Title Companies and Your Wholesaling Business

You have jumped into the wholesaling world, and you are ready to complete a transaction and ensure the investment pays off. But you question, “How can I be confident this deal will go through free and clear?” It’s simple, use a title company. A title company will certify the property is free and clear of any problems lurking under the surface such as liens, missing deeds, judgments, or unforeseen hazards.

Title 101: How to work with Title Companies as a Wholesaler

Communication. It is essential for the completion of the transaction that you communicate clearly with the title company. When you submit a purchase agreement don’t be sloppy! Although some title companies may have seen it all from a walk-in purchase agreement to something written up on a napkin, you should make sure all documents are legible and contact information is included; such as emails, phone numbers, and addresses. Title companies may need your help and, as the wholesaler, don’t go dark. Be available. You may need to play the role of mediator between the buyer and seller. It is important to make sure all parties are on the same page. You can provide clear communication to both sides while helping to facilitate the title process. For example, who is on the title? Is the owner deceased? This will be important information to include with your purchase agreement. The more the title company knows upfront the easier the process will be and more likely you will close sooner rather than later.

Education. Be knowledgeable about what is in your contract. Is the buyer or seller from out of state? Is there a current tenant living on the property? What about understanding the dreaded proration of taxes; especially in Indiana? Understanding the title process is also essential. It’s not just a one-step and done process after you submit a purchase agreement. The title process is a strategic 8-10 step timeline. This is why it is so important to provide a clear and clean purchase agreement, be available, and provide accurate contact information. The more you do as the wholesaler upfront, the more straightforward the title process will be.

Transportation. Wholesalers tend to have a bad reputation in the real estate community. When working through a contract don’t set false expectations such as promising a seller you can close in 48 hours if it’s not feasible. Maybe 10-15 years ago this was acceptable, but now the seller and the buyer should be aware of the anticipated timeline. As the wholesaler, you are in control to set realistic expectations, and if the contract closes easier than expected, great! You also need to make sure the funding is solid. Educate your buyers and sellers on fraud and how to be cautious with wiring instructions. Be sure to understand where the money is coming from. Will there be a wire? Is a lender involved or all cash? Funding can delay the closing. Ask your buyers and sellers about funding upfront and be transparent with the process. Keeping all channels of communication open and honest can reflect on your company’s reputation. If the transaction is clean with clear expectations, you continue to build a good reputation for yourself and in turn will get more referrals. Having a trustworthy reputation as an honest and fair wholesaler will result in profit and growth. As title companies often see, misrepresenting yourself to the buyer or seller and acting as a realtor will get you in trouble. You are a mediator between the buyer and seller, so do not misrepresent yourself as the realtor!

Time and Patience. Going through the title process isn’t as simple as going through a drive-through and picking up a hamburger. Especially during this time of COVID where title companies are following different regulations and safety precautions. Even if you have all your information submitted and ready to go, there are other businesses that title companies are dependent on for getting information. During the examination of the property, the title company may reach out to a bank or a law firm. If the law firm or bank is behind in business matters, then the closing and title process will also be delayed. It is beneficial for the wholesaler to share possible delays to the buyers or sellers. With changes in business regarding COVID and extra safety measures put in place by title companies, it may take a little longer, but you will still make it to the finish line at the closing table.

Mentors. If you are new to this industry and are wanting to dive into a successful and enduring career in wholesaling, it is highly recommended to find a mentor. Reaching out to an experienced wholesaler or title company can be beneficial to the success of your business. A mentor can help you through the first few transactions, introduce you to investor-friendly title companies, and educate you on the process. Being in an industry where there are so many different scenarios that could occur, it is wise to have an insider’s input and guidance. Title companies often will provide education courses that will explain and walk you through the title process. You will be able to build your understanding of tricky topics such as taxes, closing costs, owners’ policies, and funding. Ask for guidance; it could be just the advice you are looking for.

Title companies don’t always get the credit they deserve. Without them, it would be hard to become a legal homeowner. Once a property is under contract it is time for the title company to step in and ensure a property is free and clear of any problems. By using an investor-friendly title company, you can rest easy knowing the process will be managed from start to finish. When working with a title company, remember to have open channels of communication, educate yourself on the contract and property, be transparent with the seller or buyer, be patient throughout the process, and find a mentor who can raise you in the ranks of wholesalers to work with. By following these rules, you will be sure to drive right through to the closing table where that contract is finally signed and sealed.