As an Omaha investor, do you know what to expect from your title company? They can offer much more than title insurance and knowing their capabilities can improve your business. Learn more about how it all works in our latest post!
As an Omaha real estate investor, you should have a great relationship with your title company and know what they can do for you. They have several key responsibilities to help homeowners and investors with real estate transactions. In fact, the process couldn’t be completed without them. In this post, we’ll discuss what they do, what you can expect, and how they can help you.
What Title Companies Do
A title company takes a thorough look at the sales history of the property. They look for things like past liens, potential ownership claims, and disputable filings on the property. Their goal is to ensure that the property sold free of anything that could cloud the title and allow someone to make an ownership claim. They call that free and clear. Their work is insured, so if a claim should arise in the future that you weren’t aware of, the liability will fall on them (though you can expect some legal costs). Your title policy will indemnify you from any claims made against you down the road, helping you avoid problems in the future.
Title companies maintain their own copies of county records (the public filings) so they can easily search for any liens or claims on the property. They also look for past mortgages, tax problems, judgments, or any other restriction that could have an effect on property ownership. They may request a survey of property lines to look for any encroachments, like a fence or building on the wrong side of the lot line.
If all goes good and well, the title company will issue a policy, ensuring the property is being sold free and clear from a buyer to a seller.
How Title Companies Can Help You
Title companies offer an abundance of information regarding local properties. They can provide you with sales history, let you know when properties are paid off, and provide information about the community to help you make more informed buying decisions. While often overlooked, title companies can be a huge resource for both people buying and selling a home in the Omaha area.
If possible, chose a title company that specializes in working with property investors. Knowing what you are trying to accomplish and common investor concerns will help you close more confidently and consistently. For example, there are unique title challenges that come with buying homes at auction and you want a company that knows how to handle them efficiently. They will also be able to answer your questions about the property you are considering. They will help simplify the buying process so that you are able to buy and sell more properties in a relatively short amount of time.
Some property companies will offer investor related services, like collecting seller financed mortgage payments. It’s worth taking time to meet with them and ask what other services they offer that might help you grow your business.
The Title Insurance Time Line
A title company will typically deliver your policy in about two weeks but this timeline can vary depending on the situation. They will start with a title search and work to clear any clouds on the title, like liens, levies, and other encumbrances. Thorough research is critical to ensure their are no undisclosed claims, liens, or items that will hinder a sale. Properties with a clean paper trail, like recently tract developments can be pretty straight forward. Older homes can have more convoluted histories and less accurate documentation. An experienced title company will handle most properties quite quickly.
Title Insurance Costs
You can expect the cost of your title research and insurance policy to cost 1-5% of your loan amount. There are other closing costs you should budget for, like escrow and signing fees, courier and delivery fees, appraisals, filing fees, attorney prep fees, and such. Your experience may vary, but many investors budget about $2000 for those costs. The important thing is to include all these costs in your budget for the property before the purchase so you won’t overvalue the potential profitability of the project.
You’ll need to provide accurate information about yourself and the property in a timely manner. Also, be available to answer any questions and find solutions for any clouds on the title. It can be risky taking over somebody else’s liens or costs, but that can be necessary to obtain certain properties. Having these items taken care of beforehand will save you a lot of time, money, and headaches.
Keep in mind that not all title companies are the same. Of course, they all need to operate in a legal manner, complying with an ever-evolving set of regulations. But some will be more willing to help you than others. By law, they can not buy deals (take money from you for deals), but there are a number of other ways to help each other out. When you develop a relationship with the title company you trust, referring business to each other can be a great perk. They will know what kind of properties you need, what you are looking for, and how quickly you need to move. They will offer you great service in exchange for your returned business.