At what point in the process do title companies get involved?

Question

When starting wholesaling I’ve noticed videos aren’t really clear about when exactly to get a title company involved. Should I have one before I even talk to a homeowner? Should it be before or after a contract is signed? Does the cash buyer bring their title company in during the inspection period? Do I have to pay for services from title companies or is that the buy/seller? How do I find a title company that is wholesaler/investor friendly?

David Ramirez · Answer

You don't need a title company until you have a contract in place with a seller, but it's good to have a few options in mind. Finding an investor-friendly title company is not difficult; simply reach out to a wholesaler or investor in your area and ask them which title company they use. They should not have a problem telling you.As soon as you sign a purchase and sale agreement with the seller, you should open escrow with your preferred title company so they can start working on the file. An agreement/contract is not legally binding if an EMD is not made, so make sure you do that right away. When opening the file with your title company, inform them that you will be assigning your agreement to an end buyer. A title search is usually done at no cost, but ensure they hold off on the municipal lien search until you have a buyer lined up with a non-refundable EMD. If not, the search could be at your expense if you have to cancel

You should maintain constant communication with the title company to ensure everything is set for closing. You don't have to pay for the title company's services unless you conduct what's called a double closing. In this case, you are responsible for the expenses incurred in the A-B transaction, but not in the B-C transaction.

Since you are opening the title before promoting the property, the transaction will always be handled by your preferred title company. I recommend keeping it this way.For any questions, feel free to reach out to my partner @Francis Nasser, she handles and coordinates every transaction with the title company.

David Ramirez · Answer

Yes, your EMD with the seller is refunded If you cancel during your inspection period. Your buyer's EMD should be nonrefundable.

Henrry Novas · Answer

Hi there!

1. Title Company Timing: Its wise to identify a title company or a closing attorney eve before you start making offers. They'll be crucial once you have a property under contract.

2. Contract Signing: Typically, you involve the title company right after you and the seller sign the contract. This ensures the title is clear and helps facilitate a smooth closing process.

3. Cash Buyer's Role: Usually, the cash buyer doesn't bring in their title company; instead, they work with the one you've initiated. However, they might suggest or request a specific company during the negotiation.

4. Payment: Payment for title services is negotiable. Often, its split between the buyer and seller, but this depends on your agreement terms and local practices

5. Finding the Right Company: To find a wholesaler/investor-friendly title company, network with local real estate investors and ask for recommendations. You can also check with real estate investment groups or forums.

Remember, each deal can be unique, so stay flexible and open to adapting to your specific situations.

Best of luck!

David Ramirez · Answer

I do a standard $500 for every transaction, it's rare when the seller requests for a higher deposit. Remember that you are acting as a principal (buyer) in the transaction, and then you are assigning your rights to purchase the property to an end buyer. The correct way to do this is by depositing your earnest money with the title company as soon as you open escrow so that the agreement becomes legally binding. You should request a significantly higher Earnest Money Deposit (EMD) from your end buyer; I would recommend at least $5,000 to ensure their commitment and to guarantee that they will proceed to the closing table. You will receive your assignment fee and your initial EMD at the close of escrow.

Donte Rome · Answer

talk to and vet them before you do deals. at least have 2 that are wholesale friendly. My contract requires me list the title company the transaction is taking place so I let the seller see this before they sign.

Alicia Arizpe · Answer

Thank you very much! Is the wholesaler the one who puts down EMD and who decides that number? The seller or I? I appreciate your insight.

Donte Rome · Answer

I ask them questions like.

are they investor friendly and what percent of their business is done with investors?

how fast can they close?

do you do double closes?

can i get a copy of your closing fees?

do you do assignment of contracts?

Alicia Arizpe · Answer

Hello!

Very grateful for your clear and concise information!

Alicia Arizpe · Answer

Okay I gotcha! That makes sense. Is EMD is always returned unless a fault happens during the process?

Alicia Arizpe · Answer

Okay definitely will start looking for them. As a wholesaler, how would I "vet" them?