15 Year Title & Escrow Expert Podcast
Title & Escrow Expert ShowNotes
Joe Bauer: Welcome to another edition of the Seattle Investors Club Podcast. My name is Joe Bauer, and I have my lovely cohost, Julie Clark. How are you doing today, Julie?
Julie Clark: Aloha.
Joe Bauer: Aloha? What, are you still in Hawaii?
Julie Clark: I’m still on Hawaii brain a little bit, so sorry, guys. I might mess it up today. I’m a little bit relaxed.
Joe Bauer: Oh, I like it. Super smooth. I’ll tone it down a little bit, talk a little slower.
Julie Clark: Right on.
Joe Bauer: Cool. Well, today we have a 15-year title and escrow expert on the call. It’s a bit of an interesting call because, for compliance reasons, we’ve asked our guest to remain anonymous. What do you think of that, Julie?
Julie Clark: I think that’s mysterious.
Joe Bauer: Oh. Spooky.
Julie Clark: So what do we say? Instead of calling our wonderful guest by name, we’re just going to call him The Dude.
Joe Bauer: The Dude.
Julie Clark: The Dude. The Dude.
Joe Bauer: So, The Dude, how are you doing today?
“The Dude”: The Dude. Well, let me … [Mahala. 00:01:21] let me put down my Mai Tai here and join the call here real quick since we’re all [inaudible 00:01:25] here.
Julie Clark: You don’t need to put down your Mai Tai. We’re a pretty easy-going group. Feel free.
“The Dude”: So if I pause, I’m just getting a refill. How about that?
Julie Clark: That sounds good.
Joe Bauer: Perfect. Perfect. So, first things first, title insurance is for buyers and sellers and lenders. Let’s separate our discussion on benefits to each party. So benefits to lenders of having title insurance, The Dude.
“The Dude”: The word “benefits” versus “requirements” versus why it’s there are kind of all synonymous with each other. Lenders primarily … We’ll kind of get the lender part out of the way because I know you were primarily focused on real estate here. But for lenders, lenders really … Their purpose of title insurance is to make sure that their loan is in the proper position from a title-change standpoint on the property. The main reason for that tends to have to deal with foreclosure-type situations, which does mean something to investors.
“The Dude”: That’s where, when investors are looking for properties and things like that, they are really concerned about lien position. Which loan is it that is being foreclosed on? Is it the loan in the first position? Is it the second position? What is going to survive the auction or survive a foreclosure if it happens? So for lenders, that’s really the main purpose as to why. In title insurance, there are loan policies. That’s what they’re called is loan policies, or lenders policies, where we are providing an insurance for the lender that their loan is in the proper position, in a nutshell.
“The Dude”: There’s other components to it, but that’s really the main concern, the main items that lenders are really after, is making sure that their loan is going to be connected to the property in the proper position. Does that make sense?
Julie Clark: That makes sense. Let me ask you a quick question. The job of your team, then, would be to review the chain of title to see and confirm which position that they’re in? You know, because some lenders … A private lender might be in second position, and that’s their goal. They know that, right?
“The Dude”: Mm-hmm (affirmative). Exactly. Yeah.
Julie Clark: So [crosstalk 00:03:40]-
“The Dude”: Second position, third position, even. We see that a lot where the lender in first position is Washington Mutual, and then the second position is a BECU home equity line of credit, and there’s a third investor who wants to put their loan on title and give somebody a renovation loan or something like that so they can renovate their home.
“The Dude”: There’s a lender’s policy, a coverage, which ensures that this loan is in fact going to be in third position. They are subordinate to the other loans and that kind of thing. You can’t leapfrog over the top of another loan. Okay, so Chase is in first position, BECU second position, your loan’s third. You can’t bypass one of those other loans without that other loan, without that other lender choosing to subordinate.
“The Dude”: That’s another part of title insurance where, if BECU, for example, is willing to put their loan in third position and allow the private investor to be second position, they can do that. But there’s a process that has to take place, and that’s part of what title insurance gets involved with, is establishing that proper position.
Julie Clark: Do you think as a private money lender … Let’s say you’re in second position with a hard money lender or somebody in first position. Does the private money … This might be a question and actually a great topic for another day, but I’ll see where it goes here for a minute and keep it short and sweet. Do you recommend … Or maybe this is more of a legal question, but do you recommend that the second lien position loan, within their deed of trust, acknowledge the first? Or do you see that the first position must allow the second? Because I get all technical. I’m kind of a legal dork on these things because … So I always thought that it’s the best advice for making sure that the first position lender, if it’s like a hard money lender …
Julie Clark: When you’re a real estate investor, you probably know the hard money lenders anyways. Let’s call it our friends at [Barastone 00:05:52], that their first-position deed allows my second-position loan. Does it matter? Does it have to allow it?
“The Dude”: Well, it’s … First off, before I go there, I am going to say this. I am giving you my professional opinion. By no means am I an attorney. By no means am I authorized or allowed to give legal advice, okay? So I’m just going to preface my comments by saying that part.
Julie Clark: Which means, everybody, that this is something you need to follow up on and check with your attorney. This is talking shop amongst friends here. That’s all [inaudible 00:06:26] disclaims. Okay.
“The Dude”: Thank you. Now, for that matter, when it comes to position … And this is why this is an important thing, especially for Washington state. We are one of the few states left … I think there’s only seven or eight left where we are what’s considered a non-recourse state. What that means is if your loan is in second position, if you’ve got a hard money loan to renovate, that kind of a thing, and they are in second position, they are subordinate to a senior loan, a Washington Mutual loan, that kind of thing, and that homeowner decides, “I’m not making my payment anymore. I’m walking away from my house. I’m done with it,” and the senior lien holder forecloses, Washington Mutual forecloses on the home, you as the second lien holder, you are out of luck.
“The Dude”: We are a non-recourse state. Your loan gets wiped out. As a second lien holder position, you are out of luck in a foreclosure situation. Now, there are some other legal ways to go after excess funds and things like that to try and recoup some of those funds, but in general, in Washington state as a subordinate lien holder, as a junior lien holder, you are straight SOL when it comes to a foreclosure situation. That’s something to be very aware of. If anybody’s out there doing private loans and things like that and you’re going to go into second position, make sure you’ve got lots of equity there and make sure that you’re cautious about where you’re placing your loans and things like that because if a foreclosure happens-
Julie Clark: Or even get a personal guarantee.
“The Dude”: Right. Yeah, personal guarantees, things like … But, again, that gets into a whole other legal area which is different and sort of outside of the scope of title. So it’s a little different, but yeah, we’re a non-recourse state, which is an important detail when it comes to investing and foreclosing, for sure.
Julie Clark: Again, do you think that the first lien tuition … I guess Washington Mutual or something. We’re not usually, as investors, dealing with … Well, I guess we could be dealing with more of a traditional bank in first position, but I guess what I’m saying as just talking shop and not giving legal advice is it might make sense to know if that first deed of trust has any language that would disallow the second, right?
Julie Clark: I know a hard money loan is probably not going to do that. I always think transparency is the best way to operate anyways, so just ask the hard money lender, “Are you cool with a second lien position, or can you add some language to your deed that will allow it?” I think about stuff like that, you know, aside from the news on that you get wiped … I mean, if you’re going to be making private money loans, you better know what you’re doing. But we don’t want to scare people off, because it’s actually a great … You know, I do it. It’s awesome. It’s good mailbox money right there if you know what you’re doing.
“The Dude”: No, and we do see that language on some deeds of trust, where you’ll see even a primary loan, a first mortgage, will state right there in the deed of trust that the intention of this instrument, this deed of trust, is intended to be a primary first-position mortgage. And we will see that, not on everyone, but we do see lenders doing that more these days, especially in our state because we’re non-recourse.
“The Dude”: So, now, if there is no language, if there’s no language on the first deed of trust or the second, in general, things go in chronological order where-
Julie Clark: Of when they were recorded, right?
“The Dude”: Of when they were recorded. Yes. Exactly. Now, that’s not set in stone. Just because something was recorded later, we just don’t take the date for it. We do have to review the whole document, make sure there is no language about first position, second position, subordinate. But that is … In general, things go in chronological order in our state, and if something was recorded first, in general, you’re in first position, for the most part.
Julie Clark: So, guys, in a nutshell … This is a little bit of a loosey-goosey topic that makes us all a little bit sweaty and nervous. Maybe time to take a sip of that Mai Tai, if you know what I mean. What I would tell you guys is this is exactly the reason why … Of course, we all know we need to have teammates, which includes having a good real estate agent, good insurance agent, good attorney, and what we’re trying to tell you today is make friends with a title rep.
Julie Clark: I talk to my title rep when I do deals all the time. It’s like talking to my property manager. Also, before I’m dealing with somebody that is a tenant or a property that has a tenant in it, I’m talking to my friend [Sheri 00:11:23] before I do anything because she’s the expert. So you don’t need to know every detail of this yourself; you just need to know who to call. And whenever you’re getting involved in any type of buying, selling, or lending as a private money lender, it’s a great idea to have a teammate such as a title rep, hence why we’re doing this podcast today.
“The Dude”: Well, and that does. And that kind of rolls into the importance of title insurance when you’re a buyer or a seller. And all of these things are kind of tied together, right? If you’re a buyer or a seller, all of these type of loan and lien positions mean something. Now, if you’re actually going to acquire a property, it’s a little bit different, but yeah. No, you’re very correct that the … In my opinion, the relationship between investors, lenders, and agents … Some people are very close to their title and escrow people. Some people only leverage their title and escrow person to go have a 5:00 beer with on occasion.
“The Dude”: The depth of relationship varies between people pretty substantially. I personally think that the business relationship with a title and escrow company, closer, title officer, rep … You know, there’s several components to it … is a very underutilized and underleveraged relationship in the marketplace, and the-
Julie Clark: I agree with that. I agree with that. I think that people look at title and escrow as just something they have to pay for as part of the transaction. They don’t realize how important and … You want to be buddies with a title and escrow rep. It’s okay to spread the love around, but it’s also great to have that direct-dial, speed-dial relationship. That’s what I have, and I tell you it’s put me at ease so I can drink more Mai Tais.
“The Dude”: Let’s elaborate on that a little bit. The reason for that type of relationship … So your relationships with title and escrow companies are … They’re nothing more than a handshake. There’s no contract. You can use whoever you want. Like Julie said, you can spread it around. You can use different companies. The importance of monogamy in a relationship with title and escrow companies is the level of service that you’ll get in return.
“The Dude”: We live in this on-demand world. We get our music on demand. We get our TV on demand. You run out of paper towels, you order it from Amazon same day, and it’s at your house two hours later. Right? We-
Julie Clark: You can do that?
“The Dude”: I know, right? If only we could do that with contractors when we’re renovating houses. You get your sheet rock on demand.
Julie Clark: Oh, hey. We have a lot of entrepreneurs listening to this podcast, so you just [inaudible 00:14:23] probably a good idea.
“The Dude”: Yeah.
Julie Clark: You heard it here first, guys.
“The Dude”: But that on-demand nature, that’s where the depth of that relationship and the monogamy comes into play, where you’re trying to write up an offer on a deal on a Saturday at 4:00, and there isn’t a title and escrow person in an office anywhere. But you’ve got a rep that you’re close with that you trust, that they trust you and you do a lot of business together, and you shoot that rep a text that says, “I’m writing up a deal right now. I need a legal description. Can you help?”
“The Dude”: If that rep is worth anything, they’re going to get you a legal description in 20 minutes even on the weekend. So that’s where those relationships and making sure that you have those solid relationships can really come into benefit in crunch time when you need someone to be there on demand. That’s really one of the biggest benefits of the relationships with titles and escrows, is to have that level of service. Hopefully, everybody’s partnered with somebody that gives them that type of service.
Julie Clark: Word. Let’s move on. Let’s move on to … So we’ve covered lenders a bit, and this might be something that we cover in more detail about private money lending and all that. We’re working on teeing up some good experts for that for you guys as well. But right now, we’re going to move on to … Like I said, I don’t know if the right word is the “benefits” to seller, but, you know, the benefits or requirements, or whatever you want to say to sellers, of having title insurance. Lay it on us.
“The Dude”: Sure.
Julie Clark: The Dude.
“The Dude”: The Dude. Take a sip of my Mai Tai here. As sellers … Okay, so kind of break down the process of how title and escrow works … I should say title … in a transaction, okay? As a seller, when you sell a property, your role as a seller is to buy a owner’s policy for your buyer. When you’re a seller and you’re paying this title fee during closing, what you’re actually paying is you are buying title insurance for your buyer. You’re giving them an owner’s policy, and you are essentially … The owner’s policy is guaranteeing that buyer clien title.
“The Dude”: That’s where it comes in to why does the seller need title? Why does the buyer need title? It is the proper transfer of ownership from one person to another with all items on title being addressed. Now, can you transfer title from one to the other with there being clouds on title? Absolutely, but that’s all defined in the contract as to what the expectations are. The buyer typically is expecting the seller to transfer title over to them with a clien title, with no issues, no encumbrances, no prior lien holders, any money being owed to somebody else.
“The Dude”: So that’s the purpose of title insurance in a transaction, is the proper transfer from one to the other without there being items on title. A lot of people refer to it as a necessary evil. “I know I gotta have title insurance. I’m probably never going to use it, but I need to make sure that I’m transferring title clien over to my buyer, and my buyer is expecting me to transfer a title clien.” Now, without a title insurance company, how the heck are you supposed to do that? How, as a consumer, as a seller or a buyer, how are you supposed to ensure and guarantee that you are transferring title in a certain status?
“The Dude”: There’s really no way to do that, even though we are in a public-record state where all of these things, all these items, are all recorded to public record. You can go to the county website and you can plug in a parcel number and you can look and see how many deeds of trust or how many loans are on a property. But from a guarantee standpoint, from a liability standpoint, there isn’t any way for a consumer to guarantee that status. That’s why there are title insurance products, is because you actually get that guarantee behind that transfer.
“The Dude”: I know that’s … I threw a lot of info at you, but in a nutshell, that’s the purpose of it for buyers and sellers. They’re very similar, but they have different purposes. Does that make sense?
Julie Clark: It makes sense. Let’s say, though, if you were out there, you’re an investor and you’re looking to go write an offer on a property, is it fair to say, Dude, that you don’t want to call and order up that title policy when you don’t even know you’re going to get the deal or anything like that? You don’t abuse the relationship as such.
Julie Clark: Could that happen once in a while? It could happen once in a while because life’s not perfect, but because specifically for us that we are in a public-record state, as an investor, by all means, you should plug that in and see what comes up easily for you to look at because that’s something you might want to write into your contract anyways, if you see anything that’s obviously there by a quick online check, right? It’s good to know.
“The Dude”: Well, right, and that’s … As an investor, if you are engaged with a seller, you’re trying to write up an offer, you’re trying to get this thing under contract, that’s where that relationship with your title and escrow company comes into play, where you can call your rep. You can call your title person. Escrow won’t be looking at title issues. Escrow’s a different service than title, of course. But from a research standpoint, making that phone call or shooting that email that says, “Hey, I think I’m going to write up an offer on this. Can you take a look and tell me what’s going on?” That’s the basic message you would send. “Can you take a look and tell me what’s going on?”
“The Dude”: Title and escrow companies … A title service is allowed to give you property profiles and tell you the bedroom, bathroom, square footage, who owns it, that whole thing, give you a copy of the vesting deed and shows you who owns the property. They can provide you with copies of the publicly recorded liens, the deeds of trust, if there’s a sewer lien, things like that. They can give you copies of all of those documents. Now, from a research standpoint, that’s not a guarantee. Just from a research standpoint, they’re not guaranteeing you that these are all the items that are on title.
“The Dude”: They’re just simply sending you a packet of information, or they can give it to you verbally over the phone, what they see from a sort of at-a-glance standpoint. Usually, that’s enough for you to make an educated decision on, should I be making an offer on this property or not? One of the most common things that we see all the time from investors specifically is somebody … I’m working with Dave Smith. He’s the owner of this property, and I want to write up an offer. So we say, “Okay, cool.” We’ll pull a packet of information for you, what we typically call listing packages. We’ll send you the info.
“The Dude”: You get this packet of info, and all of a sudden this packet of info has Dave Smith, but there’s also Jeanine Smith on title. As an investor, you’ve been only talking to Dave this whole time. So you go, “Dave, I want to write this offer up on your property. Who’s Jeanine?” “Oh God. That’s my ex-wife, and she actually lives in Indiana. She bailed out on us four years ago. I guess she’s still on title. I thought that was cleared up in the divorce, but she’s still on title.”
“The Dude”: Well, now we’ve got a whole other set of issues that you need to talk to your title people about, is, “If I write up an offer on this, it looks like Jeanine’s on title. What does that mean?” Again, that’s probably a topic for another podcast, but that’s part of the importance of title, is to make sure not only am I getting a clear title, but am I talking to the right people? Am I talking to the person that actually owns this property, or did somebody die and I’m talking to a son who thinks that he has the authority to sell this property? Those are all title-related type of concerns.
Julie Clark: Not only that, is if you are told that, “Okay, well, this is an inherited property,” then there’s a bunch of paperwork that you’re going to need to get copies of as part of the process that you’re going to want to make sure that the seller’s going to have access to. It just goes into the timing of the deal and everything else. This is all really good information, guys, I mean as far as helping you get the deals and helping you gather the information that you need to properly get something under contract and make sure that you’ve got all the appropriate parties involved in signing off. I mean, yeah. Woo, I’ve been through some of that.
“The Dude”: Julie, nobody in title and escrow expects investors or real estate agents, or lenders, for that matter, to be their own title and escrow expert. Let the title and escrow people be the experts. Pass the buck to them. That’s the whole thing. When you contact somebody and they say, “Oh, yeah, I inherited this property from my father and now we gotta sell it, so that’s why I’m looking at selling it,” that should be your trigger to call your title person and say, “I’m looking at this property. It appears as though this guy inherited it from his dead father. Tell me what I gotta do.”
“The Dude”: You shouldn’t have to know all the things you need to do; you just need to know, “That’s when I need to pass the buck to my trusted title person so they can start helping line this up for me.” That’s part of the underleveraged relationship that I’m talking about, is knowing when to pass the buck to your title and escrow person so they can help this so you’re not spending your time chasing down paperwork, or I should say you’re spending the least amount of time chasing down paperwork as possible, so you can stay focused on going and getting more deals and doing the things you’re supposed to do rather than deciphering and trying to figure out title things. Let the title and escrow people do that for you.
Julie Clark: Is it fair to say that … Let me try to categorize this a little bit and box it in for everybody. Is it fair to say that any investor or any buyer or whoever that wants to be involved in real estate transaction certainly can call up a loacl title rep and ask for this … They say, like we said, at a glance … I think you called it listing package information, right? Anybody can do that. The difference is, if you have an actual relationship with a title rep, that the speed to which you might get that information might be a lot different. Is that fair to say, or is that-
“The Dude”: Well, definitely the speed, but also just the amount of depth and the amount of … When there is an issue, what kind of support are you going to get? If you’re just Joe Schmoe and you don’t have a relationship with somebody, and you call up a title company and say, “I’m an investor. I’m thinking about buying this property, but this guy … He inherited this property and I don’t know what to do. Can you help me?” If you’re just calling off the street and they don’t know you, they don’t know who you are. They don’t know if you’re serious. They don’t know the difference if you’ve brought one property in your life or if you’ve bought 100 properties in your life.
“The Dude”: They don’t know anything about you, so there’s an inherent amount of, I guess, skepticism I guess is the best word, where they’re just not sure if this is going to be a legitimate transaction that they’re going to be able to generate revenue off of, because remember, title and escrow companies are in the business to sell title insurance and to close escrows. That’s where they make their money. So they are interested in partnering and providing that … Partner’s the wrong word. Providing that support to investors and agents and lenders who in turn will be loyal and, when they have transactions, send their transactions to them so they can make money off title and escrow.
“The Dude”: That’s why there’s that service there. So, again, you could call up a random title and escrow company and ask for it. What you’re going to get from somebody you don’t have a relationship with versus somebody you do have a relationship. It’s not only speed, but it’s definitely amount of depth of information you’re going to get and quality of information because-
Julie Clark: Why would you not have a relationship with somebody? It makes your life so much easier rather than … There’s different reasons to use different title companies that people can come up with whatever their reasons are, but you guys get what we’re saying in general. Just like you want to have an attorney you can call on speed dial. There’s some attorneys … We have certain attorneys that we want to work with that we have taken our time to build relationships with because they’re so … You’d maybe say sought after, or may be experts at a certain thing that, unless you have a relationship, it’s hard to get them to respond to your questions.
Julie Clark: Maybe not exactly the same, because in some ways that’s their job and they’re required to do that, but you guys … You’re all smart because you’re listening to this in the first place, so you get what we’re saying. Let’s keep moving on here. Obviously, we all know we’re going to do our best to get a solid relationship with a title rep and an escrow rep. We know that the benefits … We’ll say that the seller is buying … or The Dude said is buying an owner’s policy for the buyer that guarantees a clean title. What happens when there’s something that comes up after the fact, just so people know what’s up with that?
“The Dude”: If there is a, quote unquote, claim … If somebody six months down the road … Somebody comes knocking on your door and says, “Hey. You bought this house, and I actually lent $15,000 to the prior guy who used to live here. You owe me 15 grand,” that kind of thing? We’re talking after closing?
Julie Clark: Yeah. After closing.
“The Dude”: Sure. Every title company has a claims department, just like … I mean, title. It’s title insurance. Let’s not forget that. This is title insurance. You’re getting a level of insurance on this transaction. It’s an insurance company just like Allstate for cars and things like that. They have a claims department. So, hopefully, you don’t ever have to issue a claim. That’s the goal, of course. 999 times out of 1,000, maybe even less than that, anybody ever has to make a claim. But it does happen, and really, it’s pretty straightforward.
“The Dude”: It’s kind of like Allstate with your cars. If you feel like that there is an item that should have been covered by title or should have been addressed or should have been disclosed or whatever we’re talking about, it’s time to start the claim process. You contact that title company that did the policy. You say, “I think I need to make a claim here. I’ve got this guy saying that the prior owner owed him 15 grand. What do I do?” The title company reviews it. Their claims department looks at it. In that type … Let’s use that as a situation.
Julie Clark: Is there any deductible like there would be on your auto insurance?
“The Dude”: Nope. Nope.
Julie Clark: Nothing like that? It’s either covered or it’s not.
“The Dude”: It’s either covered or it’s not. In general, and we’ll use this scenario as a good example, if a lien is not recorded, if somebody’s just got this piece of paper in their hand … And maybe the prior owner even signed it and it was notarized, but they just never recorded it. That type of thing isn’t going to be covered. A title company has no way to know if there are floating loans out there that were never recorded with the county. For investors, that’s something to know, just because you got-
Julie Clark: Or private money lenders [crosstalk 00:30:55].
“The Dude”: Or private money. Exactly.
Julie Clark: Guys, I rarely … Really, I can’t even actually even think of a time … but I don’t do a lot of auction business. Maybe it comes up more there, where there was a title issue after the fact. But you know what I do here a lot of, and it scares the bejesus out of me that I need to drink an entire bottle of Tito’s because it sweats me out so bad, is when … It’s gluten-free, by the way. That’s a joke just in case you were wondering.
Julie Clark: But the thing that freaks me out is that there will be investors, and they’re usually really … I won’t categorize. They are borrowing money from private money investors in, let’s say, second lien position. And you know what? That second-lien-position lender is just some individual that has a bunch of money from whatever they do in their life, whatever they’re … For whatever reason, they have money and they’re willing to lend it.
Julie Clark: The second-lien-position lender does not record their lien position. I don’t know if these investors are saying, “You don’t need to. You can just do it if a problem comes up.” I’ll tell you what. Sometimes, the passive private money lender has mo idea if a problem comes up. You guys, for God’s sakes, if you are doing any type of lending, make sure you record it. I have heard some horror stories even recently on this type of thing. I mean, is it illegal for the other person who’s essentially doing something illegal? I think so, but you’re still out of your money, at least for a while.
“The Dude”: That also applies to things like quick-claim deeds and bargain-sale deeds and things like that that everybody uses. Just because you have a signed notarized document in your manila folder in the trunk of your car, that doesn’t mean that anything is official. You better get that document … If you want it official and you want it a part of title and a part of public record, get that sucker recorded, because if it’s just floating around and you think you’re good because you got a signed document, you’d better think again. Now-
Julie Clark: Even if it’s notarized?
“The Dude”: Even if it’s … Now, would it hold up in a civil lawsuit or court? I don’t know. I’m not [crosstalk 00:33:23].
Julie Clark: Yeah, but now you’re spending … Let’s say it does. Now you’re spending legal bills, the time it takes. Why … People are … They trust people. Even if they know them, they trust them. Never trust anybody. Nobody.
“The Dude”: If your reason for not recording a document is “I didn’t have the time; I didn’t want to go drive downtown to the county recorder’s office,” use your title and escrow company. That’s part of the relationship. They have recording departments. They’ll charge you the $87 recording fee, which is what the county charges even if you were to walk down there.
“The Dude”: Call your title rep and say, “I’ve got a deed of trust. I’ve got a quit claim that I need to record. Can you help me out?” They’ll even go as far as sending a courier to your office, pick up the document, record it, and then they’ll just charge you the fee. They’re not going to charge you anything extra. They’re not going to charge you a $200 dock-handling fee. They’re going to charge you for the $35 courier and they’re going to charge you for the $85 recording fee. And they’ll do it for you. They’ll serve it up on a platter.
Julie Clark: I think sometimes that investors who are not 100 percent nice guys or gals will not tell some average Joe that has a bunch of money that they even need to do it. And that person on the other side, unless they’re involving an attorney, they don’t even know to record it, and then the investor doesn’t even tell them. We here, as far as the nuts and bolts of real estate investing and everybody who’s involved in our world, we’re all about honesty, transparency, professionalism, and if you are a slippery slope type of investor or whatever, then we’re going to play doorbell ditch on you and put poop and ring … You know, get away from us. That’s not how we roll is what [inaudible 00:35:18].
Julie Clark: So, yeah, people need to be smart. You guys are all smart who are listening to this today because you’re getting educated and you’re educating yourself more. But, yeah, that’s all scary stuff right there. Let’s keep moving. We covered the seller side. How about the benefits to buyers of having title insurance? Let’s go down that rabbit hole.
“The Dude”: Well, sure. We’ve kind of covered a little bit of the buyer’s, too. It’s all in conjunction with the seller and even with your lender if you’re a buyer using a traditional loan product or a private money lender, the loan that’s … You know. It all flows together to a certain extent where, as a buyer, you want to make sure that you’re receiving title the way that you expect it to be where there’s no claims from anybody, there’s no missing liens, there’s no … You know, somebody had new windows put in the house but didn’t pay the bill, so now you’ve got a window contractor coming and trying to get you for money.
“The Dude”: That’s really your interest as a buyer when it comes to title insurance, is making sure that you’re receiving title the way that you expect it to be.
Julie Clark: What are you paying for as the buyer? As the buyer, are you buying the lender’s policy because you’re the one borrowing the money?
“The Dude”: Exactly. If you are … Again, the seller pays for the owner’s policy, so the seller is buying title insurance for the buyer. If you are a buyer paying all cash, there’s no title insurance for you to buy. Your seller pays for the policy to transfer title to you the way that you expect it. So if you’re an all-cash buyer, there’s no policy for you to buy. The only time that you as a buyer will have to pay any sort of title insurance … I should say in a traditional transaction. Traditionally, as a buyer, there’s nothing for you to purchase title-insurance-wise unless you are using some sort of a loan product. Some hard money lenders or private investors, for some ridiculous reason-
Julie Clark: Ridiculous reason.
“The Dude”: … ridiculous reason, don’t require a lender’s policy for their loan. If I was-
Julie Clark: That is because there’s a lot of people with money out there that don’t know anything about real estate that meet people that have a track record of doing a bunch of deals, and they give them their credibility pack, and that investor is not on the up-and-up and does not … You should just offer it. Yes, it costs money, but you know what? You guys, whoever’s not operating 100 percent on the up-and-up is going to get a spanking somewhere down the line. I promise you that’s how it works. Some of you … And I’m not talking about the good kind of spanking if you get my drift.
Julie Clark: What I worry about is, again, on the lending side is that, remember, if you’re an investor and you’re going to do private money, second lien position, or even first lean position, make sure that buyer, the investor you’re lending your money to, buys you a lender’s policy; you require it.
“The Dude”: They’re cheap. They’re not even that expensive. Lenders’ policies are pretty cheap. Owners’ policies are more expensive because there’s more liability to them. There’s a lot more items to insure when you’re talking about an owner’s policy. But a lender’s policy … We’re talking, on average, 500 bucks to ensure that your loan is in the proper position, there’s no other entities out there or lenders or contractors that are going to trump your loan and position.
“The Dude”: It’s a very small investment for a lender to make. Even if it’s a $10,000 loan, I don’t know why somebody wouldn’t insure their loan [crosstalk 00:39:16].
Julie Clark: Because they’re cheap.
“The Dude”: Yeah. It’s just cheap. It’s not that expensive.
Julie Clark: If you are a private money lender and you are working with an investor who says, “No. I’m not going to provide that for you,” or, “You can pay for that if you want on your own,” then you say, “Well, guess what? You can borrow my money from somebody else. And then you let me know who that is, and they’re going to get on my shit list because that’s just BS.” If you’re so tight you can’t pay that as an investor … I mean, that just comes with the deal, guys.
Julie Clark: I won’t get worked … I gotta take a sip again of my Mai Tai because I’m getting worked up. I don’t like people who aren’t on the up-and-up. So we’re going to say it again: if you are a buyer and you’re buying a property for cash, you don’t need to pay for any title insurance, because the seller … Traditionally, the seller would be paying that for you to have your guarantee of clean title. Right?
“The Dude”: Mm-hmm (affirmative).
Julie Clark: However, let’s go talk as investors now. One of the good terms that you can offer sellers is to pay for all the title insurance yourself, meaning you don’t make the seller pay for it. You cover that for them. That’s a term that might give you a leg-up in your transaction if you’re competing for a deal. I never offer it up front. I’ll just tell you guys what I do. I never offer it up front as just my MO business model. I offer it when I need to. Otherwise, I just let the seller … I use it as like a card that I can pull out of my pocket if needed.
Julie Clark: But rarely … Or if I feel like I’m getting a super good deal from somebody, because I’m such a transparency-and-fair freak, whatever you want to call me, I’ll offer to pay for it because, again, it’s probably not very much and I want to feel like I’m not taking advantage of the seller. So if I’m getting a super good deal, I might offer to pay for that just because I’m a nice person. But, otherwise, it’s just a deal term that’s negotiable.
Julie Clark: Let’s talk real quick, Dude, about who in a traditional transaction pays for what, you know, like [crosstalk 00:41:44].
“The Dude”: That flows into rates and who pays for what there.
Julie Clark: Yeah, yeah.
“The Dude”: Yep. Let me start by prefacing this: title and escrow rates in our state are regulated by what we call the OIC, by the insurance commissioner. So many people out there, agents, lenders, investors, they get so obsessed with, “I need to shop around for title and escrow.” Everybody’s rates are damn near the same. They’re usually within 100 bucks of each other. So you’re going to spend a day calling around to title and escrow companies, comparing rates just to share 100 bucks. It isn’t worth it.
Julie Clark: That is the topic of another podcast [inaudible 00:42:25] crazy nickel-and-diming, and they don’t realize. Let me give you a tip from the start, guys. A tight relationship with a title rep, an escrow company, is worth one million times more than the extra hundred bucks you’re trying to save by shopping around. You guys get that message? Don’t be a ding dong. Please.
“The Dude”: Maybe that should be a T-shirt or something. Just don’t be a ding dong. That’s it. That’s it.
Julie Clark: The Dude says don’t be a ding dong. That’s right. You guys, there are so many times that investors climb and scratch over pennies and they miss the bigger picture, which is every time you are looking at a service that you are going to be using as part of your real estate business or whatever business that you’re in, you should be first looking at the relationship and the benefits, the mutual, reciprocal relationship benefits as the number-one deciding factor. And, just, if you like someone and you work well with them personality-wise, that is so much more important, you’ll know when you get rolling here, than worrying about 100 bucks or 200 bucks or whatever here or there.
Julie Clark: Time is money. You want to call around to 10 different ones? You just spent more than … How much is your time worth? You just spent your money on your time, ding dong.
“The Dude”: Exactly. Exactly. Well, and like the notary fee … That gets thrown around a lot in title and escrow … is, “Am I going to pay a notary fee? Do I have to pay the $100 to have a notary come out to my house?” Are you kidding me? If all it costs is 100 bucks to have a notary come out to my house at 6:00 on a Friday night and hand serve up on a platter my documents … I don’t even have to leave my front door and I’ll get my documents signed, but you’re going to squabble over that 100 bucks? Really?
“The Dude”: Okay. Don’t pay the 100 bucks, and drive into Belleview and find parking and go up into somebody’s office and sign documents. It’s … Again, like you said, don’t obsess over something like a $100 notary fee. Let them come to your house, and save your time and all of that, and pay the 100 bucks or whatever if it’s not built into the fee. You know, again-
Julie Clark: You know what I’m thinking of while we’re talking about all this? You know a smart thing investors should add to their line item on their deal analyzer, is just a $500 buffer just because … you know, where you pay for convenience line item. You don’t know what it is that’s going to come up during the transaction. Maybe somebody needs to run around and you need to pay somebody 20 bucks an hour to go run around and do some stuff for you.
Julie Clark: You guys should all add in a $500 convenience cost so when crap comes up during the thing … That could be the notary. That could be whatever. If you can’t squeeze 500 bucks into your deal, then you’re buying the wrong deal. Please.
“The Dude”: Let me circle back-
Julie Clark: Amazing grace, how sweet … I feel like I’m preaching right now.
“The Dude”: Amazing convenience. Yeah. Exactly.
Julie Clark: It could be that or I’ve drank too much of my Mai Tai.
“The Dude”: It is … Well, I guess in … No, Hawaii’s behind us. I was going to say the time factor, but Hawaii’s behind us in time.
Julie Clark: That’s right. Let’s get back to the fees thing. [crosstalk 00:46:14].
“The Dude”: Yeah. So who pays what? Pretty straightforward. The escrow, the escrow portion of all this … We talked a lot about title, not so much about escrow. Escrow’s split right down the middle. So-
Julie Clark: In a traditional transaction.
“The Dude”: Yeah. This is all traditional. Now, you can structure your deal however you want to do it. The buyer can pay it all. Seller can pay it all. You can say, “I’ll pay for your title but I’m not going to pay for your escrow.” But traditionally-
Julie Clark: But remember, guys, if you’re using your local MLS contract, the traditional way most likely is written into the contract. So if you’re using your own contract, you can write those terms in however you want. You can have it mirror your MLS contract and then just use an addendum to outline who pays for what if you want to make a change to be having more aggressive terms.
Julie Clark: Remember, if you’re using an MLS contract, you’re also going to need to use an addendum to outline different terms than the traditional 50/50 split.
“The Dude”: Right. That does get seen quite a bit in the marketplace, where investors are using their own contracts that attorneys drafted up. It’s pretty common that it isn’t defined anywhere in the contract as far as who’s paying what. It’s pretty common for a title and escrow company to say, “I love your contract. It looks great. You’re missing a couple things. Number one, you didn’t say who’s doing title and escrow.” That’s pretty common that the contract doesn’t specifically declare who’s doing the title and escrow. “And it also is missing who’s paying for what.”
“The Dude”: We’ll come back to the traditional breakdown where escrow is split. It’s all based off the sales price, so-
Julie Clark: Let me ask you a question on that point. Is there any rule on that? If it’s silent, does it automatically go 50/50 by state law, or does it have to be defined in the contract?
“The Dude”: It does have to be defined because escrow is … A contract in the eyes of escrow is a set of instructions. That’s really how everybody should look at their contracts, is, yes, this is technically a contract or an agreement, but for a closing service, for escrow, it is a set of instructions. So if your contract, if your set of instructions, isn’t defining who is paying for what from a closing-cost standpoint, escrow doesn’t know what to do.
“The Dude”: They’re going to sit there and go, “We can’t proceed because we don’t have instructions on who is paying for what.” They can’t prepare their settlement statements and their closing documents because they don’t have instructions. Escrow will never, ever assume anything. They need specific instruction on all parts. Same thing when it comes to earnest money or inspection contingencies or things like that. Escrow is not allowed to make assumptions on a contract, so that’s why things have to be spelled out. Escrow’s the mutual third party. They’re the middle person that is following the instructions that the seller and the buyer are agreeing to.
Julie Clark: Let me ask you a quick question. This is something that I screw up on in my traditional brokerage business sometimes, or I don’t catch it because a buyer’s agent on one of my listings writes it up wrong. Sometimes, sometimes, based on certain client requests, escrow could be different than the title company. That could happen sometimes, right?
“The Dude”: Sure.
Julie Clark: It’s easier if it’s not, but sometimes sellers or buyers have specific people they want to use and you don’t want to rock the boat, so you go with that. If somebody’s using a title company and then the escrow company is different and they just write the person’s name at the escrow company, I see that happening all the time. The most important thing is … Let me … Do people need to write the name of the company, escrow company and/or title company? Also, if you have a certain person you want to work with at that title or escrow company, you should write their name down as well. Is that accurate?
“The Dude”: I would agree with that, and the reason for that is because all of the title and escrow companies have multiple closers, anywhere from … could be 2, could be 30. There’s lots of people there, and everybody has different relationships. If you are being allowed to direct the title and escrow in the transaction, if you’re the one calling the shots on who’s doing title and escrow, be specific. Put the title company. Put the escrow company. Put the specific closer’s name on that contract because, if you don’t, you may get this open-up from the company that is somebody in another … you know, in federal [inaudible 00:51:08] or wherever the office is because there wasn’t any specific instruction.
“The Dude”: Every title and escrow company has their own rules of engagements on how they spread around purchase or sale agreements or what, you know, different relationships. In general, a good title and escrow company, you know, in your case, Julie, would know that if the deal is coming from you, they know exactly who your preferred closer is, who you work with on a regular basis, and they’re going to know to put that deal with your preferred closer unless the contract says something different. If the company has their stuff together, they’re going to know. But that’s … Again, that circles back to the importance of that relationship. If you just-
Julie Clark: But remember, the buyer’s agent, if I’m a listing agent … because I’m awesome agent and an investor, I can even list my own deals, buy my own deals. Lots of savings there. If I list the listing agent and I have … Even though my escrow and title team know that it goes with me, buyer’s agents a lot of times direct distributing the contract information once it gets mutual. And they don’t know who to send it to is actually another problem, right? Because they just see … You know, my team might know, but if they have taken the reins to distribute the contract to all the parties to get it processed … It’s just, again, you want it to run smooth. You want it to run smooth. It saves time, it makes you feel good, and all that other stuff.
Julie Clark: I’m going to kick us back to the fees, traditional being 50/50, because we got sidetracked there. And people obviously care very much about fees.
“The Dude”: Yes. In traditional, escrow gets split in half. So you have $500,000 sales price. I’m just using round numbers, not actual specific rate quotes. But if the total escrow fee for the transaction is $1,800, seller pays 900, buyer pays 900 plus tax. So you split the escrow. That’s traditional.
“The Dude”: Title … People oftentimes say title gets split 50/50. That’s not true. The seller buys the owner’s policy. The buyer pays for the lender’s policy if there’s a loan that needs to be insured. Those numbers are very different, and the owner’s policy could be $1,000 based on the sales price. If the loan amount is only $50,000, they’ve only got a lender’s policy of about 300 bucks they gotta buy. So-
Julie Clark: Now, it’s based on the loan amount.
“The Dude”: The amount that … It’s all based on … Let me back up. What the seller pays for … They’re buying the owner’s policy, which is based off of the sales price. So $500,000 sales price, they are paying for a $500,000 owner’s policy. That’s [crosstalk 00:54:06]-
Julie Clark: Title insurance policy.
“The Dude”: Title insurance policy. Yep. The buyer, their portion of title insurance is based off of their loan amount. Seller’s is the sales price; buyer’s is the loan amount. If there’s no loan to insure, the buyer doesn’t have any title to pay for. That’s where you get when you’re doing these contracts and you’re saying, “We’re just going to split title, split escrow.”
“The Dude”: Well, if you’re a buyer and you’re paying cash, you may be agreeing to paying half of that owner’s policy, which in a traditional transaction you didn’t need to do. Traditionally, seller pays for owner’s policy, buyers pay for lender’s policy, and that’s it. So if you’re talking about just splitting 50/50 costs, take a second and think about that, or call your title rep and say, “I’m thinking about doing this. I’m going to pay all cash for it, but we’re going to split closing costs. What does that mean?” That’s one of the-
Julie Clark: We’re trying to tell you guys to separate escrow splits from title cost-
“The Dude”: Exactly.
Julie Clark: … and title insurance. Totally two. You don’t apply 50 percent to both escrow and title. You separate the two because, if you’re lucky and you’re paying cash, you will have no cost as the buyer.
“The Dude”: Traditionally-
Julie Clark: Traditionally.
“The Dude”: You would have no title cost traditionally.
Julie Clark: Right. And then, traditionally, you would split 50/50 on escrow fees, which is totally different than title costs.
“The Dude”: Correct.
Julie Clark: Those are terms to negotiate in your contracts. You want to make it easy on yourself and have one that you’re willing to do all the time and maybe only pull out the rest … Maybe you want to pay for everything because you think it’s going to give you a leg-up on all your deals. You’re in a super competitive market. Or maybe you just want to play that card when you feel it’s necessary. That’s up to you.
Julie Clark: Definitely, if you guys are a little bit confused about those specifics, because I know you care so much, definitely you can contact me at [email protected] After this podcast, you can hit me up and we will make sure to clarify it for you. We can even put you in contact with a local title and escrow rep wherever you’re at and get this 100 percent clarified for you. But I think you guys are getting the gist. Two sets of costs: title costs, escrow costs.
“The Dude”: Yep, yep.
Julie Clark: Awesome. Good stuff. Between title companies and escrow companies, those competitive rates, then … I think we covered this briefly, but-
“The Dude”: Yeah, and I’ll restate that. Again, title and escrow rates for the big title and escrow companies that are around there … We all know who they are. All their rates are regulated by the state, and they’re all very similar to each other. You may find a difference of $100 here or $150 there, but in general, title and escrow rates are the rates. They’re very similar to each other.
“The Dude”: Now, one thing to remember is those rates all slide based off of what either the sales price is or what the loan amount is. So if your template, your spreadsheet, whatever it is you do to calculate your closing costs … You can’t just always say, “Well, it’s going to be about 1,000 bucks for title.” Well, the last deal that you did, if you bought a house that was $200,000, maybe it was only 1,000 bucks for title.
“The Dude”: Now you’re going to buy a $700,000 house. Because it’s a sliding scale based on the sales price, that changes. Your title cost at $200,000 versus $700,000 are very different. Be careful when you’re doing your calculations and things like that, that you’re not just using round numbers and based off of some low sales price, because that number does change.
Julie Clark: You need to get with your escrow rep and your title rep on what their fees are and just plug that into your deal analyzer as a percent of the loan amount or percent of the sales price so you get the number right.
“The Dude”: Right. And the good title companies have easy-to-use apps and things like that that you can just pull up an app. Plug in the sales price. Boom, it’ll spit out your closing cost.
Julie Clark: There you go.
“The Dude”: They have those kind of tools as well. There’s a lot of different bells and whistles and tools and things like that that title and escrow companies have access to and they can plug people into that you didn’t even know were there. Not everybody needs to be fancy, buy a bunch of fancy tools and things like that, but there are a lot of different products and resources that title and escrow companies can connect people to that-
Julie Clark: Such as list pulls, too, right, guys? You can [crosstalk 00:58:59]-
“The Dude”: Yeah. [inaudible 00:58:59].
Julie Clark: … criteria to your title rep on your … you know, for lead generation for your direct mail list or your code-calling list or whatever you want to do, and they can pull those lists for you. Maybe you’re interested in a certain zoning at a certain part of town. You give that to your title rep, and they can pull up all the properties with that zoning.
Julie Clark: We’re going a little long here today, so we’re going to have … If you’re a member of Seattle Investors Club, we’re going to be covering this even in more detail as well. But when you call your title rep, say, “What kind of products and services are available to me through you as an investor?” And you can get the whole menu of what that is.
Julie Clark: I want to keep just moving on real quick and wrap up on this last series of questions here, just a last question from a global standpoint. Is there a top two common problems you see from investors, maybe, that you see there is missing contract language, like we said, about not giving the instructions … because the contract is instructions to escrow. You gotta make sure you’re always giving the instructions for who pays for what and things like that.
Julie Clark: Is there anything else? What’s the quit claim? I’m going to be selfish here and ask about something that I’m interested in because … What’s the whole thing surrounding quit claims and how that works and what that is?
“The Dude”: Sure. I’ll break that up quick, and like you said, I know we’re getting lengthy on this, but I think this has been a good podcast for everybody. The most common things that we deal with when it comes to investors, and we touched on a little bit of it before, is heirs: somebody died, and now they gotta sell the property. There’s a lot of divorce situations and things like that out there where we are making sure that the proper people are selling the property that have the proper authority to do it.
“The Dude”: That’s pretty darn common for investors where it’s divorces or heirs and somebody’s died and that kind of thing. That’s the most common for investors. When we’re talking about quit claims, a quit-claim deed … It’s not quick, just so everybody knows. It’s not quick claim. It’s quit, Q-U-I-T. Quit-claim deeds are … It’s a way to change vesting on a property without a sale.
“The Dude”: So if … Julie, if you as an individual own a property by yourself and you get married and you want to add somebody onto title, you would use a quit-claim deed. You would add your partner to title, and that’s a way to put somebody on title. You can also remove somebody from title that same way. So if a divorce happens and in the divorce decree it states that you get the hose and your ex does not, typically through those divorce proceedings you would use a quit-claim deed to remove somebody from the title of the house.
“The Dude”: Now, again, I am not an attorney, nor am I a tax accountant. So there are and there can be items pertaining to taxes and things like that where, if you’re just simply going to remove somebody or add somebody to title, there may be tax implications as a result of that. So it’s always good practice to have a good relationship with your accountant or with some sort of a tax attorney to run this scenario by them and make sure that there isn’t any massive capital gains, stipulations, or items that are going to come up as a result of you adding or removing somebody from title.
“The Dude”: Or, if somebody says, “Yeah, pay me $100,000 and I’ll just give you the title to my house and I’ll just record a quit-claim deed,” that’s not the way that it works. You gotta pay X-size tax and things like that. So always good to be sure to run things by your accountants and your attorneys, if you are in fact using a quit-claim deed, to make sure there’s not something you’re missing. But-
Julie Clark: Do you see investors do things like buy it in their personal name and quit-claim it to their LLC for some reason they think is a strategy?
“The Dude”: Yeah. The concept of LLCs and things like that … Again, that’s more of an accounting-type situation, you know, taxes and things like that. I don’t have a lot of intimate knowledge as to the strong benefits behind using an LLC versus your personal name. I know it has to do with liabilities and taxes. If you get sued, they can only come after things in your LLC-
Julie Clark: I think it also might have to do with lending, borrowing a little bit. Make a note, side note, side note. A little partner talk here, Joe. Make a side note if … Let’s get some details on that topic, quit-claim: why people, investors, might try to do that.
“The Dude”: Yeah. Yeah, that’d be a good [crosstalk 01:04:19]-
Julie Clark: To me, it’s either squirrelly or it’s a strategy, and to be honest with you, I’m not sure which one it is. So, Joe, we’re going to make a point to find out and let our tribe know. How about that? That sound good to you, guys?
“The Dude”: Yeah. Yeah, I think that makes a lot of sense.
Julie Clark: Hey, buddy. Buddy, is that interesting to you? Okay. Buddy’s on board. He’s [inaudible 01:04:39]. Yeah. Buddy’s good with that. Yep. Okay. Well, that was … You can keep talking about quit claim, but that is interesting. You see that on inherited properties; you see quit claim, right?
“The Dude”: Yep, yep, where you’ll see a … Yeah, again, the quit-claim deed is just an instrument to adjust who is on title and who isn’t, is what that is, without a sales price. So if there’s no money transferring from one to the other, that’s when you use quit claim because you’re adjusting who’s on title without the use of funds. Typically, that is what quit claims are used for.
Julie Clark: Let’s say somebody thought … Somebody’s doing a list pull. I’m just doing a little side note here. And they go, “Oh yeah. I’m going to pull all the transactions that had a nominal or no-dollar amount transfer.” Well, your risk in dealing with that is you’re going to get a lot of stuff that might not mean that they are selling or inherited anything. It means that they got married and they put their spouse on there. So you gotta just understand that just because something is a zero-dollar transfer doesn’t mean necessarily that it’s a deal you’re going to go after because that’s a great list-pull term.
Julie Clark: You gotta know the details on that. I’ve been down that rabbit hole myself, and you just … I wouldn’t say it’s the best idea. I’m sure there’s a way to dive deep into that. Maybe that’s another side not for my partner on another topic on list pulling and [crosstalk 01:06:26].
“The Dude”: Yeah. Farming 101. There’s definitely-
Julie Clark: Farming 101.
“The Dude”: There’s definitely some dos and don’ts, and having a relationship with that title and escrow company, somebody who knows farm lists … You can send a farm list to any title company and go, “I want 500 addresses around this listing because I’m going to do a just-listed postcard,” or as an investor you’re going to say, “I want all the properties in 98155 that are zoned to L1,” that kind of a thing.
“The Dude”: Well, that’s fine. Any idiot can just pull a list of properties and send it to you. A proper relationship and a good one would be somebody that says, “Sweet. We can get that list for you. I’m into it. Let me get it pulled. Tell me why. Why do you want this list?” And then, once you start explaining why and what your motivation is, there may be layers and criteria that you’re going to use that you didn’t even know existed. So-
Julie Clark: Or something might come up and give you an “aha” moment, like, “Oh. Ninja. There’s an idea there.” So I like the topic of Farming 101. Good one, Dude. We’re going to steal that idea from you. Totally stellar. Yeah. Right. Righto. Yeah, now my brain’s just moving [inaudible 01:07:44].
Julie Clark: But this is all good stuff, guys. I think that not only did Buddy get a lot of good information today out of this … Right, Bud? He’s there. Oh, he’s not even asleep yet. This is, I think, awesome. I know I learned a lot, and this has been totally a long one. A longie but a goodie. Right?
“The Dude”: Totally.
Julie Clark: Right on. Anything else you want to add, Dude, before we wrap it up here and get back to cranking out the cashflow?
“The Dude”: Yeah. I’m going to leave you with my poetic, my wax-on, when it comes to title and escrow here because I think it actually helps summarize the importance of title and escrow. In real estate, I always look at title and escrow as dinner at a really good restaurant. This is how I’m going to line it up for you. As an investor or as an agent, you’ve gone out, you’ve prospected, you found an opportunity, you’re talking to the seller, you’re trying to either get the listing or you’re trying to get this property under contract.
“The Dude”: That’s your appetizer at a good restaurant. It’s your work up front. It’s what you’re doing up front. Now, you’re under contract. Maybe you’re rehabbing the place. Maybe you did buy it and now you’re rehabbing it or whatever, or as an agent, you’ve got it under contract and you’ve got it listed, and now you’re trying to find a buyer. You’re doing some marketing, holding open houses, things like that. That’s your main course at a restaurant. You’ve had your appetizer, your main course.
“The Dude”: Now it’s on to dessert. You’ve got the property sold or you acquired the property, and now, you’ve got this baby. You’ve got this meal that you’ve worked on.
Julie Clark: You’ve already had a baby? That’s kind of [crosstalk 01:09:31].
“The Dude”: A big meal. Okay? A meal at the restaurant, not baby. You’ve got this fabulous meal that you’ve had, and now you have to turn it over to somebody else to serve dessert. That’s what title and escrow is. It’s the dessert at the end of a really good meal you’ve had. If that dessert … Maybe you had the seared scallops in the whole world as your appetizer. You’ve had the best peppercorn ribeye with blue cheese on top, whatever it is that your main course is. And you’re just licking the plate clean.
“The Dude”: Now, your dessert comes out, and you’ve got moldy berries on top. What does everybody remember? All of the clients in a transaction, they never remember … They remember the dessert. If that dessert came out with moldy berries on it, is anybody ever going back to that restaurant ever again? No.
Julie Clark: Dang. This is a good analogy. I love it.
“The Dude”: Everybody remembers the dessert. Go back and ask any one of your prior clients, your buyers, sellers, “Who did the title and escrow on the transaction we did together?” They have no idea. All they remember is the experience. If the experience was bad, they remember that you took them to that restaurant. They remember that the agent took them to the restaurant and the dessert came out with mold on it.
“The Dude”: That’s the last flavor that everybody gets, so your partnership with a title and escrow company is so critical to make sure that they bring out that crÃ¨me brÃ»lÃ©e that’s perfect at the end of the meal to finish off the experience for everybody involved in the transaction. So that’s-
Julie Clark: I just got the chills. This is good, man. You are a poet. This is … Oh my God.
“The Dude”: So there you go. That’s how I describe title and escrow to a lot of people. It makes sense because they can relate it to dinner, and it’s true. You talked about that, Julie, at the beginning of it, where reputation and integrity and things like that are important to people’s success. And I completely agree with you. That’s why title and escrow is a really integral … It’s not just a necessary evil. It’s a very critical, important piece of the meal at the restaurant to make sure everybody had a great experience.
Julie Clark: Wow.
“The Dude”: So there you go.
Julie Clark: Woo. I think that’s the best wrap-up that we’ve ever had on this podcast, I gotta tell you. I gotta tell you.
Joe Bauer: I would have to agree.
Julie Clark: Let me tell you what: that was spectacular. Wow. I’m kind of speechless, which is, as you all know, rare. I’m going to wrap it up, though, because now I’m starving from thinking about peppercorn steak with blue-cheese crumbles on top. I will tell you guys, if you would like to have any referrals wherever you are across the country to somebody that is an expert in title and escrow, such as The Dude, or anybody else wherever you’re at, we definitely have a network of contacts that … Just give me a shout: [email protected] We can hook you up with or put you … give you some contacts for some professionals, such as The Dude, that will make your business run smoother and let you present a good dessert to all your clients, I guess, is the … I’m not eloquent, so [inaudible 01:13:13].
“The Dude”: That was close. [inaudible 01:13:15].
Julie Clark: I don’t know what I’m talking about. You guys get my flow. Yeah. I just butchered it. Sorry.
“The Dude”: No worries.
Julie Clark: All right. That was spectacular.
“The Dude”: You bet. Glad I could help. Yeah.
Julie Clark: I’m excited, motivated, hungry, and all that. So thank you so much, and I think we’re done with the nuts and bolts of real estate investing.
Joe Bauer: Yeah. Yep. One quick thing: if you guys want to check out the show notes for this podcast, you can do so at seattleinvestorsclub.com/28. That’s seattleinvestorsclub.com/28. I know some of you guys like to read what you’ve listened to, and there you have it.
Julie Clark: Spectacular. Well, guess what. You guys have a wonderful day, and I’m going to go eat some lunch.
Joe Bauer: All right. We’ll see you later.
Julie Clark: Ciao.