When to bring in the Title company

Question

Hello BP Community,

My partner and I have put in an inquiry on a property that seems like a good deal and we want to go see it this weekend. We have been gathering a lot of information on the REI processes but we do not have any experience. Should we or could we have the Title company check the title before we have a purchase and sell agreement?

The seller lives out of state and gave us access to the lock box to check it out. We also want to take a couple of contractors out with us to get an estimate on repairs and updates needed. Our plans for the property is to fix-and-flip it, with some guidance, or at the very least, wholesale it.

I guess I want to ask if we are taking the right steps and going in the correct order.

I hope someone can help us. Thanks in advance!

Shannon

Bill Gulley · Answer

Hi, first, look at it, then run comps, run the numbers, determine rents, estimate repairs, if it's a flip figure in profits, holding costs and 2 transactions. Get the numbers, make an offer, negotiate the deal, get a final contract. Then take the contract to title and have them do a search to insure the property. Line up financing needed and get insurance lined up. Inspect the property have your contractors give you a bid (you could also do inspections prior to a contract but you may need to spend money for bids, so know it's  a deal first). If you are getting bank financing, after you get a contract just turn it over to them, they will order title and set the closing.

Your contract should be contingent on financing, repairs required not to exceed x dollars, contingent on inspections and good title. If any of these issues don't fly the return of your earnest money. Financing contingency might be acceptable financing at a rate no higher than x%, name your poison.

The lender will protect you as they will protect themselves with an appraisal, required repairs and title work.

This way you don't spend money before you have a contract. Good luck :)