Warning! Your state may not do deals strictly through title companies!

Wholesaling
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Warning! Your state may not do deals strictly through title companies!

Bryant Moran
Real Estate Agent · New York City, NY · Member since 2015 · 36 posts · 14 votes

So basically,

I decided to wholesale in Connecticut, around the Hartford area and Whethersfield. (Expanding as I drive for dollars looking for the perfect place). So I google Title Companies in Connecticut call three separate ones up and ask them about closing and whether or not I can use the buyer’s funds to blanket the costs, or “assigning” him my contract.

These are the ones I called. Chicago Title Insurance, First American Title Insurance Company, and Fidelity National Title

They said that they couldn’t do closing with me because they sell title insurance and that I would have to close through an attorney. So now I’m confused. Does that mean that I hand him the paperwork (an offer to purchase & the assignment paperwork) and he’ll handle it? 

So, I found out that not all title companies do closing services or escrow services. Just need some clarification and costs for attorneys

Ideally, if you are an investor in the Connecticut area, I would love to know what title companies and/or attorney you guys use to close. I appreciate any feedback. Thanks guys! 

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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many title companies in many states do not allow pass through closings like your trying to do.. you need to bring in your own funds to close  however you get them.. then you sell to your client... this is were this wholesale industry is going one state at a time.  Mississippi stopped doing double closes almost 10 years ago for instance. and I am funding deals in MO right now because they don't allow double closings. 

on the wholesaling thread that was going around.. I made the comment that if one wants to really be a wholesaler or double closer you best get your transactional funding or money partner lined up or your going to be spinning a lot of wheels.

Attornies may take on other risks but they risk losing their insruacne carrier so you can check

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    Chicago is owned by Fidelity just fyi.. along with Ticor and probably a few more... the owner of Fidelity also owns Half of Healdsburg in Sonoma county.. N cal wine country

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  • Adam Drummond
    Investor · Greenville, SC · Member since 2013 · 252 posts · 92 votes
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    @Bryant Moran

    south carolina is not a title state either.  you have to have an attorney handle the closing here as well.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    many title companies in many states do not allow pass through closings like your trying to do.. you need to bring in your own funds to close  however you get them.. then you sell to your client... this is were this wholesale industry is going one state at a time.  Mississippi stopped doing double closes almost 10 years ago for instance. and I am funding deals in MO right now because they don't allow double closings. 

    on the wholesaling thread that was going around.. I made the comment that if one wants to really be a wholesaler or double closer you best get your transactional funding or money partner lined up or your going to be spinning a lot of wheels.

    Attornies may take on other risks but they risk losing their insruacne carrier so you can check

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  • Phil Z.
    Real Estate Broker · Orange, CT · Member since 2013 · 951 posts · 218 votes
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    It is my understanding that Title Companies can do closings in CT.

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  • Bryant Moran
    OP
    Real Estate Agent · New York City, NY · Member since 2015 · 36 posts · 14 votes
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    Originally posted by @Adam Drummond:

    @Bryant Moran

    south carolina is not a title state either.  you have to have an attorney handle the closing here as well.

     So how do you do it, you just hand your paperwork to the attorney and he takes care of the rest? Will he do a title search, and can he have the investors' funds cover all expenses? 

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  • Bryant Moran
    OP
    Real Estate Agent · New York City, NY · Member since 2015 · 36 posts · 14 votes
    11y
    Originally posted by @Phil Z.:

    It is my understanding that Title Companies can do closings in CT.

     Which ones specifically? Orange is a bit far from Connecticut, so if I were to close at a title company in Orange would it matter that I'm from a different county? 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    @Bryant Moran

      please take no offense but your asking some really basic questions that you should have solid answers for before you waste time energy and money trying to do RE deals.  :)

    get with a good Realtor and ask them how they close deals they will know and it will probably only cost you a beer or coffee  good luck

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    I build new homes in Charleston SC and yes its an attorney closing state.. but they all buy title insurance from the same outfits.. be it fatco  fidelity  lawyers etc etc.

    And the insurer lays down the rules that the closing attorney needs to follow lest they lose their ability to right insurance for a certain underwriter.. just like an insurance person sells auto for state farm or allstate they are agents of the company.

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  • Adam Drummond
    Investor · Greenville, SC · Member since 2013 · 252 posts · 92 votes
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    @Bryant Moran

    in SC I hand over our signed contract to purchase to the real estate attorney.  they then order the title search to be done.  once everything comes back clear then they prepare the hud (closing statement).  the statement will show where all of the money is going from atty costs, tax prorations, bank fees, etc.  The buyer will then need to bring in a certified check for the amount that is shown needed according to the closing statement.  I always make the certified check out to the closing lawfirm.   The money will be disbursed from their account to any lenders, realtors, inspectors, etc.  hope this helps.

    Adam

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  • Bryant Moran
    OP
    Real Estate Agent · New York City, NY · Member since 2015 · 36 posts · 14 votes
    11y
    Originally posted by @Jay Hinrichs:

    @Bryant Moran

      please take no offense but your asking some really basic questions that you should have solid answers for before you waste time energy and money trying to do RE deals.  :)

    get with a good Realtor and ask them how they close deals they will know and it will probably only cost you a beer or coffee  good luck

     Thanks for the suggestion, I know the process for everything else it's just this one part totally shifted the game. I was going in assuming that title companies handle the work. How do you close your deals through attorneys?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Bryant Moran

      Ok in this instance think of an attorney as an escrow officer .. that works for a title company that is their function.. but in many states only attorneys are allowed to draft notes and mortgage documents..

    So just google attorneys that do RE closings there will be some.. then just point blank ask them if they will accommodate a double close.. they either will gladly or will tell you no.. if they say no then you need to find a transactional funding source.. I do this for many folks all over the country and get busier every month it seems at title companies and state crack down on double closes or pass through escrows.. and if they say yes then your set.. they will handle the transaction just go there and drop off your purchase and sale agreement they will handle it from their.

    But to be perfect honest closing attorneys by and large are not nearly as good as a really good escrow officer.. they will not generally go the extra mile because they are too busy were an escrow officer usually has company staff to help them with customer service.

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  • Bryant Moran
    OP
    Real Estate Agent · New York City, NY · Member since 2015 · 36 posts · 14 votes
    11y
    Originally posted by @Jay Hinrichs:

    @Bryant Moran

      Ok in this instance think of an attorney as an escrow officer .. that works for a title company that is their function.. but in many states only attorneys are allowed to draft notes and mortgage documents..

    So just google attorneys that do RE closings there will be some.. then just point blank ask them if they will accommodate a double close.. they either will gladly or will tell you no.. if they say no then you need to find a transactional funding source.. I do this for many folks all over the country and get busier every month it seems at title companies and state crack down on double closes or pass through escrows.. and if they say yes then your set.. they will handle the transaction just go there and drop off your purchase and sale agreement they will handle it from their.

    But to be perfect honest closing attorneys by and large are not nearly as good as a really good escrow officer.. they will not generally go the extra mile because they are too busy were an escrow officer usually has company staff to help them with customer service.

     So you're suggesting that I work with an escrow officer instead? So If i work with attorneys right, can I do a simultaneous closing? Because I'd really like to avoid paying closing costs on both ends of the deal. Also, if I take ownership and sell right away, don't I become a "dealer" and then would face larger tax penalties?

    By the way the information you are imparting on me is truly invaluable and I am very grateful for your help. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    OK first off your tax burden is exactly the same whether you come into title and sell same day or 5 days later or if you just take a wholesale fee.. as long as your being straight up with uncle sam...

    I am not suggesting you close with either one... what I am suggesting is you talk with a closing attorney ( AKA ESCROW OFFICER) and see if it is their custom to allow double closings.  if it is then your home free if they don't then its plan B.. either you take an assignment fee and just pass your contract on to the buyer .. or you find funding to take the deal down so your the seller of record.

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  • Phil Z.
    Real Estate Broker · Orange, CT · Member since 2013 · 951 posts · 218 votes
    11y
    Originally posted by @Bryant Moran:
    Originally posted by @Phil Z.:

    It is my understanding that Title Companies can do closings in CT.

     Which ones specifically? Orange is a bit far from Connecticut, so if I were to close at a title company in Orange would it matter that I'm from a different county? 

     Orange is a town in Connecticut.  The county in CT is irrelevant.  Either way .. you are better off with an attorney doing the closing.

    1Reply
  • Bryant Moran
    OP
    Real Estate Agent · New York City, NY · Member since 2015 · 36 posts · 14 votes
    11y
    Originally posted by @Jay Hinrichs:

    OK first off your tax burden is exactly the same whether you come into title and sell same day or 5 days later or if you just take a wholesale fee.. as long as your being straight up with uncle sam...

    I am not suggesting you close with either one... what I am suggesting is you talk with a closing attorney ( AKA ESCROW OFFICER) and see if it is their custom to allow double closings.  if it is then your home free if they don't then its plan B.. either you take an assignment fee and just pass your contract on to the buyer .. or you find funding to take the deal down so your the seller of record.

     Thank you so much!!! 

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