan is paid off, the Lender’s policy terminates. If the property is refinanced, a new Lender’s policy is obtained for the new loan.

What Is the Title Commitment?

Before closing, the title company issues a document called the Title Commitment. The Title Commitment is important because it informs the parties of what the title company is willing to insure, which exceptions will remain, and the requirements that must be satisfied before the final title insurance policy is issued.

The Title Commitment is also one of the buyer’s most important opportunities to review the title insurance being offered. If the buyer believes a requirement, exception, or other title matter is unacceptable, the contract provides a process for raising objections and, if necessary, terminating the transaction.

This is important to our discussion of surveys and ILCs because the Title Commitment indicates what additional coverage the title company is willing to provide and whether any additional requirements must be met before that coverage is issued.

If the title company is willing to provide the requested coverage without requiring a survey or ILC, that is helpful information. If the title company says it needs a survey, ILC, or some other documentation before it will provide certain coverage, that is also important information. Either way, the buyer is not supposed to be guessing at closing. The Title Commitment is reviewed before closing so the buyer can evaluate whether the title insurance being offered is acceptable. If it isn’t, the buyer can object and ultimately terminate the contract.

What Is “Owner’s Extended Coverage” (OEC)?

The standard “Owner’s” title insurance policy provides one level of protection. “Owner’s Extended Coverage,” usually called “OEC”, provides additional protections beyond the standard policy.

One additional area commonly addressed with OEC involves “Survey Matters.” This is one reason OEC matters in discussions of surveys and ILCs. A buyer may decide not to obtain a survey but still wants the title company to provide as much title insurance protection as is reasonably available, including coverage related to certain survey matters.

The cost of OEC is relatively small, usually less than $100. Unless directed otherwise, we ask for OEC as part of the purchase contract and original negotiations. That does not mean the title company will automatically provide every form of coverage in every situation. It means we are requesting it, and the Title Commitment then tells us what the title company is willing to provide and whether any additional requirements must be met.

What Are Survey Matters?

This is where the conversation begins to overlap with surveys and ILCs. In the companion article, we explained that a survey and an ILC both involve the relationship between property boundaries and improvements (again, “improvements” can include houses, garages, sheds, fences, driveways, retaining walls, patios, sidewalks, and similar structures).

Survey Matters, as part of title insurance, involves issues related to the relationship between improvements and property boundaries. For example, imagine that after closing, it is discovered that a fence extends onto a neighboring property. Imagine that a garage encroaches on an easement. Imagine that an improvement crosses a setback line or extends beyond where everyone believed the property boundary to be.

These would likely be “survey matters.” When people talk about Survey Matters, they are generally talking about issues involving the relationship between property boundaries and improvements.

How Does This Relate to Surveys and ILCs?

If OEC provides protection for problems that a survey or ILC might have identified, why would anyone spend additional money on a survey? The answer is that insurance and certainty are not the same thing.

A buyer who orders a survey is often attempting to reduce uncertainty before purchasing the property. A buyer who relies on title insurance accepts that some uncertainty exists but looks to the policy for protection if certain covered issues are discovered later. A survey may help identify certain issues before closing.

A buyer who chooses not to obtain a survey may rely more heavily on title insurance and OEC if a covered issue is later discovered.

Neither approach is automatically right or wrong. Some buyers would rather spend additional money up front to reduce uncertainty. Others are comfortable accepting more uncertainty because they have title insurance and believe the risk is small. The important thing is understanding that those are different ways of managing risk.

Why Would a Title Company Require a Survey or an ILC?

In some transactions, a title company may be comfortable providing Owner’s Extended Coverage without requiring a survey or ILC. In other transactions, that same title company may decide it needs additional information before it is willing to provide OEC.

One way to think about it is this: the title company is deciding how much uncertainty it is willing to accept before issuing the policy. If it believes it has enough information, it may proceed without requiring additional documentation. If it wants more information, it may require a survey, an ILC, or some other documentation before providing OEC.

When that happens, the discussion may shift from whether the buyer wants a survey or ILC to who will order it, who will pay for it, and how it affects the transaction timeline.

In many Colorado transactions, buyers include language stating that if the title company requires a survey or ILC to issue the requested title policy, the seller will order and pay for it. The reasoning is straightforward. If the seller is paying for the “Owner’s” title insurance policy, then the seller is often expected to bear the cost of satisfying the title company’s requirements for issuing that policy.

On the other hand, if a lender requires a survey or ILC for the buyer’s loan, it is common for the buyer to pay for it, as the requirement is tied to the buyer’s financing rather than the seller’s title insurance obligation.

These are common approaches, but, as with many things in real estate, they are negotiable. And for context, in my experience, it is rare for a title company or lender to require a survey or ILC in a typical residential transaction.

Understanding the Tradeoff

The existence of title insurance and Owner’s Extended Coverage (OEC) does not automatically eliminate the need for a survey. They address risk in different ways. A survey may help identify certain issues before closing. Title insurance may provide protection if certain covered issues are discovered later. Some buyers would rather spend additional money up front to reduce uncertainty. Others are comfortable relying more heavily on the protections provided by title insurance.

One final note: I’m explaining these topics based on my experience helping buyers and sellers navigate real estate transactions. I can help explain how title insurance, Owner’s Extended Coverage, surveys, ILCs, and contract provisions typically work in practice and how they fit together within a transaction. What I cannot do is provide legal advice or tell you how an attorney, a court, or a title company would evaluate a specific claim or dispute.

One question that occasionally comes up in a real estate transaction is whether a buyer should obtain a survey or an Improvement Location Certificate (ILC).

The problem is that most buyers have never ordered either one. Many people are not entirely sure what the difference is, how they relate to title insurance, or why someone would choose one over the other.

Like many real estate decisions, this is not a question with a universally correct answer. Instead, it’s a question of risk, reward, cost, timing, and how much certainty you want before closing.

My goal is not to tell you what to do. My goal is to help you understand the tradeoffs so you can make an informed decision.

First, What Is a Survey?

A survey is prepared by a licensed surveyor and is intended to determine the location of a property’s boundaries and show those boundaries in relation to the improvements on the property.

An “improvement” is simply something added to the land. Examples include a house, garage, shed, barn, fence, patio, driveway, retaining wall, sidewalk, or similar structure.

When people think about a survey, they often picture the surveyor locating the property corners and marking the boundaries. While the process is more involved than that, the basic idea is correct: the surveyor researches records, evaluates field evidence, and determines the location of the property boundaries.

The end result is a document intended to provide a high level of confidence regarding those boundaries.

What Is an ILC?

An Improvement Location Certificate, usually called an ILC, is also prepared by a licensed surveyor.

Like a survey, it shows the property and the improvements located on it. However, an ILC serves a different purpose.

In Colorado, ILCs are commonly used in residential real estate transactions. They can provide useful information regarding the property and its improvements, but Colorado law specifically states that an ILC is not a Land Survey Plat or an Improvement Survey Plat and should not be relied upon to establish fence lines, building lines, or future improvement lines.

Why have both documents? Because they are often used to solve different problems.

A survey is generally used when someone wants a high degree of confidence in the location of the property boundaries. For example, if you are planning to build a fence, construct an outbuilding, resolve a boundary dispute, or simply want as much certainty as possible about where the property lines are located, a survey may be worth the additional cost.

An ILC is commonly used in residential real estate transactions because the question is often less about establishing the exact location of the property boundaries and more about understanding how the existing improvements relate to the property. Is the house generally where it is supposed to be? Are there any obvious concerns involving the garage, fence, shed, or other improvements? In many transactions, that level of information is sufficient for the buyer, lender, title company, and seller.

That’s why an ILC often costs less than a survey. The surveyor is not being asked to provide the same level of boundary determination that would be required for a survey intended to establish property lines. The trade-off is that the buyer has less certainty about the exact location of those boundaries.

Neither document is automatically better. The question is whether the additional certainty provided by a survey is worth the additional cost, time, and effort in a particular situation.

Sometimes the Decision Isn’t Entirely Yours

Up to this point, I’ve been discussing surveys and ILCs as though the decision were entirely the buyer’s. Often that is true, but not always.

In some transactions, a lender, title company, or other party may require a survey or an ILC. In those situations, the discussion may shift from whether you want one to who will order it, who will pay for it, and how it affects the transaction timeline.

I’ll discuss that in more detail in a companion article on title insurance, Owner’s Extended Coverage, and survey matters because those topics are closely connected to this conversation.

Why Would Someone Care About the Difference?

Because certainty costs money. Imagine two buyers purchasing similar homes.

The first buyer wants as much information as possible before closing. They are concerned about property boundaries, future improvements, and eliminating uncertainty wherever possible. That buyer may decide a survey is worth the additional cost.

The second buyer is purchasing a typical residential property in a subdivision. They see no obvious boundary concerns and are comfortable accepting a little more uncertainty in exchange for spending less money. That buyer may decide an ILC is sufficient, or may decide not to obtain either an ILC or a survey. Neither buyer is necessarily right or wrong. They’re simply making different decisions about risk and cost.

Situations Where a Survey May Make More Sense

A buyer might lean toward obtaining a survey if:

* The property consists of acreage.
* The boundaries appear unusual or irregular.
* There are visible encroachments or boundary concerns.
* The buyer plans to build a fence, addition, garage, barn, or other structure.
* There is a disagreement about a property line.
* The buyer simply wants greater certainty before closing.

In these situations, the additional information provided by a survey may justify the additional cost.

Choosing Between an ILC, a Survey, or Neither

Many residential transactions involve relatively standard lots in established neighborhoods.

In those situations, some buyers decide that an ILC provides enough information for their needs. Others decide not to obtain either an ILC or a survey. They may conclude that the additional information provided by an ILC or survey is unnecessary, given the property’s characteristics and their comfort level with the associated risks.

Again, this is not about right versus wrong. It is about understanding the available options, the information each provides, and the risks of proceeding without them, then making an intentional decision.

Cost, Timing, and Negotiations

A survey generally costs more than an ILC. Depending on the property and the type of survey being performed, the difference can be significant.

Surveys also take time.

If a buyer wants a survey completed during the contract period, it generally needs to be ordered early in the transaction. Once the surveyor begins work, the buyer will typically be responsible for that cost regardless of whether the transaction ultimately closes.

There can also be negotiation considerations.

In a highly competitive market, buyers sometimes avoid requests that could increase costs, delay the process, or complicate negotiations with the seller.

That does not mean a buyer should avoid requesting a survey if they believe one is important. It simply means they should understand that every request has consequences, both positive and negative.

Understanding the Risk

Every effort to reduce risk comes with a cost. The question is not whether risk exists. Risk always exists. The question is how much risk a particular buyer is willing to accept.

Some buyers are willing to spend additional money to reduce uncertainty. Others are comfortable accepting a little more uncertainty if it helps them preserve cash, simplify negotiations, or increase their chances of getting the home they want. Those are personal decisions.

My role is not to make those decisions for you. My role is to help you understand the risks, costs, potential benefits, and available options so you can decide what makes the most sense for your situation.

One thing I should note is that I’m explaining these topics based on my experience helping buyers and sellers navigate real estate transactions. I can help explain how surveys, ILCs, title insurance, and contract provisions typically work in practice, the role each plays in managing risk, and how they relate to your particular transaction. What I cannot do is provide legal advice or tell you how an attorney might advise you or how a court would interpret a particular situation.

One Final Thought

Many buyers approach this conversation assuming there must be a single correct answer. In my experience, there usually isn’t.

A survey provides greater certainty, but it costs more and takes longer. An ILC is generally less expensive and is commonly used in residential transactions, but it may not provide the same level of certainty regarding property boundaries.

The important thing is not that every buyer makes the same choice. The important thing is that every buyer understands the choice they are making.

It’s also important to remember that this discussion has focused primarily on the buyer’s decision-making process. In some situations, lenders, title companies, and title insurance requirements may influence that decision or even require a survey or ILC. Those topics are closely tied to Owner’s Extended Coverage and survey matters, which I’ll discuss in a companion article.

Because that arrangement became common, many people assumed it was required. It was not — and never was. It was simply the convention in most markets.

In August 2024, changes related to buyer representation and agent compensation took effect nationwide. Those changes have led to a lot of discussion — and, in some cases, confusion — about what changed, what did not, and what it means for buyers and sellers.

This post explains the basics. This post explains what has changed, what has not, and where some of the biggest misconceptions tend to show up. I also link to separate posts for buyers and sellers who want a more practical explanation of what these changes may mean in real life.

What Hasn’t Changed

One of the biggest misconceptions is that sellers were required to pay the buyer’s agent. They were not. That was never a law or universal rule. It was simply a common arrangement that became the norm in most markets.

Buyers can still choose to work with an agent, and sellers can still decide whether to compensate the agent representing the buyer. The main changes concern how compensation for the buyer’s agent is handled and disclosed.

What Has Changed

First, the MLS — the database agents use to find and share listings — no longer displays whether or how much the seller is offering to pay the buyer’s agent. For many years, that information was visible in the MLS. Now it is not.

Second, agents working with buyers are now required to have a written agreement with them before touring homes. Among other things, that agreement addresses how and how much the buyer’s agent will be compensated.

Misconceptions

One misconception is that sellers can no longer offer compensation to the buyer’s agent, and that buyers must always pay their agent out of pocket. Neither is true. Sellers can still offer to pay the buyer’s agent, but that offer is no longer displayed in the MLS. Now, compensation is addressed more directly: first in the agreement between the buyer and the buyer’s agent, and then, when needed, in negotiations with the seller.

More for Buyers and Sellers

This post explains the broad changes. If you are a buyer and want to understand what these changes may mean for you when hiring an agent, touring homes, writing offers, or negotiating costs, see my separate post for buyers. If you are a seller and want to understand how these changes may affect your pricing, marketing, negotiation strategy, and whether to offer compensation to the agent representing the buyer, see my separate post for sellers.

One of the reasons we encourage buyers to ask a few direct insurance questions up front is simple: insurance policies have exceptions, and it’s easy to assume something is covered when it isn’t.

A story

A good friend bought his first home a while back. He and his wife went on their honeymoon and came home to find their basement flooded. The water came in from the outside. The problem was that a downspout extension was missing, and there was a heavy rainstorm while they were gone. Without the downspout extension, water collected in a window well and eventually flooded the basement.

It was no fun coming home from their honeymoon to this, but they had insurance, so at least they wouldn’t have to deal with it themselves. At least that’s what they thought. It turned out that because the water came in from the outside, their policy did not cover the damage. They were told they would have needed a separate flood policy for that situation. They discovered that, if the water had originated from inside the home (a water heater failure, for example), the damage would have been covered.

The point isn’t to be paranoid, but to have a basic understanding of what your policy covers and what it excludes.

A few questions worth asking your insurance agent:

• • In your experience, where are people most surprised? What kinds of claims do homeowners most often assume are covered, but aren’t?
  • If we’re away and something happens—especially water—what does the policy require us to do?
  • What are the most common ways people inadvertently create coverage problems?

HOA / attached-home-related questions:

• • Can you review the HOA master policy and tell me what it covers vs what my personal policy needs to cover?
  • Do I need ‘walls-in’ coverage (studs-in), and what exactly does that include for this unit?
  • Do I have loss assessment coverage? What’s the limit, and do you think that’s sufficient?

The bottom line? Don’t assume. Before closing, ask your agent a few direct questions, and if you’re buying a townhome or condo in an HOA, make sure your personal policy is coordinated with the HOA master policy. We’re not insurance agents and can’t tell you what your policy does or doesn’t cover—but we can tell you people are often surprised by exclusions, and it’s worth getting clarity now.

If you’ve sold a home in the past 30 years, you likely paid a commission not only for the agent you hired (the listing agent) but also for the agent representing the buyer. And if you’ve purchased a home during this time, your agent’s commission was likely paid by the seller. While it was never required for the seller to pay both agents’ commissions, it became the convention in most U.S. markets.

Although these long-standing conventions still hold in many cases, recent changes that took effect in August 2024 may alter the landscape. These updates have sparked widespread discussion and, in some cases, confusion about what has actually changed. In this article, I’ll break down what’s new, what remains the same, and how these changes might affect you if you plan to sell your home.

What Hasn’t Changed

There has always been a misconception that sellers must pay a commission to the buyer’s agent. This was never a rule or mandate. Over time, however, it became the convention. While this practice was common, it was never legally required.

What Has Changed

When agents list a home for sale, they input it into the MLS (Multiple Listing Service). The MLS is the primary database agents use to search for homes for their clients, and it’s also where information is syndicated to popular sites like Zillow, Realtor.com, and many others.

Until August of this year, the MLS displayed the commission the seller offered to pay the buyer’s agent. This is no longer the case. Now, when an agent working with a buyer views a listing, they cannot see whether or how much the seller is willing to pay.

Additionally, agents working with buyers must now establish a formal agreement with their clients before showing them homes. This agreement specifies how much the agent will earn—a detail not previously required.

How These Changes Affect Sellers

It will take time for the real estate market to adjust to these changes, but here’s what we’re seeing so far:

• • Buyer Expectations Remain: Sellers have traditionally covered the buyer’s agent commission, and most buyers still expect this to be the case. Consequently, many sellers continue to pay this expense.
  • Negotiation Dynamics: Buyers must now negotiate directly with their agent to determine compensation. However, many buyers instruct their agents to request this payment from the seller in the purchase contract. If the seller declines, they can counter by removing the buyer’s agent commission. If the buyer cannot cover the commission themselves, they may reject the counterproposal and look elsewhere.
  • Pre-Offer Conversations: In some cases, buyer’s agents contact the listing agent before submitting an offer to discuss commission expectations. Whether or not the seller is willing to pay this commission can significantly influence whether the buyer decides to submit an offer.

Our Advice to Sellers

Market conditions play a significant role in determining how to handle the buyer’s agent’s commission. If your property is attracting multiple buyers or has limited competition, we might recommend negotiating a lower—or even no—buyer’s agent commission. On the other hand, if your property has little interest or faces strong competition, offering to pay the buyer’s agent’s commission may incentivize the buyer and their agent to prioritize your listing.

One way or another, we will determine how much the buyer expects you to pay their agent before deciding how to proceed with an offer. Buyer’s agents often reach out in advance to discuss commission expectations, allowing us to clarify how much the buyer is obligated to pay. If the buyer’s agent doesn’t contact us beforehand, the purchase offer will outline the requested commission. Either way, we should have a clear understanding of their expectations. If the buyer’s agent requests a lower commission than you were willing to pay, you can agree to the lower amount, and we’ll amend the listing contract to reflect the change.

Final Thoughts

The recent changes in the real estate industry may shape new norms and conventions, and the transition may feel uncertain at first. Our role is to guide you through these shifts, providing the information and support you need to make confident, informed decisions that maximize your returns and ensure a successful sale. If you’ve worked with us before, you know our commitment to thorough communication. We’ll always share what we know, what we don’t know, and what we think, ensuring you have a clear understanding to make the best choices for your situation.

(If you’re considering working with us to sell your home, this post is worth your time. While the main idea may seem straightforward, its deeper implications are often missed. We’re asking you to see the home-selling process in a new way that recognizes emotion’s quiet but powerful role. It’s like thinking you know someone’s story, only to truly get to know them and realize there’s so much more beneath the surface.) 

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Selling a home isn’t just about statistics, checklists, or square footage—it’s about how your home makes potential buyers feel. That feeling often determines not just whether your home sells but how quickly and for how much.

We ask you to pause, reflect, and consider this perspective. Even if it feels abstract now, over time—and by the time our work together is complete—you’ll see how these ideas lead to better decisions and, ultimately, better results. This is just the starting point, and it begins with slowing down and recognizing that this process has a deeper layer worth your attention.

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Why Does Emotion Matter?

Think about why you gravitate toward one coffee shop, grocery store, or park over another. Why do certain parts of your home feel inviting while others don’t? What makes you enjoy visiting one friend’s house more than another’s? These places may have similar features, yet something intangible sets them apart—more often than not, it’s emotion.

The same is true when selling your home. Buyers aren’t just purchasing square footage; they’re responding emotionally, often in ways they don’t consciously realize. If your home stirs a strong emotional response, it becomes something they have to have. But if it feels cold, uninviting, or just “fine,” it risks becoming just another option—competing on price alone.

In a hot market, an emotional connection can mean a higher sales price. In slower markets, it can be the difference between selling and sitting unsold. Imagine a sunroom with large windows flooded with afternoon light versus the same room with covered windows blocking the light. The space hasn’t changed, but the feeling has. That’s the power of creating an emotional connection.

A property that doesn’t evoke emotion becomes a commodity. And when something becomes a commodity, price becomes the only deciding factor. That’s why we take a different approach—one that blends art and science.

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Art and Science

We use every tool available to create an advantage. For example, most agents overlook how strategically-written listing comments can start building a buyer’s emotional connection to a home or how a well-crafted email to an agent before a showing can subtly shape expectations. There are countless ways to enhance a home’s emotional appeal, and each listing presents unique opportunities. This creative and strategic process is what we love about what we do.

What I’m describing here is the art of real estate. Some parts of the process should be systematized and repeatable—like ensuring listings appear on all relevant websites, managing showings efficiently, and handling essentials like photography and floorplans. That’s the science of selling a home. But the most valuable part—the part that shapes how buyers feel about your home—is art. We understand the difference. We have tools at our disposal that most agents don’t even realize exist—and we know how to use them. We are artists and craftsmen—not order-takers or robots.

The value of our approach may not be immediately apparent, but by the time the process is complete, our clients get it. We want them to feel good about working with us, and we take responsibility for making that clear as early as possible. This post—and the conversations ahead—serve that goal. Shifting your perspective now will lead to more confident decisions—and better results—in the end.

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In Conclusion

If you take the time to absorb these ideas, you’ll navigate the process with more confidence, less stress, and ultimately, greater financial and emotional value. We don’t expect everything to click immediately—this is just the beginning. These concepts will take shape and become more meaningful as we move forward.

There are many moving parts in a real estate transaction, and we’ll guide you through all of them. But among all the factors that influence a sale, understanding emotion is at the top of the list.

When buying a home with cash, the seller will expect to see a document called Proof of Funds—confirming you have the money available to complete the purchase. Ideally, we’ll include this with your offer, so it’s best to have it ready ahead of time.

When buyers get a loan, their agent includes a pre-approval letter with the offer. That letter proves the lender is likely to fund the purchase. For cash buyers, the equivalent is Proof of Funds, which is usually a recent bank or investment statement showing you have enough liquid funds to cover the purchase price (or more).

Why does the seller care? Because they don’t know you. If they accept your offer, the seller is effectively taking their house off the market; they want to be sure you have the money to pay for their home. Proof of Funds gives them confidence that you’re serious and capable, which can make a big difference, especially if there are multiple offers.

And don’t worry—this doesn’t mean handing over your full account details. You can redact account numbers. The only thing that matters is that your name is on the account and there is at least enough money to pay for the property.