Selecting the right closing agent

A closing agent is the person or firm who closes real estate transactions. In some states that is an attorney and in others it is a title company.

The right closing agent for all of your deals can often make the difference between a successful closing and the deal falling apart at last minute.

Your closing agent should also be looking out for your best interests as well as make the entire process smooth and easy. If you find yourself constantly struggling with your own closing agent it is probably time to find a new one.

Recently I was looking for a new agent (we use attorneys here) and I had a list of questions that I reviewed with them. I thought I’d share those with you to help you make the best selection for your closings.

When I first started in this business, I had a great attorney. He was very caring and knew the law well. The only problem was that he was totally old school. It was just him and his paralegal in the office and they still used a typewriter instead of word processing. If a document had to be changed, it meant typing it all over again!

Closings were often 2-3 hours long, and it wasn’t unusual for closing to be an hour or more late. When I was doing one closing every couple of months, this was just a minor aggravation. As my closing became more numerous, it was absolutely frustrating! Although he was a great guy, a change was needed.

Another investor I was speaking with recently was describing how difficult every step of the process has been with his attorney. Even basic title insurance requests were ignored. My advice? Find a new attorney quick. They are supposed to be on your side!

The question is – how do you know? How do you select a good closing agent? Referrals from other investors is a good place to start. As I said, I was recently looking for a new attorney, and I started by asking for referrals from other investors.

Then I called around and interviewed a few firms. I started by introducing myself to the receptionist, explained that I am a real estate investor, and that I am looking for a new firm for my closings and I would like to see if I could set up some time to meet with one of the attorneys. I also asked her what she thought of the firm. Her answer was so positive and so confident that I was almost ready to choose them right then.

She told me that every attorney – every para-legal – every staff person knew that client satisfaction is the most important mission in the office. When that philosophy trickles down to the receptionist and is so easily and confidently voiced – you know it is definitely one of their operating tenets. However, I still had more questions, so I made an appointment to meet with an attorney. An initial thing to consider is location. Are they conveniently located for you and easy to get to for most buyers/sellers.

Here is what I asked in our meeting:

  • Size of firm? You want to make sure that they have a few agents available to close in case one gets tied up the whole day doesn’t fall behind. You also don’t want such a large firm that you can’t establish any relationships.
  • Will you be assigned an attorney? This goes back to the idea of being able to establish some relationships. However, there is not a problem if sometimes another attorney closes your deals. It is just good to have at least one agent that knows you well.
  • Pre- & post closing team? Do they have paralegals to handle all the paperwork so closings are smooth.
  • Are they on most Lenders approved list? When you sell retail, your buyer will probably get a loan from a bank. If your closing agent is on most banks approved list you can require closings to occur at your firm.
  • How often are their closings late by more than 30 minutes? Things happen, you just want to make sure this is not a regular occurrence.
  • Do they work with other real estate investors? I prefer firms that are already familiar with investors and our creativity. Some agents are so used to standard closings that everything we do seems odd to them.
  • Do they accept Assignments of Contract and wholesaling in general? If they offer any resistance to this at all, they are not investor friendly and I would move on.
  • Will they hold Earnest Money (even if closing winds up at another firm)? Whether buying or selling, it is nice to have it held by your agent.
  • How much lead time do they need to close? Some deals require a sense of urgency. Can they work on a short time line?
  • Cost for closing? Title search/report? These do vary quite a bit, so good to know before you are surprised.
  • Will they run title early in the process? You want to discover title issues as early in the process as possible to get them cleared without delaying closing. Some firms like to wait until the last day to run title.

After discussing these questions with a prospective closing agent, you should have a good feeling as to whether they will be an asset to your team or more of a detriment. Not all are created equal, so spend the time to identify the best firm for your business.

Expect abundance,

Lou Castillo

 

 

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