How to Find a Good Title Company or Attorney
Use the services of a title company or closing attorney for all your real estate deals. Let them make sure that the “t’s are crossed and i’s are dotted” when you buy/sell/flip your contract. They know the rules and regulations and what is appropriate for your area. Your attorney or title company can make sure that you don’t make a costly mistake that could come back to bite you!
Using a title company or attorney is more professional. Your buyer will usually want a title policy on the property they are buying, and that will require closing at a title company.
To find out where to get an “investor friendly” title company or real estate attorney, contact the other real estate investors on your buyers list. Ask them who they recommend. Get names and numbers. You could go visit with a few of the companies or just pick the name that seems to come up the most.
This is where all that networking comes in handy. By building a good relationship with the investors you call from ads, meet at the real estate investor clubs, or at the auction, you’ll develop a base of mentors that you can call anytime you need advice.
Don’t abuse the privilege though. Rarely will you make friends with someone if you call them frequently and keep them on the phone for a long time. These are busy folks whose time is valuable, respect that!
Keep your phone calls brief and to the point. Or better yet, take advantage of the time at the investor club meetings for your questions – those are GREAT times to ask questions. In a group setting, you have a lot of people milling around, and you can strike up some great relationships AND learn a lot by “listening in.”
The Sales Agreement
Once you find that elusive motivated seller and just the right house at the right price, you’ll need a contract to “tie up” or buy the house.
Use a Purchase Agreement to write up ALL the things that you and the seller have agreed to verbally.
There’s an old saying: “A verbal contract is as good as the paper it’s written on.” REMEMBER it! Unless you have it in writing and signed, you have NO agreement at all. All real estate contracts must be in writing – PERIOD!
A contract spells out the entire deal. It lets the seller know you’re serious about buying their house, and it provides written instructions for the Title Company or attorney – It puts everyone on the same page.
It’s amazing how sellers develop a case of “selective amnesia” and have a tendency to “forget” things about a deal. Having a written contract up front is vital.
You do need to have your contract lined up BEFORE you start looking for houses. You need to know what every line and term means. Leaving things out or having other things there can either mess up the deal or even worse, cause a potential legal problem.
Read the Purchase Agreements WORD FOR WORD so you see how they work. Since each state has different rules, it may be necessary to include other terms in your contract.
Keep it SHORT and SIMPLE. If the contract is too complicated, the seller may refuse your offer. People fear what they don’t understand. And if you throw a 10-page contract with tons of legal “gobbledygook” in it, your seller may get scared and “want to think about it.”
A contract can be short, sweet, simple, and in plain language and STILL be totally useful.
Important Clauses to Include Every Time…
No matter which contract you use, you MUST BE SURE to add a clause in the paperwork that protects YOUR interest AND allows you a “way out” of the contract. Such a clause is called a “weasel” or “escape” clause. Here’s an example:
“This agreement is subject to inspection and approval of the property by the buyer in writing within 10 days of acceptance.”
Another commonly used “weasel” clause in the wholesaling contracts is:
“This agreement is subject to approval by Buyer’s partner of the condition of the property as well as terms and conditions of this contract. Buyer shall have ____ days after acceptance to approve or waive this contingency.”
A simple verbiage like that is what makes your contract “risk free.” It will allow you the time to find a buyer from a list of investors you lined up and to show the house to them.
IMPORTANT – you only need ONE “weasel” clause in your contract to provide a way out for yourself. The more of these clauses you use in your contract, the less serious you look to the seller, and it’s less likely that your seller will sign it.
Don’t Forget This Clause:
“Buyer shall be entitled a key and access to the property for purpose of showing it to potential buyers, inspectors, lenders, etc. prior to closing. Buyer may place a sign on the property prior to closing.”
And finally, if you cannot find a buyer for the contract, you notify the Seller by phone and by certified mail that you did not approve the purchase. You then are no longer obligated to purchase the property.
Once you get more familiar with market values and what the investors on your list will buy, you may be able to eliminate the “escape” clause, but until then, make sure it’s in EVERY contract you write.
Let’s discuss more on contracts in the next blog article… 9 Essential Clauses for Your Purchase Agreements