I have noticed that a lot of times brand new real estate investors find it hard to understand how to close a deal with an out of state seller. The procedure is actually quite simple once you understand it. I have been working with absentee owners for just about 4 years now, and I can tell you that it generally is pretty easy. When you have found an absentee owner that is a motivated seller they usually are very cooperative in getting the deal closed.
An exception to that rule might be when you have a situation like the one I am working on now, where I have 6 folks in the deal in 4 different states, and some of these folks don’t get along. But, that is another story that I will post after the closing – which should happen sometime next week.
How do you find an investor friendly closing attorney?
In my state we use closing attorneys rather than title companies, but everything should work the same way regardless. I easily found several investor friendly closing attorneys in my local REIA group. These guys and gals are real estate investors themselves, and they understand all of the ins and outs of double closings, assignments, and are used to working with sellers that are out of state or “absentee owners” as they are commonly called. They have this whole process down to a science; even when the seller is in another state my typical time to close the transaction with my buyer is about 7 days, on average.
Exactly how does it all work?
Once I put a house under contract, I immediately begin marketing this house to my buyers list. I looked back at my transactions for this year, and I found that most of my deals sold in a matter of days, and those that didn’t, sold in less than a week. I am a wholesaler so this is a timeline that I love!
I hold onto the contract for my purchase until I have the second contract with my buyer. The reason I do this is to avoid any confusion at the closing company. Once I have both contracts, I send an email to my contact at the closing company and tell her I will be faxing everything to her today for a double closing, and I usually give them an idea of when I would like to close. I also tell them to go ahead and run the title which will take a day or two.
Ensuring things go smoothly
I always type up a contact sheet with the names, addresses, phone numbers, and email addresses of each person involved in all transactions, including my contact information. I put the information down separately for the A to B closing, and for the B to C closing. I also include things like my tax ID# and anything else I know they will need to close. This information is sent off with a copy of both contracts.
I also feel that it’s important to let them know of any special circumstances we need to take into consideration. It is my job to make their job as easy as possible. They love working with me because I do that, and I love working with them because everything is always flawless at the closing. You hear a lot about the importance of “building your team,” and I couldn’t agree more. My closing attorney is a vital part of my team. I take great care to nurture that relationship.
Getting ready for the closing
Once my closing attorney has everything from me and the title is back, we schedule a closing and the documents will then be prepared and sent out quickly to the seller. In most cases, the seller signs the documents in front of a notary the same day they are received, and the documents are sent on their way back to the closing attorney. If the seller is really on the ball, this may all happen within a 24 hour period.
Since the seller will not be at the closing, the only other person to be consulted about the closing time is my wholesale buyer. I always let them choose a time that is convenient for them.
On the day of the closing I will typically go in a little early to sign the documents for the A to B closing. This takes maybe 10 minutes. My buyer will arrive for the B to C closing, sign the documents and we will be done. At that point, my check will be cut, the keys to the house will be given to my buyer (by me) and we will all go home happy. The closing typically takes about 30 or 40 minutes, tops.
There are folks that say they never go to closings. I love going to the closing! I get a chance to network with my buyer and further build that relationship. For example, the person I will be closing with next week has bought multiple houses from me this year, and I get to nurture that relationship with my closing attorney and his staff. It’s nice to be able to thank those people in person who worked so hard to pull this quick closing together for you. For me, attending the closing is just one more opportunity to build those relationships that are so important in business.
Photo: City Caucus