when contracting a deal should you have the title company handle the title right away or wait till you find a buyer for the contract. also if the contract expires before you find a buyer do you owe any money to the title company out of your own pocket?
Generally becuase you are trying to resell quickly you get your title company to start the work. Then yo require your end buyer to use your title company. Yes of course you owe the title company, you asked them to do work and they did it.
Now often wholesalers stiff the title company but you should not. If you are willing to steal from a title company then just skip Real estate altogether and rob banks.
Some title companies will cut you a break especially if you are a regular customer. But more importantly you need to do deals that you know are good enough to resell or be prepared to close yourself. You can also avid some of the costs by learning to do some of the work yourself. Many areas have some info online that can help spot problems that might come up. good luck - Ned
If you know its a hot deal get the PR going right away.
Honestly I get it going the moment I have a contract. I like that added fear I have to pay them should the deal not sell. It makes me move even faster!
If you don't know how to prelim title searches yourself, you need title checked before you get it under contract. You need to know about liens, back taxes, etc. before you enter a contract, let alone selling it.
All you need to do is to ensure the people who will be signing a contract are in fact on title, that is not a prliminary title search, but simply a verification of ownership. Do that before you contract, but if you don't so long as you aren't spending money on something you won't get hurt, as an example, one signs a contract and later you find tahta sister also needs to sign. Sometimes the sister will refuse so you need to know your contract is valid before getting deep into some deal.
Taxes, liens, encumbrances and clouds are an issue that needs to be done by the title company, some think they can do it, but unless they have had specialized training in a title plant, I wouldn't bet my deal on thier opinions. These are not an issue at all pre-contract, the contract requires the seller to give clear title. If there is tax due or any lien it's the sellers problem, not yours. But, you do need to know quickly as you may not have a deal.
So, immediately after contracting order a title committment or a preliminary report from the title company. A preliminary will give a search back to the last transaction, that could entail searching estate issues, court record searches of incapacitation or competency issues and other matters that RE types simply are not trained in, so have the experts do it.
Cost of a preliminary report is much less than a full search. I got them free, but to do that I was giving them tons of business and the searches I asked for usually closed, like 90% of the time, so I wasn't asking them to do work on a lark but on solid deals, some just don't close. If you have a high closing rate of contracts a title plant maight give you a free preliminary, it saves a little time for them as they do a full search, so getting tagged for some and then again isn't where you need to go. Often, if they charge for the prlim you'll be credited on the full search.
In many areas the seller is required to provide the search, I have had the seller order the search immediately after contracting to be billed at closing, if the deal doesn't close and the title company wants to charge for services, they bill the seller in such cases, not the buyer. :)
Originally posted by @Wayne Brooks :
You need to know about liens, back taxes, etc. before you enter a contract, let alone selling it.
Wayne Brooks you always give good advice but I have to disagree with this. With a good contract if there are any issues like liens, 1) that is normally the sellers problem and 2) You have an out and get your deposit back.
So why do you care about things like this up front?
I don't think we should be scaring new investors away from doing deals with issues that really don't matter. - Ned
Ned and Bill, I agree. Itjust seems most guys aren't doing traditional equity deals, but trying sub2's, wraps, etc. where they do need to know this. On a traditional equity deal, no sweat. I just like to make sure they didn't "forget" some large lien or judgement before I tie it up.
im relying on my contract to do a lot for me as well. can i just write in the contract that the seller pays for the search with a clause that if any issues are found and not addressed before the contract end data the contract is void and does not renew. is that a good exit strategy or do i need something else to protect my self from deals that wont work out and unnecessary out of pocket expenses.
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