With real estate closings, I get this question all the time especially when Realtors® and investors tell Students what “has to be” to close the deal.  In our state we have three choices for who pays for the title policy and associated work involved to issue the title policy.  This has nothing to do with clear and marketable title versus insurable title.

Most newbie investors will only close with what is called a “fee simple” or clear and marketable title.  This simply means that there are no judgments, liens or other title “deficiencies” when the title policy is issued to the new owner.   By not understanding how to correct title issues, newbie investors pass over deals worth tons of money in which they would otherwise have profited.

Sometimes a closing agent will tell the buyer, “You’re getting an insurable title policy”.  What they don’t say is that it is not a clear and marketable title.  This simply means the deficiencies associated with the “chain of title” or ownership is flawed and you as the buyer are the new owner of these issues.  They do this as “exceptions” to the title policy that are located in the Schedule B-1 in the title commitment – so you can see these yourself if you just look.

To get a title policy issued someone must pay the title agent (closing agent) to do the associated work.  There are three parts to doing the title work that will have to be paid for by the buyer or seller or both.  This determination of “who pays” is usually determined on the original Purchase and Sale Contract. In our state the choices are the Buyer pays, the Seller pays, or Dade-Broward option – as shown on the FAR/BAR 2013 contract.

Option #1 – If the Buyer Pays option is chosen it means that the Buyer pays for the title policy cost of approximately 0.575% of the sale price, i.e. $100,000 x 0.575% = $575 as a promulgated rate.  In addition he pays for the Lien Search (a/k/a Lien Letters) and Title Search.  The Buyer paying for title is what is known as “Usual and Customary” in our state but it is not mandatory.

The promulgated rate is the lowest allowed by the state UNLESS you negotiate a lower rate with the title company directly – this is little known and a best kept secret in the industry.  The reason it’s a secret is the closing agent gets his commission from this fee and if the fee is lower, he gets paid virtually nothing.  If is often seen in commercial closings by knowledgeable attorneys.

Option #2 – If the Seller Pays option is chosen it means that the Seller pays for the title policy cost as well as the Lien Search (a/k/a Lien Letters) and Title Search just as the Buyer does in Option #1.

Option #3 – If the Dade-Broward Option is chosen the Seller pays for the Lien and Title Searches and the Buyer pays for the Title policy.   The higher priced the property, the more the title policy costs while the lien searches are about the same price.  Conversely, the lower the price of the property, there is a break point where the Seller will be paying more for the searches than the Buyer for the title policy.

A Seller can request an addendum that the Buyer pays for all title costs or vice-versa, the Buyer can request that the Seller pay all title costs.  There is no “law” that governs who pays what but the Purchase and Sale contract is where this is determined.  While this is contract law, always try to have your opposing party to your contract pay for as much as possible to maximize your profits on every deal.

One last note, typically whoever pays for the title policy gets to choose the closing agent, but a simple clause in your contract’s addenda section can override this by saying that you (as Buyer or Seller) gets to choose the closing agent and the opposing party pays for the title work– the best of both worlds.  Ever since I mentioned this years ago, a few banks have used it on their REO Addendums – read these carefully if you are doing REOs.

change your life mentoring click button j 300x236 1To your limitless success,

Dave Dinkel

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.

With real estate closings, I get this question all the time especially when Realtors® and investors tell Students what “has to be” to close the deal.  In our state we have three choices for who pays for the title policy and associated work involved to issue the title policy.  This has nothing to do with clear and marketable title versus insurable title.

Most newbie investors will only close with what is called a “fee simple” or clear and marketable title.  This simply means that there are no judgments, liens or other title “deficiencies” when the title policy is issued to the new owner.   By not understanding how to correct title issues, newbie investors pass over deals worth tons of money in which they would otherwise have profited.

Sometimes a closing agent will tell the buyer, “You’re getting an insurable title policy”.  What they don’t say is that it is not a clear and marketable title.  This simply means the deficiencies associated with the “chain of title” or ownership is flawed and you as the buyer are the new owner of these issues.  They do this as “exceptions” to the title policy that are located in the Schedule B-1 in the title commitment – so you can see these yourself if you just look.

To get a title policy issued someone must pay the title agent (closing agent) to do the associated work.  There are three parts to doing the title work that will have to be paid for by the buyer or seller or both.  This determination of “who pays” is usually determined on the original Purchase and Sale Contract. In our state the choices are the Buyer pays, the Seller pays, or Dade-Broward option – as shown on the FAR/BAR 2013 contract.

Option #1 – If the Buyer Pays option is chosen it means that the Buyer pays for the title policy cost of approximately 0.575% of the sale price, i.e. $100,000 x 0.575% = $575 as a promulgated rate.  In addition he pays for the Lien Search (a/k/a Lien Letters) and Title Search.  The Buyer paying for title is what is known as “Usual and Customary” in our state but it is not mandatory.

The promulgated rate is the lowest allowed by the state UNLESS you negotiate a lower rate with the title company directly – this is little known and a best kept secret in the industry.  The reason it’s a secret is the closing agent gets his commission from this fee and if the fee is lower, he gets paid virtually nothing.  If is often seen in commercial closings by knowledgeable attorneys.

Option #2 – If the Seller Pays option is chosen it means that the Seller pays for the title policy cost as well as the Lien Search (a/k/a Lien Letters) and Title Search just as the Buyer does in Option #1.

Option #3 – If the Dade-Broward Option is chosen the Seller pays for the Lien and Title Searches and the Buyer pays for the Title policy.   The higher priced the property, the more the title policy costs while the lien searches are about the same price.  Conversely, the lower the price of the property, there is a break point where the Seller will be paying more for the searches than the Buyer for the title policy.

A Seller can request an addendum that the Buyer pays for all title costs or vice-versa, the Buyer can request that the Seller pay all title costs.  There is no “law” that governs who pays what but the Purchase and Sale contract is where this is determined.  While this is contract law, always try to have your opposing party to your contract pay for as much as possible to maximize your profits on every deal.

One last note, typically whoever pays for the title policy gets to choose the closing agent, but a simple clause in your contract’s addenda section can override this by saying that you (as Buyer or Seller) gets to choose the closing agent and the opposing party pays for the title work– the best of both worlds.  Ever since I mentioned this years ago, a few banks have used it on their REO Addendums – read these carefully if you are doing REOs.

change your life mentoring click button j 300x236 1To your limitless success,

Dave Dinkel

Frequently Asked Questions

1. What Should I Do If a Seller Ghosts Me?

If you feel you have been ghosted, act decisively and quickly. If you have tried texting and calling, it’s time to drive by the seller’s location. I always take the recorded Notice of Interest or Memorandum of Contract to leave, so the seller knows it exists. Go by at a time when you know they will be there and don’t be confrontational, just get the facts.

In our experience with new investors, the chances of losing a deal with no contract is likely over 85%. Verbal commitments do not apply in contract law; get everything in writing, especially contract changes.

Different ‘gurus’ have different opinions, but our experience is finding motivated sellers and then a buyer for your deal. Ideally, you should be finding motivated buyers from day one, so you are ready when you find a seller. Buyers are easier to find as you can see at https://davedinkel.com/products/

Prevention only comes about by thinking a Black Hat wholesaler will be coming after your deal. First, educate the seller that an unscrupulous investor may come by and illegally offer more money, have the seller sign your “Notice to Homeowner,” stating that he understands he cannot accept another offer.

There is nothing illegal about changing their mind, it is called seller remorse and occurs about 25% of the time. However, if they have signed your contract, it can’t be cancelled for any reason unless acceptable to the investor/buyer.

If price is an objection, you need to find out how important it is to sell fast and for cash. If the seller isn’t under a time constraint, has a money issue, or has a personal dilemma, he may not agree to the price you need. Offer to help move and build it into your price before you make your offer. However, never give the seller money; only pay the moving company, and only after closing (escrow with a closing agent). If fear is the seller’s issue, break it down into what the real problem is and answer their objections one at a time.

You can get to the root of motivation for a seller by asking a few questions. First, “Why are you selling?”, “How soon can you close?”, and Are you ready to sign an AGREEMENT today, if not, what do I have to do to make you comfortable?’. The answers to these questions will determine the truth about your seller’s motivations.

The best times to involve your attorney in your deals are to have him review your contracting, review the signed contracts from the seller and end buyer, have him open escrow and start the title work, negotiate with city or counties for lien reductions or mortgage payoffs with lenders, and to close the transactions.” Your attorney is not the adversary; it’s the opposing party’s attorney who is a deal killer, and having your attorney allows him to help overcome this obstacle.

The key to successful prospecting and bringing back deals that didn’t close is to follow up until the property is transferred in the public record. Some of our deals have been where the seller came back to us months and years later because they felt comfortable with us and not the other “pushy” investors who contacted them.

Your contract’s most important clauses are inspection period (as long as possible), when the EMD must be deposited if at all, your ability to access the property, any added clauses specific to the property that will protect you against seller claims later that were verbal only.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.