Speaker 1: Welcome to day four of our 30 day wholesaling challenge. And in this video, I'm gonna explain how title companies work and how closings actually work. And I'm gonna go through details on cost structures, how it all breaks down. And if you've never done a deal before, this is the one you definitely wanna watch. But before I get into it, make sure you do me a favor, smash that like button, hit the subscribe notification button so you can continue to receive the rest of the videos in this 30 day challenge. So a title company, what is the real purpose of a title company? Just to handle your closings? Yes and no. The reality of a title company is it is a service and their main business is actually selling insurance. It's called title insurance. Now title insurance is there to protect both the buyer and the seller in the event there is a dispute in the title, hence the word title insurance. It mostly protects the new buyer. Say you paid $300,000 for a property and there was something fraudulent on the title, there would wind up being a lawsuit and that title policy protects you up to the $300,000 you purchased. And honestly, there's very few buyers that will pay close to top dollar without getting in title insurance because it assures them and honestly, it induces them to move forward with the transaction. So most real estate has an element of title insurance and that's where title companies really come into play. So number one, title companies offer a simple service. It's to help you close two parties on a real estate transaction. They are licensed and regulated by the state in which they operate in and most title companies can only do closings within that specific state that they're registered in. A lot of people think the title company is unbiased. So whoever picks the title company, they work for both parties. In theory, it's correct, but the reality is whoever hires the title company, just like you would hire a lawyer, is honestly gonna represent the best interest of the person that hired them. That's the person they have a relationship with them and they can give you a lot of information on a transaction to make sure you are completely protected. And so it is brutally important that you select your title company to do your wholesaling business. Don't ever use somebody else's title company because you're not gonna get an unbiased, meaning if you use their title company, that title company is gonna look out for their client's interest and not so much yours. I've seen it happen over and over. Always make sure you choose the title company when it comes to wholesaling. This is non-negotiable. So let's talk about the steps. So say you get a property under contract. By this point, you've already reached out to your title company and set up a relationship. So the first step is to submit your contract that's signed by both parties to your title company. The next thing the title company's gonna do is pull the chain of title. And basically, it's a fancy word for they're gonna research the title. They have underwriters within the company and they're gonna look at the history of how the deed has changed from person to person. And if there's any issues, it's gonna come up here and then that has to be resolved at that point. The next step they're gonna do is they're gonna pull off payoffs for the property. If there's any mortgages, any outstanding debt on the property, if there's any type of liens, it's all gonna come up on these reports because you're buying a property and all these issues need to be cleared for the title to transfer with a clear title and title insurance. So if you're buying a property and you're a new cash buyer, they wanna make sure it's got a clean title. A clean title means the mortgages are being paid off, all the liens are paid off, and all the property taxes are squared up. So once all the numbers are done, depending on the type of closing you do, sometimes there's prorations. Now a proration is basically if there's a $2,000 tax bill and you're halfway through the year, then $1,000 gets credited towards the new buyer and then the seller gets debited $1,000 because they were there for 50% of the time, so they owe 50% of the tax. This is called a proration. They do it with taxes. Sometimes they do it with rental agreements. If you have a 30-day rental, say it was $3,000 a month, it's $100 a day, and that's how they do a proration. So don't let that word scare you off. And then the other thing the title company does is they handle the recordings, meaning they record the deed, they record a satisfaction of mortgage. If there's a mortgage and it's recorded, they handle all that for you at your local county courthouse so you don't have to go out there and do it yourself. And guys, that simple as most closings work and how title companies work. So now you need to know how to go out and interview a title company that is going to be specific to your wholesaling business. The reality is 97% of title companies are geared towards dealing with realtors. We are the exception, not the rule. So we need to find a title company that's okay to work with us. So we basically ask them three simple questions, and I want you to repeat these questions word for word. Let's get into it. Number one, do you work with real estate investors? Simple question. Listen to their answer. How they define their answer is going to determine if you're going to move on to the next question or not. If it's an extremely negative answer, move on. They are not the title company for you and they've shown their true colors and saved you a ton of time. Question number two, are you familiar with the assignment of contracts? That's it, just like that. Are you familiar with assignment of contract? This is a technique we use in wholesaling. If you want to learn how to do it, go over to freewholesaling.com. We teach it in detail. We also teach it in this 30-day challenge. That's basically simply you signing your contract over and getting a fee for it. If they're extremely negative towards this question, do not use them because that means they're uncomfortable with assignment of contracts and they really don't want to work with real estate investors, much less wholesalers. If I get a positive response to the first two questions, my third question is really simple. Can I get a list or an email of all your settlement fees for using your title company? Just like that, because you want to get it on record. The sooner you get the numbers, the less they can play around with you. Most people have no idea what the cost of title insurance is, all the fees are, and honestly, just for that reason alone, if you ask for it sooner than later, they can't manipulate and play around with these numbers because you have an email, you got a printout, and you can hold the title company accountable for it. So these three questions will easily suffice in qualifying if a title company is great for your wholesaling operations. I want you to understand this. You have to develop a very good relationship with your title company because they can literally make or break your wholesaling business. They will assist with your buyers and your sellers. They're an integral part of your team and you got to make sure you have a super fantastic relationship with them because if you have a terrible relationship, it's going to bleed in your business and you're going to lose deals. So make sure you connect with them with these three questions. Do not try to go off the hook and ask crazy questions. Stick to these three questions and use your ears and listen to them. And if you get a positive response on all three, that is the title company you most likely want to work for for your wholesaling business. So when it comes to title company fees, there is two types of fees that you will become familiar with in wholesaling. One set of the fees is extremely negotiable. The other is set in stone. There's nothing you can do about it. So number one is going to be your government and state fees. These are completely non-negotiable. These are going to be recording fees. These are going to be documentary stamps, intangible taxes, basically any type of fee that is required by the state level or your county level in the county courthouse because they record any type of transactions of record for real estate. And you'll see these fees. Some of them are a little pricey, but you can't negotiate them. So don't sweat them. And guys, at the end of this video, I'll show you how you can actually get a copy of how to work with your wholesaling title companies. I'll actually have a PDF that you can connect with and I'll show you how to get it at the end of this video. So once you understand the fees that you can't negotiate, don't waste your time on that because so many wholesalers try to negotiate recording fees and state fees. The title company doesn't make any money off of that. They just pass along the cost. Now, the second set of fees are what we call your closing or your settlement fees. And guess what, guys? These are highly negotiable. So remember in your series of questions, I asked you to get a list of settlement fees or closing fees from your title company. This is where that list is going to give you complete transparency on how to negotiate the fees you can with a title company. So the first fee is gonna be your title insurance fee. And to be honest with you, it's not really negotiable. So they set a set amount of number, they sell a policy, and the title company gets a commission off of it, just like any other insurance salesperson. Life insurance, health insurance, property insurance. It's the same thing. On average, they earn between 50 and 60% of that fee up front, and they keep it as a profit for commission. Hence, this is their main business called title company, and they sell title insurance. Now, after that, I'm gonna show you how some of these fees, they can charge you search fees, they can charge you lien fees. They get all creative with these crazy names on these fees. Most of these are highly negotiable. Honestly, a lot of them are just BS fees to jack up the profit level. So be specific. If they're gonna charge you utility lien search, ask for a report of utility lien search. You'd be surprised, a lot of title companies just give a phone call. That's not really a utility lien search. You could do that on your own. And then the final one is the settlement fee. And this is what they charge to do the closing. Now, they're already selling the title insurance. They're making their money on that. They're gonna charge you some of these little BS fees. There's not much you can do about it. You can negotiate them. So I look at any search fees and the closing fee I look at in totality. So I'm in the state of Florida. It can range anywhere from $350 all the way up to $1,500. I don't let a title company ever go over $1,000. And honestly, it depends on what they're doing for me. Sometimes I do need their help. But the reality is the more closings you do, the more you get the title company's fees in writing, the less they can negotiate on you. My first 10 wholesale deals I noticed, I had fees from $300 up to $2,000 until I started asking questions. I didn't get these fees dialed in. Guys, look at your search fees, your BS fees, and your settlement fees, and try not to let them exceed $1,000 because it is a cash transaction. It should be simple. If you're being charged $2,000 or $3,000 and there's not an attorney involved, you're probably getting ripped off by the title company because they know you don't understand their business. I'm sharing you the secrets. Now, if you guys really wanna get all the detailed access and you wanna learn more, if you go under our 30-Day Wholesale Challenge in the Flip With Rick Plus section, I will share the sheet with you. And it goes in details, the cost of the fees, what you should expect. It's gonna be different state to state, depending if you have an attorney handling the closing. But guys, title companies are, in essence, your partner in your wholesaling business. You need to have an excellent relationship with them, but you also need to understand you're running a business, and if you don't know about their fees, you will be taken advantage of. I want you guys to pocket as much money as possible while letting your title company making a healthy profit but not ripping you off. So guys, this is day four of the 30-Day Wholesale Challenge. Remember, if you wanna get this sheet in detail on fees with your title company, go over to Flip With Rick Plus. I share it in grave detail, everything you need to know. And listen, if you got value from this video, do me a favor, make sure you smash that like button. You hit that subscribe notification button to continue to receive the most up-to-date information on our 30-Day Wholesaling Challenge. Guys, this is Rick Ginn, and I'll see you soon.