Closing Attorney, Escrow Agent or Title Rep for a cash purchase?

Question

Hey BP....we have our first BRRRR house under contract, yay! It's out of state and California apparently has a strange way of closing from the rest of the country. Can any of you from the middle and the east share with me the best (least expensive) way to close a cash purchase? Details are appreciated!! In South Dakota it seems I have the option of having a closing attorney, escrow agent or Title Rep do it for me. Also looking for a great portfolio lender in Sioux Falls with no seasoning, no prepay penalty, who will lend on ARV of finished home not % of purchase price.

Josh Anderson · Answer

I prefer Getty for closings, they are easy to work with and typically pretty fast. As far as ARV and cost/appraised value goes when working with a bank. the bank will use the lesser of cost and appraised value if a new purchase but will typically use the appraised value for refinances.

@joe splitrock The best advice I can give for getting the bank to use close to ARV is providing them a list of repairs to be done to the property to give to the appraiser. The appraiser should use these number to provide both an "as is" and "as completed" value for the property. And most banks should use the "as completed" value (also called ARV) to lend against. But will may require you to use draw requests through a title company to pay for the updates as it helps the bank protect from getting mechanics liens filed on the property. Which supersede mortgage position, so the bank is going to protect their first position.

Just for reference i am a commercial lender at MetaBank.

JD Martin · Answer

I just use my title service that I have used on all of my sales/purchases/refis. We don't have to use attorneys here in TN. I get title insurance for everything. My cash closing costs generally run anywhere from $650-900 including title insurance.

Peter Kottwitz · Answer

Hi Jenn!

I'll throw another recommendation in for Land Title Guaranty as well as Stewart Title, both are terrific! If your looking at purchasing in South Sioux Falls (Lincoln County), and want title insurance, First Dakota Title I believe is the only game in town.

As far as the seasoning, I don't think you would have a problem refinancing at any time after the repairs have been completed, so long as the institution offers portfolio loans on those types of property's. 80% of appraised value is pretty typical when getting cash out.

Good luck!

Jenn A. · Answer

Wow guys! Thanks for all the info thats perfect! My husband was born in Sioux Falls so we are excited to invest in the area. Sorry I should've clarified the financing/seasoning....buy cash, do the rehab, then get an appraisal and cash out to % of ARV and not have to wait 6 months. At least that's the plan. Thanks for the referrals! I will be following up and telling them who sent me. @Chris Pohlson going off your prior post I have been working with Jackson and he's been super helpful so far!

Joe Splitrock · Answer

Good point that if you prove the value of improvements to the appraiser, they will take that in consideration. I read the "no seasoning" and assumed she was looking to finance right away. I typically finance prior to any improvements. In the good old days they would let investors take an allowance for improvements. Now they want to hold the money and pay people directly. I don't care for that process - just personal preference. I also thought being an out-of-state investor may cause banks to be a little more cautious.

Jesse Christensen · Answer

@Jenn A. Congratulations and welcome to SuFu! That's local talk for Sioux Falls;) Using a title company to close will be the cheapest. I also recommend Stewart Title, talk to Denise, she's the go to. Good luck!

Chris Pohlson · Answer

Congrats, @Jenn A.! Reach out to Paul Lems at Minnwest Bank here in Sioux Fu. Good luck. Let me know if I can help.

I've had good (cheap) luck with Stewart Title and Land Title Guaranty as well.

Joe Splitrock · Answer

@Jenn A. just do it at a title company that offers full service. I recommend Getty Title. It is very easy. It may be difficult to find a lender who will use ARV. I have purchased many homes here under ARV and the appraisals all magically come in at within a thousand dollars of the purchase price. Also keep in mind our real estate market here doesn't have swings like CA, so a property doesn't go up in value drastically over a few months. There is lots of open land here and none of it is ocean front... Good news is steady up means steady down.

Aaron Junck · Answer

I have used Getty abstract on many deals and also Stewart title here in town. (Sioux falls) . Try to contact @josh Anderson on here (from tea,sd) pertaining to the seasoning issue. I am currently doing one but inorder to "refi" the ARV I have to own it for 6 months . Otherwise everyone seems to go off of the cost to build/ appraisal , whichever is less if less than 6 months :(.

Closing Attorney, Escrow Agent or Title Rep for a cash purchase?

Closing Attorney, Escrow Agent or Title Rep for a cash purchase?

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