Once the purchase agreement is signed, a Title Agency or Closing Attorney will handle all the paperwork for your real estate transaction.
The state you live in will determine which you'll use because each state has different laws about who can and can't be involved in the preparation and closing of a real estate transaction. (you can check a state-by-state closing guide by clicking here to see the requirements where you live.)
You might want to ask me right now why I'm talking about Title Agencies before we've even discussed the ins and outs of real estate wholesaling; well, I'm glad you asked! It's essential to have an "Investor-Friendly" Title Company (or attorney) lined up before you ever put your first house under contract.
Wouldn't it be frustrating to get your first contract signed and not know what to do with it? Besides, the title agency can get to work on everything they do, so when you get the purchase agreement assigned to an end buyer, the title agency will be that much closer to being ready to schedule a closing date (so you'll get paid quicker!)
What is an "Investor Friendly" Title Company?
Most title companies perform typical closings day in and day out, which usually involves someone buying a home through a realtor and obtaining a mortgage.
Most of them aren't used to terms like Assignment Agreements, Double Closings, Back to Back Closings, or Simultaneous Closings. This is why you must find an Investor-Friendly before going out and putting your first house under contract.
So your first mission (after completing this course) is to find yourself a Superhero Title Agent that works with investors regularly. Over the years, I've had the privilege of working with some fantastic title agency professionals, and take my advice when you find one to treat them like gold.
Often in real estate transactions, "issues" pop up with the title, errors in records, unknown liens, illegal deeds, missing heirs, unpaid water bills, encumbrances, and the list goes on... A great title agent will uncover and help mitigate or eliminate these issues and save your deal from going south.
One more time, for the record, when you find your superhero title agent, make sure you show your appreciation after each closing by taking them lunch or dropping a thank you card in the mail. Little gestures go a long way with people who often feel overworked and under-appreciated.
1. Starting the Process - You and the seller sign a sales contract, then you'll deliver it to the title company, usually accompanying an earnest money check. The escrow is accepted by the title agent and often confirmed with an earnest money receipt upon request. The escrow agent starts the closing process by opening a title order. The file begins to be processed with the collection of data including but not limited to obtaining loan payoff information, marital status of parties, legal documentation for corporate entities & ordering inspections.
2. Title Search and Examination - This search is made of public records. Records searched include deeds, mortgages, easements, assessments, liens, judgments, wills, probate court, divorce settlements, and other documents affecting title to the property. Title examination is the examination of the documents found during the title search that affect the title to the property. This step verifies who the legal owner is, and the debts owed against the property are determined. Upon completion of the search and examination, a title commitment is prepared.
3. Document Preparation - The closing agent will review the lender's paperwork & instructions, types the appropriate documents, follow the real estate contract terms and agreements, review instructions from other parties involved in the transaction, and insert closing fees into the settlement statement. The escrow agent acts as a key communicator with all parties involved throughout the process until the file is ready to schedule and close.
4. End Buyer Wires Funds - A day or two before the closing, your end buyer will wire the fund for the closing to the title company's account.
5. Settlement or Closing of the Transaction - The escrow or settlement agent oversees the closing of the transaction. The seller signs the HUD, CD, settlement statement, deed, owner's affidavit, and miscellaneous closing documents. The buyer will sign their final CD, HUD, and their settlement statement. After all the paperwork is complete, the seller will get their proceeds for the property sale, you will get your assignment fee, and the end buyer (Investor) will take the title to the home and get the keys.
Title Company Receptionist: Hello, National Title Service; how may I direct your call?
You: Hi, can I speak with one of your closing agents? It doesn't matter who; I just have a couple of quick questions.
Title Company Receptionist: Sure, hold on one moment, please.
Closing Agent: Hi, this is Amy; how can I help you?
You: Hi Amy, I just had a couple of quick questions for you... I'm a real estate investor, and I wanted to see if you are familiar with contract assignments, back-to-back closings, or simultaneous closings.
Closing Agent: Yes, I am. We work with several real estate investors that do those quite often.
You: Great, that's what I wanted to hear! I'm working on several transactions, so I'll be in touch soon.
Closing Agent: Sounds good. Just give us a call if you need anything.