$125 Title Search Fee Upfront? Is this the norm?

[Kim Miller]

Hi,

I tried to post this earlier, but I guess it didn't go through. I can't seem to find the post anywhere. So I hope this isn't a duplicate post.

But anyway, I spoke with a young lady today at an investor-friendly title company here in Houston, TX today and she told me that I would have to pay upfront a $125 for title searches. If I close on a property then the fee would be given back to me at closing, otherwise they keep the money if I don't close on the deal.

I'm new to wholesaling and am working with very limited funds right now. I'm aware that a title search is not required, but in order for me to move forward with any deal, I'd definitely want to know what's going on with the property first.

Can someone please give me some suggestions on how to go about this? Should I contact other title companies or do they all work the same way?

Thanks!

[J Scott]

Title companies are going to do one of three things:

1. Charge you upfront for the title search. This is very uncommon, but that's because most title companies don't generally work with investors, and new investors are more likely to back out of a deal and stick the title company with the bill. So, any title company that specializes in working with investors will be more likely to ask for upfront title fees to avoid losses;

2. Charge for title costs at closing, but if you don't end up closing, they'll charge you anyway. This is pretty common -- there are no upfront title charges, but if the deal falls through, the title company has done work and will still expect to get paid;

3. Charge for title costs at closing, and if there is no closing, the title company will eat the costs. This is more common with closing attorneys that have repeat customers. For example, my closing attorney will never charge me for deals that don't go through because most of them do and they're willing to take the risk that some won't. Plus, they have an agreement with their third-party title company that they are only charged if the deal is closed, so if it's not closed, the third-party title company just eats the cost, so my attorney isn't out-of-pocket if my deal doesn't close.

It's up to you if you want to find another title company, but having one that specializes in working with investors is a nice benefit, even if it means having to pay title costs upfront.