Experienced real estate investors have learned to appreciate those title companies with personnel that will work with them and do a great job. But new investors may be thoroughly confused – what is it that title companies do that result in all the charges and fees? What should you expect from your “favorite” title company?

First, know that your local title company is eager to talk with you and explain what they do, even before you do business with them. As a real estate investor you are a wanted repeat-business customer. Take them up on their open door. Let them walk you through everything you need to close a deal, and answer all your questions.

As you enter the network of real estate investors, ask about title companies.  They will steer you to the best companies with experienced professionals who know the options to un-knot a sticky closing issue. Here’s a rundown of what title companies do for you.

• Title search
  Sophisticated search techniques designed for the particular record system in question is essential, as states and counties can vary from place to place. Imagine plowing through the county or state records on your own, looking for every title transfer or encumbrance that might still affect the property today. Now imagine that you missed one.

• Title insurance
  Once they’ve done the search and made an assurance that the title is clear, the title company supplies insurance to protect the buyer in case of anything they missed or errors they made. Normally the company acts as agent for the actual insurer.

• Closing documents
  The title company handles the deed, disclosures, insurance and both the seller’s and the buyer’s mortgage documents and promissory note.

• Cash disbursements and escrow
  A great deal of money flows through a closing and the title company determines who pays what, who receives what, and funnels all funds to where they must go. The down payment; the buyer’s mortgage company paying off the seller’s mortgage company and anything over to the seller; the broker/agents; outstanding property taxes; as well as insurance and the title company’s fee(s). The title company also handles the escrow account for pre-paids such as property tax and homeowner’s and title insurance.

• Guidance for resolving title issues
  Past history can reveal hidden time bombs that could take a property away from a new owner, with little recourse. Title companies can offer special guidance to help resolve a bewildering, but hopefully rare, range of title issues, should one turn up. Messy inheritance; incorrect foreclosure; boundary and survey disputes; contested divorce division; mechanic’s lien; and so on and on. Don’t assume you’ll never be this unlucky!

A closing that is missing an essential disclosure or a payment can open the door to major problems later. Title companies have the documentation and money flow expertise to protect all parties in a real estate transaction. Find a good one, and put them on your real estate investing team.

Which local title company has the best reputation with investors in your area?

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