Today, I received an email from one of our great listeners question about something that I never had actually written about! I felt that the question was so important, that I needed to share the answer with the listeners of TherRedPillInvestor.com and TenMinuteSkill!
How’s it going? I’m going to speak with a title company that’s does assignments on Monday and was wondering if you had any specific questions to ask if you were going in to talk to them. My position is I am a buyer.
Thank you for your question!
First, here are a couple resources about title and escrow that you may want to review if you are interested…
This is from my podcast The Red Pill Investor about Title, Escrow, and Transactional Funding. In another place, on my blog at TenMinuteSkill.com, I have a post called “What Is Escrow? Wholesaling Investing For Beginners.” that may be helpful.
Aside from that, I’ve not actually articulated a great way to handle that conversation. I believe however, that there are a few mindset things that if applied properly, will be helpful in that situation and enable you to ask the right questions for your particular situation.
First, approach this as a buyer. As a consumer, you have certain rights and responsibilities, but in the end, they are working for you.
As a home buyer, you are somewhat different than the average homebuyer.
The average homebuyer purchases a home every 5-7 years, and generally does not interact with a title company.
Generally, the homebuyer is usually okay with “whatever the agent says” and will close the transaction pretty much wherever the agent says to.
Why This Is important
The reason why this is important to you is not quite as obvious. As a consumer, the Title and Escrow companies generally deal with and prospect to agents for business.
When you, as a consumer/buyer come into the equation, and begin to “interview” them (for lack of a better term) that is already “unusual.”
Typically, this type of interview or meeting is granted to “Investors”. When you approach this meeting as an “investor”, then the escrow officer has a certain element of natural assumptions about your real estate knowledge. Obviously, to set up the meeting and ask the wrong questions will result in a less than optimal result. LOL.
As a Buyer, either for yourself as a personal residence, or as an investment, if you are going to do business with them repeatedly (as many investors want to do) then you want to approach this relationship as honestly as possible.
Generally speaking, the average Escrow Officer that I have worked with over the past 18 years has been of the highest caliber. They have generally always been very professional and eager to help you.
It is in their interest to cultivate that relationship! From Escrow’s perspective, if you do multiple deals, they will get a volume of business over perhaps one big check. Generally speaking, the Escrow Officers have a sales representative that is also there to assist you.
Understanding that if your intent is to do multiple real estate transactions with them, then it’s best again, to start honestly. After the obvious pleasantries, I would ask the following questions.
1. My intent is to buy properties, and I won’t always know exactly what I will be able to do with them. Some of them obviously, I will assign the contract out to other investors, some I will close with transactional funding, some I may end up buying for myself with a partner. I just don’t know. But I will let you know as quickly as I know. If I was to buy property like that, do you see any challenges that I am missing?
2. If that type of business is ok with you, how much time would you prefer to close a deal? I would like to know about how much time you need on your end once I get the financing together.
3. What is your favorite 80’s movie?
The Reason for the 3 Questions.
The first question addresses their knowledge of the various ways of selling the home. As on my contracts, I write “Buyer reserves the right to lease, rent, repair, assign, or sell for profit.” I would want to make sure that the title and escrow officer is aware of how to transfer title in the ways that I would prefer. Primarily “assignment of contract”. If the escrow officer isn’t familiar with assignment contract, that’s not an automatic no.
Too many times, people are too quick to dismiss someone based on their lack of knowledge of a subject. The truth is, sometimes those who don’t know about it, are the best at it. Mostly because they don’t know that they can’t. So if they are open to the idea, don’t necessarily throw the baby out with the bath water!
The second question addresses their comfort level in terms of time. The truth is, once they get the financing in place on any transaction, the Title and Escrow portion works pretty quickly. They just need to get the paperwork in everyone’s name, on pre-written forms; do the title search, and make sure everything is correct.
Truthfully, they could close within just a few days if necessary. What we are looking for however is their comfort level in terms of pressure. This question is intended to generate a discussion about their ability to close quickly, or timeframes that are challenging (the end of the month comes to mind!) . Additionally this question may bring up their team (if they have one) and all the backup systems to close a deal that they will need. It will be a great education after you ask this question. Listen in! A great escrow officer will tell you a lot at this point!
The third question is essential. I’ve asked that question of every single person I have ever hired. The decade is irrelevant, the answer isn’t relevant. Their ability to switch gears from a discussion about “assignments of contract”, transactional funding, how quickly they can act, all the different things that they are prepared for… to a completely irrelevant subject is key.
It’s called a “pattern interrupt.” Their ability to quickly switch from one topic that is very serious, to something to that is completely nonsensical will tell you a lot about their ability to act under pressure.
Think about it. If they are on one train of thought, and you have discussed potential “negative outcomes” and you are discussing potential tough situations; and then direct the conversation to some funny movie that they come up with, then you know they are able to separate issues from personal items.
The person who says “what does that have to do with real estate or real estate investing” before answering with their favorite “Breakfast Club” moment may have a difficult time separating the intensely personal business of this career; and work aspect.
While they are not physically working for you, you do have to have a working relationship with them. If you know that they don’t “take life too seriously” and are able to find something to smile about, while quickly changing subjects, then that is a bonus!
The best answer I ever got to that question was from one of my very best buyers agents. Her’s were Freddy Krueger movies… Go figure! But then, she is a go getter so maybe there IS some science behind it!
In any event, I thank you for your question, and I will go ahead and share this with others on the blog. I do appreciate your question!
Thank you for it!