So you’ve decided to get into wholesaling, flipping or the rental game. Everyone has told you to get a strong support team ready to make your business a success. Picking a good escrow company can make or break your business.
To get to the basics, an escrow company is the middleman in a real estate transaction that ensures the process goes smoothly. They order title insurance, make sure all necessary paperwork is filled out, cordinate the loan and money, and make sure taxes get paid on the property. Some State’s use attorneys instead of escrow companies.
There are thousands of escrow companies that all do the same thing and are very hungry for your business, but a good escrow company is hard to find. They can be the difference between a deal closing or not.
What you are looking for:
Real Estate can be a tricky business, especially if you are new, you want to make sure your team is experienced. It is important to find an escrow officer that has 100’s of transactions under their belt and has seen many different types of transactions. Every delay in a transaction costs you money!
- Constant Communication and Ease of Contact
Most escrow officers I know are buried in paperwork. If you ever go into their office they have boxes and boxes of pending transactions. They are very busy and every phone call is “urgent.” You want to make sure you end up getting someone who will respond to all communication promptly. I have dealt with escrow officers who will only allow me to speak to them through their assistant, this is usually a bad sign.
- Technology Friendly
I am on email all-day long, I like to receive my prelim, escrow documents, and any other communications electronically. Some escrow offices don’t get it and don’t have this capability. Usually, if you’re just looking for a basic update you want to be able to send a quick email and get an update. So you’re looking for a company that embraces technology and will respond to emails in the same day.
- Investor Friendly
You want to work with an escrow company who does business with other investors. There are many things that can really help you along the way. How to fill out tax forms from an investors perspective, how to ensure your buyers don’t back out, paperwork to protect you, etc.
Escrow companies can charge a wide range of fees. Paper Fee, Sub-Escrow Fee, Loan Tie In Fee, etc. Typically if you promise further business or ask for these fees to be removed, they will be. Escrow companies try to get away with what they can. So be sure to always ask if they have any room in the price. One company tried to charge an $800 escrow fee for a $45,000 cash transaction.
The problem is in most REO transaction the selling party usually gets to choose the escrow company (although this is negotiable, banks are typically not flexible on this in my experience).
How to start a good relationship, if you can’t control who does the escrow.
- When a transaction starts, call and introduce yourself. Your goal is to portray that you are an experienced investor, your goal is for the transaction to go quickly and smooth. After I introduce myself, just as an excuse to call, I say, “I am here to help and want you to feel free to call or email if you need any paperwork or documents from me. Is there anything you need at this time?”
- Develop a relationship and reputation. Although, we have worked with a lot of different escrow companies (at the banks choosing). We have worked with some multiple times. By the second transaction, I know who to talk too and usually get a discount because they know I am not too difficult and will continue to provide them more business.
On a closing note, if you do not have a relationship with an existing escrow company, the best place is to start is by talking to other investors. Go to your local Real Estate Investment club, or post on a forum for other investors in your area, there are so many options you want to start in the right spot.
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