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Hello all,
I have been quiet the last couple of weeks while I finished transitioning in to my new schedule and prepared some things for this exciting opportunity.
However, I am now back on track and making moves! Coming up this Monday, August 17th, I have a consultation with a local Title Insurance Agency that I found through my local Real Estate Club!
I spoke to him very briefly while we set up a date and time for the meeting, and I had informed him that I had some contracts that I wanted him to look at (these are the Agreements to Sell/Buy as found in the Real Estate Profits on Steroids).
He had me email him a copy, and he already took a look at them, and this was his response:
“These are very simple contracts which is good. However, I am going to recommend to you that you use the standard MLS version contract that most Realtors and attorneys are familiar with in this area. I have attached a sample for your review. we will discuss more about this at our meeting as well as contract assignments.”
The document that he attached is 6 pages long and much more wordy/complex. This also seems to be the standard form his office uses, as his information is listed as the “Attorney for Purchaser” at the end of the paperwork. I can copy/paste the paperwork, or email it, if anyone desires to look at it in its entirety.
I’m mainly curious as to how I should proceed with this situation. Should I push for the simpler contracts (which I would prefer, they are much less intimidating)? I’m also not entirely sure that he knows exactly what I plan on doing (honestly, I was very excited and nervous while talking to him and can’t remember what I said exactly as far as topics covered).
I know the important thing is to make sure that he is aware that I am going to be buying and selling an option on the property, and that I would prefer to do a simultaneous close. I just remembered that I did include the Assignment of Contract document as well, so he may have deduced that I’m playing the role of a middleman already, but clarification is always important!
Any and all advice is appreciated, I’m very excited to be making steps forward!
On a side note, my first set of business cards are scheduled to arrive today, so I’m out of this world right now! Also, I apologize for any spelling errors, I posted this from my cell phone.
Keep it simple
An MLS contract is mostly written to protect real estate agents from liability
You won’t be working with real estate agents so there is no need to use their standard MLS contract
Use the simple contact — which still needs to be modified to spell out exactly what you and the seller agree to. Don’t forget the contingency clause – always include one.
Thank you for the quick response!
As far as the contingency clause, that would be the following, correct?
[quote]”AS IS” and INSPECTIONS
This contract is contingent upon the Buyer’s inspection and approval of subject property prior to transfer of title… [/quote]And then, as far as the section that I would be modifying based on what myself and the seller agree to, that’s what I would be placing within this section?:
[quote]SPECIAL PROVISIONS
Buyer and Seller, mutually agree … [/quote]I’m sorry if these are obvious, but I’m just making sure that I am correct. Thank you again for all of your assistance, because day by day I’m feeling much more confident in my knowledge as I move forward,
I like to tell the seller that I’m not buying the house but I work with a group of investors who will be buying the house. One or more of those investors will need to inspect the house and approve the purchase by such and such date. If they approve, we will close. If they do not approve, I will let you know by such and such date.
Be honest.
It is much easier to remember what you said if you tell the truth. And seller’s appreciate that you are being honest and helping them get their house sold. They don’t get any surprises.
It is much better if all contracts are written in easy to understand language that a 7th grader could understand. No legalese mumbo jumbo
I had my meeting with my attorney, and he was absolutely awesome! He is a “Platinum Sponsor” of my local Real Estate Chapter, and many of the investors there use him. I was very pleased with his thorough approach to our meeting, and I feel much more comfortable going out and knowing that I have his expertise within the closing to make sure that I am protected.
However, my biggest question is, what price do you put on expertise? I know that, speculatively, I would much rather pay for a service that I trusted, but I’m wondering what a “reasonable” cost is here?
From what I gathered, he said that he specifically focuses on doing simultaneous closes, and prefers to not do an “Assignment of Contract.” His reasoning is that an assignment is very close to the legal definition of a broker, and would rather stick with a simultaneous close in order to not fuzz any legal lines. He is willing to do an assignment when the profit margin on a property is not very high (sub $5,000 profit for me). For each closing, he charges a flat fee of $500 (so for a simultaneous closing, I’m looking at $1,000). I can work out the details with the seller, for example, if the seller does not have representation, he would be willing handle all of the paperwork, and I could split the cost with the buyer, as long as the buyer is aware that he is my representation and that he has my best interest at heart.
So, at the end of the day, my question is whether or not this rate seems reasonable, or, should I continue price shopping? I hope what I typed thus far makes sense, I can clarify anything from the meeting, or ask him additional questions, if you have any more for me.
Thank you again for your assistance!
Stuart
The fees are very reasonable. Remember, you usally write the contract with your buyer that they pay for all closing costs. Even if you found someone who was $100 or $200 cheaper for a simltaneous close, you may not feel as comfortable with the person. Once you find someone who understands the biz model and will close the deals, you need to stick with them.
The only reason to switch to a different company/ title company is if your buyer prefers to work with someone else.
I actually much prefer a simulataneous close. Then the seller and the buyer don’t know how much profit you make.
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