Speaker 1: It's a little bit complicated so I wanted to walk through the transaction and see if this is something you guys know how to do and can handle and if you'd be a good closing attorney for me on this deal. In order to successfully complete a real estate wholesale transaction, you will need a wholesaler-friendly title company. The right title company will result in a smooth transaction. The wrong title company can kill your deal. So in this video, I'm going to break down the five-step process to close a wholesale deal with title. I'll answer the most common questions about when and how to use a title company and even how to find a good title company in your market for your next deal. And be sure to stay to the end of this video. You'll get to watch me call a title company live to see if they would be a good fit for a tricky wholesale deal that I'm working on. But first, if you're new here, I'm Jerry Norton. I make millions of dollars a year wholesaling and flipping houses and here on my YouTube channel, I show you how to do the same. So if you want to be a flipping genius like me and live your dream life, subscribe to my channel and watch my videos. Let's briefly discuss the role of a title company. In order to close a real estate transaction, you need a closing company to handle the transfer of ownership from the seller to the buyer. Now, some states use title companies, some states use attorneys, and some use escrow companies. Google your state to see what is used, but they all have the same function to close a real estate transaction. For simplicity, I'm going to refer to the closing company as the title company since that's the most common. The title company's job is to do a title search to make sure that the chain of title is correct and to see if any liens are recorded against the property, such as a mortgage from a lender. It's imperative that title makes sure the property is free and clear since they will issue title insurance. Title insurance ensures the buyer in the event that a claim on title arises after the buyer purchases the property. Now, the title company also handles recording the deed and any new liens with the county assessor's office. Prior to closing, the title company will provide a closing statement, which has a breakdown of the transaction, all of the fees owed, and who is responsible for them between buyer and seller. Now, each state has customary practices about who typically pays all the different fees, but title will always refer to the contract. Now, the title company charges the seller and the buyer an escrow fee for their services, which is typically paid at closing out of the proceeds. Now, if you're confused at all about what the title company does or what all the fees are associated with the transaction, I did a video where I went through an entire closing statement and explained how to read it and what all the fees are. I'll put the link to that video in the description below for you to watch later. And since wholesaling is a non-traditional way to transact real estate, not all title companies are familiar with the process of wholesaling, which means choosing a wholesaler-friendly title company can make or break your deal. It's that important. I once had a deal where the seller was adamant about closing with his preferred title company, but they had no idea how to close a wholesale deal. When I gave title my assignment agreement, they didn't know what to do and they told the seller it was a scam, so the seller canceled the contract with me. That's why in my contract, I also have a provision that says seller agrees to use the buyer's title of choice. I'll explain in a minute how to find a wholesaler-friendly title company, but first let's walk through the five steps to a wholesale transaction so you can see the role title has in the process. After you find a motivated seller and agree on a price, step one is to execute a purchase and sale agreement with the seller. Now, if the property is on market, the real estate agent will handle the contract using their state approved forms, so you don't have to worry about that. If the property is off market, you have to provide the contract because the seller doesn't have one, but don't worry, I'll give you mine for free. Just go to wholesalercontracts.com for the free download. Now, in your contract, you may agree to pay earnest money. Earnest money is a good faith deposit that is held in escrow at the title company until closing. Once you have an executed contract with the seller, step two is to open escrow. This means you get a copy of your executed contract to the title company as well as any earnest money. Once you open escrow, title will do a title search and prepare for a closing based on the close of escrow date or COE that you agree to in the contract with the seller. Now, you could wait to open escrow until after you find a buyer, but I recommend to open escrow right away because if there are any issues with title, you want to know that as soon as possible. For example, if the seller isn't on title or there are back taxes that need paid or any number of issues that could prevent the sale from happening. I would say about 25% of deals never make it to the closing because of title issues, so don't wait to open escrow. Keep in mind the title company you choose needs to be local to the property, not just because real estate is governed state by state, but also for the convenience to the seller in case they want to attend the closing in person. So if you wholesale virtually or in multiple markets, you'll need a local title company for each market. Now with off-market, I'll add a provision in the contract like I said with the seller that states the seller agrees to close with the buyer's title of choice. That ensures I have control over which title company is used. If you wholesale on market, one of the challenges you'll face is the agent representing the seller often wants to choose their preferred title who they already have a relationship with. Here's how I typically handle that. First, I'll call the agent's title company and I'll quiz them on doing wholesale transactions. If they have experience and are comfortable with the process and I feel they're capable, I'll agree to use them for the closing. If I have any doubts whatsoever, I'll stick to my guns and I'll insist that the agent and seller agree to use my title company of choice because again, I have to stay in control of the transaction and make sure that title doesn't blow it. Step three, after opening escrow, it's time to find your cash buyer and once you do, you'll execute an assignment agreement. Now this contract states that the cash buyer agrees to take over the existing contract for a fee. So for example, if the original contract is for $100,000 and you assign your contract for $115,000, the cash buyer is agreeing to pay the seller $100,000 per the original purchase and sale agreement and you the wholesaler would earn a $15,000 wholesale fee. And I'll give you my assignment agreement for free. To get the free download, just go to wholesalercontracts.com. And to make sure that your cash buyer is committed to the deal, be sure to get a substantial non-refundable deposit. I typically ask for $5,000 or even higher. Once you have an executed assignment contract with your cash buyer, step four is to give a copy to the same title company that you open escrow with. The cash buyer will need to send his earnest money to the title company to hold an escrow. At closing, the earnest money is applied towards the cash buyer's purchase. If the cash buyer flakes out and doesn't perform, which happens more than you think, he will forfeit you his earnest money deposit. Okay, now that the title has both executed contracts, step five is to close the transaction. On the day of closing, title will coordinate with the seller and the cash buyer to sign. You the wholesaler don't need to attend the closing unless you want to meet the seller or the buyer for some reason at the closing. I personally haven't attended a wholesale closing in years. On the closing statement out of the cash buyer side, there will be a line item that shows the assignment fee and upon receiving the funds from the cash buyer, title will distribute your wholesale fee either by check or wire transfer. But the cash buyer will see your assignment fee, so if you don't want the cash buyer to see how much you're making, you could do a double closing instead of an assignment. Now that will hide your fee so the buyer doesn't see it, but you have to come up with the funds to close the deal. This is known as transactional funding and if you run into that situation, I can fund your deals for you. To learn more and get your first double closing funded for free, go to usejerryscash.com. Now I also did a video explaining why you may choose to double close and what to do when you're forced to double close. I'll put the link to that video in the description below so you can watch it later. Now let me give you a few tips to find a wholesaler friendly title company. First of all, I have a list of investor friendly title companies in almost every state. I'll put the link in the description below for you. That may be a good starting point, but you still need to call the title company and ask them about their experience with wholesale transactions. Ask how many they perform on a monthly basis. Tell them you plan on doing dozens of transactions and you're looking to build a long-term relationship with a good title company. But even better is to get a referral from other local wholesalers. All you have to do is put a post on an active investor Facebook group and see who people recommend. Finally, let's cut to a live call on a deal I'm working on in Georgia. Now the title company was referred to me, so I called to see if they could handle my deal, which was a pretty complicated assignment and a double closing combined. Let's cut to the call. Yeah, hi Gara, this is Jerry Norton. You were referred to me by Patty. Yes, sir. Do you know her? Yes, I do. Great, yeah, she's awesome. Anyway, I'm a real estate investor and I've got a transaction coming up in Griffin. Okay. It's a little bit complicated, so I wanted to walk through the transaction and see if this is something you guys know how to do and can handle and if you'd be a good closing attorney for me on this deal. Okay, sure, what you got? It's a cash transaction. Seller is under contract with an investor friend of mine and then he's going to assign it to me, so it'd be an assignment of contract and I can get you the original purchase and sale agreement and the assignment of contract. Then I'm going to close on transaction one and then want to turn around and do a second closing where now I'm the seller and selling it to another

Speaker 2: investor. Okay. Can you do all that? We can do all that. So what I would do is... Go ahead, sorry to interrupt.

Speaker 1: Oh no, it's okay. I was just going to say the closing's in like 30 days, so I would get you the original purchase and sale agreement, the AB between seller and wholesaler investor, so then the assignment from the wholesaler to me and then a new purchase and sale agreement between me and

Speaker 2: the new investor. Yep, that would work. If you can send me those documents, we'll go ahead and get it started and you said all this is cash, right? Yeah. All cash, okay. But I want to open escrow like right away

Speaker 1: because I just want to make sure that there's nothing weird going on with title with the

Speaker 2: original seller. Yeah, for sure. As soon as I get the documents, I'll put everything into our system and go ahead and order title. Okay. And you said this property is in Griffin, correct? Correct. Okay, so we usually get title back pretty quick on those. There's a guy that we use that usually I get those back within a day or two. Oh, perfect. Unless there's something really funky going on, I usually get it back like same day if I order it that morning. Awesome. It just kind of depends on how much work is involved. But usually I get it pretty quick. Okay, great.

Speaker 1: Well, I'm glad this isn't too complicated. There's some work involved but it's not too complicated. We can handle it. Okay, the contracts should clarify how closing fees are handled. So that'll be in there so you'll know like who to sign the fees to and stuff like that. But we'll

Speaker 2: that we can deal with that when we get closer. Okay, if you want to just go ahead and send me those documents and then I'll get title ordered and then I'll call you as soon as I get it back

Speaker 1: so I can go over it with you. Okay, and then this is like a direct line to you, this number? This number comes straight to my desk. Very good. Okay, well I'll get this over to you shortly.

Speaker 2: Okay, and what was your name again? Jerry Norton. Jerry Norton. Okay, perfect. I wanted to let

Speaker 1: Patty know that you reached out. She may actually be the buyer because she might want to fix it up and flip it. Okay. So, her and her husband are going there today to confirm that. If not her,

Speaker 2: then it'll be someone else. Sounds good. We'll get you taken care of. Okay, thank you. You're welcome. Have a great day. You too. Bye.