MANAGING THE TITLE WORK IS IMPORTANT WHEN SELLING FSBOs,  Chapter 7 of 8

* * * *  HARD CORE REAL ESTATE TALK * * * *

LENN IS PAID FOR WHAT SHE KNOWS, NOT FOR WHAT SHE DOES!

Reference is made to the recent posts of Gary Bolen and comments thereto by Bob Stewart about agents getting the message out describing [justifying] the services provided to home buyers.   

Specifically, Bob Stewart suggested that we write about the duties outlined in my post of November 11, 2006:

1.  Make the appointment
2.  Show the home
3.  Provide the required disclosures
4.  Write the contract and escrow
5.  Manage financing for the buyer
6.  Manage inspections
7.  Manage the title work
8.  Schedule the settlement and manage settlement services

Today's chapter describes the Buyer's Agent's duties in working with the buyer and seller to arrange title work when selling FSBO listings.

BUYING REAL ESTATE IS A COMPLICATED TRANSACTION.  Real estate transactions follow the law of the state in which the property is located.  "Follow the law", is the important guide here because real estate ownership is of great interest to home owners, buyer and sellers, communities and local governments.  It is critical that the laws of the states, counties and municipalities be followed when selling any real estate and that task will often be the responsibility of the Buyer's Agent since many states gives the Buyer the right to select the title company or title attorney to handle the closing transaction, which includes getting the new DEED recorded in the local office of land records. 

WHAT WE LEARN IN REAL ESTATE SCHOOL.  Real estate school doesn't make an agent or broker an expert in real estate transactions.  However, real estate school along with actual experience selling homes, Continuing Education, and familiarity with procedures involved in the Closing Transaction, make the Buyers Agent prepared to manage the Closing Transaction.  The experience of most FSBO sellers is limited to the home(s) they have purchased and/or sold.  Real estate licensees have studied real estate law, attended closing, received training in closing transactions, understand the various documents involved in the transfer of real property and are in a position to manage the closing.  Agents with little experience have the benefit of an experienced broker whom they can consult for guidance.  When a home buyer hires a Buyers Agent their relationship is with the agent's broker.  Brokers, by law have significant experience that they can draw upon to guide agents in transaction management. 

Once the Contract of Sale is accepted by the buyer and seller, the Buyer's Agent, in consultation with the Buyer, will select a title entity to perform the actions necessary to complete the transfer.  Some of the services performed by the title company or title attorney will be:

Title Search.  The title company will perform or order a search of the title to identify any and all liens and encumbrances on that particular property.  In order for a buyer to receive a "clean" title or deed to the property, all liens on that property must be paid and releases recorded and all encumbrances must be removed.  While this is usually routine, it is not a process that the average home buyer or seller is able to perform.  If, the title search reveals any liens that will not be cleared by settlement, the title company will contact the Buyers Agent will, in consultation with the Buyer, communicate the matter to the Seller and it is the Seller's responsibility to produce the documents or make arrangements to remove the liens or encumbrances that would interfere with providing the Buyer a clean and mechanisable title to the property.   One of the problems we have encountered when selling FSBO properties is that the "owner" is not the only person on the title.  In fact, we've encountered relatives of the owner who believed that they could sell the property because they were "family" and the real owner gave them permission.  Only the owner of record can sell real estate and all owners of recordmust sign the deed to transfer the title to a new owner. 

Title Insurance.  The title company with usually provide the title insurance policy for the Buyer's new property.  As a Buyer's Agent, we can often manage to obtain a copy of the existing title insurance policy obtained by the Seller and manage a reissue of this policy.  This will save the Buyer a bit of cash, $150-$250, but the cost of transferring real estate is so costly to buyers, every bit helps.   

Survey.  The title company will order a survey and review the survey for any encroachments or irregularities including easements that would interfere with the Buyer's intended use of the property.   If such easements are present, they should have been disclosed by the Seller prior to entering into a Contract of Sale. 

Lender Documents.  The title company will prepare the documents required to transfer title based on the instructions from the lender.   Excepting cash purchases, the lender instructions dictate the title company's preparation of the Deed, Deed of Trust, HUD-1, and any ARM addenda.  The lender's closing package will also contain documents for the Buyer's and Seller's signature including the Truth in Lending, any affiliated entity disclosures, affidavits for first time home buyers and any documents required. 

TITLE COMPANIES ARE OUR FRIENDS.  Most title companies are well organized, friendly and helpful to both agents and buyers and sellers.  This long established structure has made significant contributions to the stability of our real estate market.  Buyer's and Sellers can rely on the honesty and integrity of the title company to perform the services necessary to transfer title to the property from the Seller to the Buyer in an orderly and timely manner.  Most title company owners are required by state law to be attorneys and licensed in the state in which they perform title duties.  If there are delays, it falls to the Buyer's Agent to make sure problems are managed.  If, however, the problems involve title, liens, encumbrances that would interfere with transfer of title, a Buyer's Agent cannot and must not advise the Seller.  At this time, the Seller needs their own agent or attorney.  Sometimes, the problems are as simple as a missing "release" of the Seller's former financing.  The title company will advise the Seller what steps to take. 

NOTARY SETTLEMENT SERVICES will be addressed in Chapter 8.     

We will deal with the seller honestly and truthfully.

We will advocate for our buyer/client.